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Agricultural trade liberalization in the Uruguay Round : one step forward, one step back?

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  • Ingco, Merlinda D.
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    Abstract

    After evaluating the Uruguay Round's impact on agriculture and border protection in the next decade, the author concludes that while there was significant reform of the rules - particularly the conversion of nontariff barriers into tariffs and the reduction and binding of all tariffs - in practice, trade will probably be liberalized less than expected. The objective of the Round was to reverse protectionism and remove trade distortions. This may not be achieved in practice, at least not until further reductions are carried out in future rounds of negotiations. The major exception to this conclusion is in high-income Asian countries, where protection for major commodities will be significantly reduced. The tariffication and binding of all tariffs on agricultural products represents a significant step forward. Liberalization is implicit because countries are prohhibited from arbitrarily raising tariffs to new higher levels. But many of the newly established tariffs are so high in many countries as to effectively prohibit trade. Patterns of liberalization vary considerably by commodity and by country. Generally, the extent of liberalization was diminished by binding tariffs to the base period of 1986-88, when border protection was at a high point. In most OECD countries, this was worsened by"dirty tariffication:"the new base tariffs offered even greater protection than the nontariff barriers they replaced. Even after the commitments to tariff reductions in the Round, the ad valorem measure of the final binding tariffs will remain higher than the average rate of protection in 1982-93. A number of developing countries in East Asia, Latin America, and the Middle East chose to lock in prior liberalization efforts on some products. But for most commodities, there will be little actual liberalization, since most developing countries chose to bind their tariffs at a maximum level. Even when countries reduced already-bound rates, bound tariffs remained significantly higher than current applied rates, giving countries the flexibility to raise tariffs later. The high level of bound tariffs may allow countries to apply variable tariffs below the bound level, thus failing to stabilize tariffs and improve market access. Moreover, the Round did not touch many of the worst distortions in developing countries, such as import subsidies, export taxes, state-trading monopolies, and domestic policies that implicitly tax agriculture.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1500.

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    Date of creation: 31 Aug 1995
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    Handle: RePEc:wbk:wbrwps:1500

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    Keywords: Trade Policy; Environmental Economics&Policies; Economic Theory&Research; Export Competitiveness; Rules of Origin; Trade Policy; Rules of Origin; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Environmental Economics&Policies; Economic Theory&Research;

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    1. Robert E. Baldwin, 1989. "Measuring Nontariff Trade Policies," NBER Working Papers 2978, National Bureau of Economic Research, Inc.
    2. Alan V. Deardorff & Robert M. Stern, 1997. "Measurement of Non-Tariff Barriers," OECD Economics Department Working Papers 179, OECD Publishing.
    3. Krueger, Anne O & Schiff, Maurice & Valdes, Alberto, 1988. "Agricultural Incentives in Developing Countries: Measuring the Effect of Sectoral and Economywide Policies," World Bank Economic Review, World Bank Group, vol. 2(3), pages 255-71, September.
    4. Josling, Timothy E. & Honma, Masayoshi & Lee, Jaeok & MacLaren, Donald & Miner, William M. & Sumner, Daniel A. & Tangermann, Stefan & Valdes, Alberto, 1994. "The Uruguay Round Agreement On Agriculture: An Evaluation," Commissioned Papers 14621, International Agricultural Trade Research Consortium.
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    Cited by:
    1. Hoekman, Bernard & Anderson, Kym, 1999. "Developing country agriculture and the new trade agenda," Policy Research Working Paper Series 2125, The World Bank.
    2. Risto Vaittinen, 2003. "Liberalisation of Agricultural Trade - Global Implications and what it Means for the EU," Discussion Papers 303, Government Institute for Economic Research Finland (VATT).
    3. Baffes, John & Meerman, Jacob, 1997. "From prices to incomes: agricultural subsidization without protection?," Policy Research Working Paper Series 1776, The World Bank.
    4. Redmond, Willie J., 2003. "A quantification of policy reform: an application to the Uruguay Round Negotiations on Agriculture," Journal of Policy Modeling, Elsevier, vol. 25(9), pages 893-910, December.
    5. Fabiosa, Jacinto F., 2000. "Impact Of Gatt In The Functioning Of Agricultural Markets: An Examination Of Market Integration And Efficiency In The World Beef And Wheat Market Under The Pre-Gatt And Post-Gatt Regimes," 2000 Annual meeting, July 30-August 2, Tampa, FL 21868, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Arvind PANAGARIYA, 2000. "The Millennium Round And Developing Countries: Negotiating Strategies And Areas Of Benefits," G-24 Discussion Papers 1, United Nations Conference on Trade and Development.
    7. Srinivasan, P. V. & Jha, Shikha, 2001. "Liberalized trade and domestic price stability. The case of rice and wheat in India," Journal of Development Economics, Elsevier, vol. 65(2), pages 417-441, August.
    8. Arvind Panagariya, 2003. "Free Trade At Border," International Trade 0309005, EconWPA.
    9. Lloyd, P. J., 2001. "The architecture of the WTO," European Journal of Political Economy, Elsevier, vol. 17(2), pages 327-353, June.
    10. Arvind Panagariya, 2003. "Developing Countries at Doha: A Political Economy Analysis," International Trade 0308015, EconWPA.
    11. Tanner, Carolyn, 1996. "Agricultural Trade Liberalisation And The Uruguay Round," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(01), April.
    12. Chitiga, Margaret & Kandiero, Tonia & Ngwenya, P., 2008. "Agricultural trade policy reform in South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(1), March.
    13. Abbott, Philip C. & Paarlberg, Philip L., 1998. "Tariff rate quotas: structural and stability impacts in growing markets," Agricultural Economics, Blackwell, vol. 19(3), pages 257-267, December.
    14. DeRosa, Dean A. & Govindan, Kumaresan, 1996. "Agriculture, trade, and regionalism in South Asia," Journal of Asian Economics, Elsevier, vol. 7(2), pages 293-315.
    15. Bureau, Jean-Christophe & Salvatici, Luca, 2002. "WTO Negotiations on Market Access in Agriculture: A Comparison of Alternative Tariff Cut Scenarios for the EU and the US," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24883, European Association of Agricultural Economists.
    16. Sharma, Ramesh & Konandreas, Panos & Greenfield, Jim, 1996. "An overview of assessments of the impact of the Uruguay Round on agricultural prices and incomes," Food Policy, Elsevier, vol. 21(4-5), pages 351-363.
    17. Fold, Niels, 2000. "Oiling the Palms: Restructuring of Settlement Schemes in Malaysia and the New International Trade Regulations," World Development, Elsevier, vol. 28(3), pages 473-486, March.
    18. Pursell, Garry & Gupta, Anju, 1998. "Trade policies and incentives in Indian agriculture : methodology, background statistics, and protection and incentive indicators, 1965-95," Policy Research Working Paper Series 1953, The World Bank.

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