The Effects of Offshore Assembly Provisions on the US Tariff Structure

This article examines the impact of the US Offshore Assembly Provisions (OAP) on the effective tariff rates of the United States. The effects of OAP are incorporated theoretically into the effective rate calculation and the resulting algorithm is then applied to the 245 affected categories in 1974. The results indicate that, with the presence of OAP, ordinary effective rate calculations overstate the protection afforded to value added in US industries. Although the OAP effect was small, greater usage of the available concessions by importers could alter considerably the level and relative industry impact of the US tariff.