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Economic Issues in Tariffication: An Overview

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Tariffication is an effort to convert all existing agricultural nontariff barriers (NTBs) to trade into bound tariffs and to reduce these tariffs over time. The main economic issues that arise with tariffication stem from the nonequivalence of tariffs in NTBs in a number of scenarios. This paper analyzes nonequivalence arising from the existence of imperfect competition in importing countries, price instability in importing and exporting countries, and inefficient allocation of quantitative restrictions. It is shown that in all these cases the definition of an appropriate "equivalent tariff" to be used in tariffication is not straightforward, and that in general this equivalent tariff cannot be computed on the basis of only observed price differences between countries. Tariff-rate quotas, which are meant to be the main tool in implement tariffication according to the existing proposal, are analyzed in some detail. Concerning the relationship between tariffication and the other elements of the trade liberalization package, it is shown that tariffication would limit the scope of export subsidy policies, and that the existence of production and export subsidies makes observed price gaps between countries of questionable value in setting equivalent tariff levels. Finally, it is argued that the main focus on tariffication should be the conversion of NTBs to acceptable long-run (bound) tariffs rates, and considerable flexibility in the conversion process could be exercised during the transition period.

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Paper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 90-gatt1.

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Date of creation: Jul 1991
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Handle: RePEc:ias:cpaper:90-gatt1

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Cited by:
  1. Beghin, John C. & El Osta, Barbara & Cherlow, Jay R. & Mohanty, Samarendu, 2003. "Cost of the U.S. Sugar Program Revisited, The," Staff General Research Papers 1947, Iowa State University, Department of Economics.
  2. Krishna, Kala & Tan, Ling Hui, 2010. "Trade policy with endogenous entry revisited," Journal of International Economics, Elsevier, vol. 80(2), pages 271-279, March.
  3. Meilke, Karl D. & Huff, Karen, 2001. "Trade Liberalization Under Nafta: Where From Here?," Trade Liberalization Under NAFTA: Report Card on Agriculture; Proceedings of the 6th Agricultural and Food Policy Systems Information Workshop -2000 16819, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
  4. Nordstrom, Hakan, 2001. "Do variable levies beggar thy neighbour?," European Journal of Political Economy, Elsevier, vol. 17(2), pages 403-420, June.
  5. Barichello, Richard R. & Cranfield, John A.L. & Meilke, Karl D., 2007. "Options for Supply Management in Canada with Trade Liberalization," Commissioned Papers 6124, Canadian Agricultural Trade Policy Research Network.
  6. Meilke, Karl D. & Lariviere, Sylvain, 1999. "The Problems And Pitfalls In Modeling International Dairy Trade Liberalization," Working Papers 14579, International Agricultural Trade Research Consortium.
  7. Anonymous & Meilke, Karl D. & Knutson, Ronald D. & Ochoa, Rene F. & Rude, James, 2006. "Achieving NAFTA Plus," 2006 NAAMIC Workshop III: Achieving NAFTA Plus 163871, North American Agrifood Market Integration Consortium (NAAMIC).
  8. Rude, James & Meilke, Karl D., 2005. "Implications of the July 2004 WTO Framework Agreement for Canadian Agriculture," Commissioned Papers 24159, Canadian Agricultural Trade Policy Research Network.
  9. Boughner, Devry S. & de Gorter, Harry & Sheldon, Ian M., 2000. "The Economics Of Two-Tier Tariff-Rate Import Quotas In Agriculture," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(1), April.
  10. Meilke, Karl D. & Rude, James & Burfisher, Mary E. & Bredahl, Maury E., 2001. "Market Access: Issues And Options In The Agricultural Negotiations," Commissioned Papers 14625, International Agricultural Trade Research Consortium.

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