Inspections in Customs: A Case Study of the Role of Tariff Dispersion on Red Lane Classification in Argentina

Abstract

The role of tariff dispersion, defined here as having different tariff lines or import tariffs for ‘similar products’, has been underexplored. In this paper, we present empirical evidence on the role that tariff dispersion has on red lane classification during customs clearance in Argentina. We find that products with tariff dispersion are more likely to be classified through the red lanes. In particular, high levels of tariff dispersion at the Harmonized System (HS) level 6 are associated with a 10 per cent increase in the probability of being classified in the red lane. Considering the negative effects of delays in customs on competitiveness, this paper highlights the relevance of having a simple — and not necessarily uniform — import tariff structure.