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Tariff and Tariff Rate Quota Liberalization in the South African Livestock Industry: Approaches to Welfare Measurement

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  • Oyewumi, Olubukola Ayodeju
  • Jooste, Andre
  • Britz, Wolfgang
  • van Schalkwyk, Herman D.

Abstract

The liberalization of the agricultural sector and phasing out of past protection mechanisms in South Africa saw the introduction of a process of tariff reform. Furthermore, a system of tariff rate quotas was introduced in compliance with WTO regulations. This study uses a partial equilibrium comparative static model to measure the welfare effects of further liberalization in the livestock industry of South Africa, particularly in meat products using four policy scenarios. The traditional method of welfare analyses using the CS and PS was applied, while the EV was used to integrate a well-behaved objective function. Although the CS and PS could have over-estimated welfare due to the fact that the demand system used in this study is non-linear, they still gave useful information sufficient to compare the impact of trade liberalization on consumers and producers of livestock products. Furthermore, the EV explains the income change necessary to attain the welfare level resulting from trade liberalization given the current prices. When expressed as a percentage of the real gross national income and real disposable income, the values are quite marginal. The results from both methods of welfare measurement suggest that it is worth considering the effects on producers if further trade liberalization is envisaged in the South African livestock industry.

Suggested Citation

  • Oyewumi, Olubukola Ayodeju & Jooste, Andre & Britz, Wolfgang & van Schalkwyk, Herman D., 2007. "Tariff and Tariff Rate Quota Liberalization in the South African Livestock Industry: Approaches to Welfare Measurement," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 46(1), pages 1-22, March.
    • Handle: RePEc:ags:agreko:10134
    DOI: 10.22004/ag.econ.10134
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    References listed on IDEAS

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    1. Alan Matthews & Cathie Laroche Dupraz, 2001. "Agricultural Tariff Rate Quotas as a Developement Instrument," Economie Internationale, CEPII research center, issue 87, pages 89-106.
    2. Huff, Karen & Thomas W. Hertel, 2001. "Decomposing Welfare Changes in GTAP," GTAP Technical Papers 308, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    3. Oyewumi, Olubukola Ayodeju, 2005. "Modeling tariff rate quotas in the South African livestock industry," Master's Degree Theses 28064, University of the Free State, Department of Agricultural Economics.
    4. McDougall, Robert, 2000. "A New Regional Household Demand System for GTAP," GTAP Working Papers 404, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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    6. Oyewumi, Olubukola Ayodeju & Jooste, Andre & van Schalkwyk, Herman D. & Britz, Wolfgang, 2006. "Implications of Tariff Rate Quotas Liberalization in the South African Livestock Industry," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25469, International Association of Agricultural Economists.
    7. Peter Walkenhorst & Nora Dihel, 2003. "Tariff Bindings, Unused Protection and Agricultural Trade Liberalisation," OECD Economic Studies, OECD Publishing, vol. 2003(1), pages 231-249.
    8. McDougall, Robert, 2002. "A New Regional Household Demand System For Gtap," Technical Papers 28713, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
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    1. Oyewumi, Olubukola Ayodeju & Jooste, Andre & Britz, Wolfgang & van Schalkwyk, Herman D., 2008. "Trade Liberalization in the South African Livestock Industry: implications for rural development," 2007 Second International Conference, August 20-22, 2007, Accra, Ghana 51997, African Association of Agricultural Economists (AAAE).

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