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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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  1. James E. Anderson, 1988. "The Relative Inefficiency of Quotas," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262511789, December.
  2. Fishelson, Gideon & Flatters, Frank, 1975. "The (non)equivalence of optimal tariffs and quotas under uncertainty," Journal of International Economics, Elsevier, Elsevier, vol. 5(4), pages 385-393, November.
  3. Anderson, James E, 1985. "The Relative Inefficiency of Quotas: The Cheese Case," American Economic Review, American Economic Association, American Economic Association, vol. 75(1), pages 178-90, March.
  4. GianCarlo Moschini & Karl D. Meilke, 1991. "Tariffication with Supply Management: The Case of the U.S.-Canadian Chicken Trade," Food and Agricultural Policy Research Institute (FAPRI) Publications, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University 90-gatt2, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  5. Young, Leslie & Anderson, James E, 1980. "The Optimal Policies for Restricting Trade under Uncertainty," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 47(5), pages 927-32, October.
  6. Dasgupta, Partha & Stiglitz, Joseph E, 1977. "Tariffs vs . Quotas as Revenue Raising Devices under Uncertainty," American Economic Review, American Economic Association, American Economic Association, vol. 67(5), pages 975-81, December.
  7. Alston, Julian M. & Carter, Colin A. & Jarvis, Lovell S., 1989. "A CHOICES Debate On ... Japanese Beef Trade Liberalization: It May Not Benefit Americans," Choices, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 4(4).
  8. Giancarlo Moschini & Karl D. Meilke, 1988. "Sustainable Rates of Return for Milk Quotas in Ontario," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 36(1), pages 119-126, 03.
  9. Weitzman, Martin L, 1974. "Prices vs. Quantities," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 41(4), pages 477-91, October.
  10. Young, Leslie, 1980. "Optimal revenue-raising trade restrictions under uncertainty," Journal of International Economics, Elsevier, Elsevier, vol. 10(3), pages 425-439, August.
  11. Young, Leslie & Anderson, James E, 1982. "Risk Aversion and Optimal Trade Restrictions," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(2), pages 291-305, April.
  12. Zietz, Joachim A. & Vald├ęs, Alberto, 1988. "Agriculture in the GATT: an analysis of alternative approaches to reform," Research reports, International Food Policy Research Institute (IFPRI) 70, International Food Policy Research Institute (IFPRI).
  13. Andrew Schmitz, 1983. "Supply Management in Canadian Agriculture: An Assessment of the Economic Effects," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 31(2), pages 135-152, 07.
  14. Melvin, James R, 1986. "The Nonequivalence of Tariffs and Import Quotas," American Economic Review, American Economic Association, American Economic Association, vol. 76(5), pages 1131-34, December.
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Cited by:
  1. Krishna, Kala & Tan, Ling Hui, 2010. "Trade policy with endogenous entry revisited," Journal of International Economics, Elsevier, Elsevier, vol. 80(2), pages 271-279, March.
  2. John C. Beghin & Barbara El Osta & Jay R. Cherlow & Samarendu Mohanty, 2001. "Cost of the U.S. Sugar Program Revisited, The," Food and Agricultural Policy Research Institute (FAPRI) Publications, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University 01-wp273, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  3. Rude, James & Meilke, Karl D., 2005. "Implications of the July 2004 WTO Framework Agreement for Canadian Agriculture," Trade Policy Briefs, Canadian Agricultural Trade Policy Research Network 24150, Canadian Agricultural Trade Policy Research Network.
  4. Anonymous & Meilke, Karl D. & Knutson, Ronald D. & Ochoa, Rene F. & Rude, James, 2006. "Achieving NAFTA Plus," 2006 NAAMIC Workshop III: Achieving NAFTA Plus, North American Agrifood Market Integration Consortium (NAAMIC) 163871, North American Agrifood Market Integration Consortium (NAAMIC).
  5. 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, Northeastern Agricultural and Resource Economics Association, vol. 29(1), April.
  6. Barichello, Richard & Cranfield, John & Meilke, Karl, . "Options for Supply Management in Canada with Trade Liberalization," 2006 NAAMIC Workshop III: Achieving NAFTA Plus, North American Agrifood Market Integration Consortium (NAAMIC) 163876, North American Agrifood Market Integration Consortium (NAAMIC).
  7. Meilke, Karl D. & Rude, James & Burfisher, Mary E. & Bredahl, Maury E., 2001. "Market Access: Issues And Options In The Agricultural Negotiations," Commissioned Papers, International Agricultural Trade Research Consortium 14625, International Agricultural Trade Research Consortium.
  8. 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, Farm Foundation, Agricultural and Food Policy Syst 16819, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
  9. Nordstrom, Hakan, 2001. "Do variable levies beggar thy neighbour?," European Journal of Political Economy, Elsevier, Elsevier, vol. 17(2), pages 403-420, June.
  10. Meilke, Karl D. & Lariviere, Sylvain, 1999. "The Problems And Pitfalls In Modeling International Dairy Trade Liberalization," Working Papers, International Agricultural Trade Research Consortium 14579, International Agricultural Trade Research Consortium.

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