The Foreign Trade and Sectoral Impact of Truck Road Pricing for Cross-Border Trade.

Abstract. Truck road pricing is on the brink of being introduced in a number of European countries. The experience gained from Switzerland, the first country worldwide to implement such a distantdependent pricing scheme, has proved invaluable. Nevertheless, significant questions still remain. The present paper attempts to provide some clarity by analysing the welfare and sectoral impact resulting from the introduction of truck road pricing with respect to foreign trade. It is shown that this impact can be separated into four effects: the pure terms of trade effect, the tax revenue effect, the transit tax revenue effect and the resource gain effect (resources set free by a reduction in transport activity). A CGE simulation of each of these effects identifies their quantitative implications. Out of the four effects the pure terms of trade effect turns out to dominate at both the sectoral and aggregate level. It triggers a trade-induced welfare loss. The tax revenue effect, and less so the transit revenue effect, mitigate this loss. For a full road transport cost internalization a trade-induced welfare loss is quantified for Austria at 1.3%. Sensitivity of this and other aggregate variables is high with respect to household reaction to transport tax revenue refunding. The trade-induced welfare loss of variable size as explored in this article counterbalances a fraction of the welfare gain due to internalization. Key words: environmental policy, foreign trade, heavy goods vehicle tax, transport costinternalization, transport policy [ABSTRACT FROM AUTHOR]