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Implicit Policy Preferences and Trade Reform by Tariff Aggregates

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  • Rod Tyers

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Abstract

Pressure from negotiators on agricultural tariff reform in the Doha Round is favouring commitments to reduce “average” tariffs over a range of commodities. This stems from the perceived need for “flexibility” in protection levels, particularly for some highly protected product groups like sugar, dairy products and rice. Yet reforms that reduce the average tariff across agricultural products but raise tariff dispersion may well reduce welfare and therefore defy the spirit of the negotiations. This paper develops a practical approach to identifying the policy preferences implicit in existing tariff patterns and employs these preferences in formulating mathematical programs that represent the primary policy formation process. These are solved and the effects explored of reform by reductions in either the arithmetic or the trade value weighted average of tariffs. In applications to the EU and Japan, tariff dispersion is found to increase with either averaging formula but by more in the trade value weighted case

Suggested Citation

  • Rod Tyers, 2004. "Implicit Policy Preferences and Trade Reform by Tariff Aggregates," ANU Working Papers in Economics and Econometrics 2004-445, Australian National University, College of Business and Economics, School of Economics.
  • Handle: RePEc:acb:cbeeco:2004-445
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    File URL: https://www.cbe.anu.edu.au/researchpapers/econ/wp445.pdf
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    References listed on IDEAS

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    1. Kyle Bagwell & Robert W. Staiger, 2004. "The Economics of the World Trading System," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524341, January.
    2. Zusman, Pinhas, 1976. "The Incorporation and Measurement of Social Power in Economic Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 447-462, June.
    3. Anderson, James E & Neary, J Peter, 1994. "Measuring the Restrictiveness of Trade Policy," World Bank Economic Review, World Bank Group, vol. 8(2), pages 151-169, May.
    4. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-985, December.
    5. Bach, Christian F. & Martin, Will, 2001. "Would the right tariff aggregator for policy analysis please stand up?," Journal of Policy Modeling, Elsevier, vol. 23(6), pages 621-635, August.
    6. Bureau Jean-Christophe & Salvatici Luca, 2004. "WTO Negotiations on Market Access in Agriculture: a Comparison of Alternative Tariff Cut Proposals for the EU and the US," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-35, March.
    7. Anderson, Kym, 1980. "The Political Market for Government Assistance to Australian Manufacturing Industries," The Economic Record, The Economic Society of Australia, vol. 56(153), pages 132-144, June.
    8. Tyers, Rod, 1990. "Implicit policy preferences and the assessment of negotiable trade policy reforms," European Economic Review, Elsevier, vol. 34(7), pages 1399-1426, November.
    9. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
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    Cited by:

    1. Francois, Joseph & Nelson, Douglas R., 2014. "Political support for trade policy in the European Union," European Journal of Political Economy, Elsevier, vol. 36(C), pages 243-253.
    2. Joseph Francis Francois & Douglas Nelson & Annette Pelkmans-Balaoing, 2008. "Endogenous Protection in General Equilibrium: estimating political weights in the EU," Economics working papers 2008-15, Department of Economics, Johannes Kepler University Linz, Austria.

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