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Extending General Equilibrium to the Tariff Line: U.S. Dairy in the Doha Development Agenda

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  • Grant, Jason H.
  • Hertel, Thomas W.
  • Rutherford, Thomas F.

Abstract

Market access has been at the core of eight negotiating rounds of the General Agreement on Tariffs and Trade (GATT). Yet, agricultural trade remains a heavily protected sector, characterized by higher tariffs relative to industrial goods, large tariff dispersions, numerous specific tariffs and systems of tariff-rate-quotas. This has made the analysis of trade liberalization a formidable task among policy analysts. Previous studies of agricultural trade liberalization have used partial or general equilibrium models of trade. However, each of these modeling strategies has their drawbacks. General equilibrium (GE) models have been criticized because they face serious aggregation issues and miss much of the policy detail that occurs at the tariff line. Partial equilibrium (PE) models on the other hand are often more disaggregated but lack internal consistency and have nothing to say about the economy-wide effects from trade reform. The purpose of this paper is threefold. One, we develop a methodology that combines PE and GE modeling techniques permitting us to extend GE to the tariff line. Two, we introduce a fully disaggregated U.S. dairy sector and compare PE and GE liberalization results from global dairy reform, thereby offering some insight into the potential errors implicit in current GE studies. Finally, we illustrate how our methodology allows for an explicit treatment of tariff rate quotas in the U.S. dairy sector on a bilateral basis for narrowly defined product lines.
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Suggested Citation

  • Grant, Jason H. & Hertel, Thomas W. & Rutherford, Thomas F., 2006. "Extending General Equilibrium to the Tariff Line: U.S. Dairy in the Doha Development Agenda," 2006 Annual meeting, July 23-26, Long Beach, CA 21409, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea06:21409
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    References listed on IDEAS

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    1. Meilke, Karl D. & Lariviere, Sylvain, 1999. "The Problems And Pitfalls In Modeling International Dairy Trade Liberalization," Working Papers 14579, International Agricultural Trade Research Consortium.
    2. Hertel, Thomas & Hummels, David & Ivanic, Maros & Keeney, Roman, 2007. "How confident can we be of CGE-based assessments of Free Trade Agreements?," Economic Modelling, Elsevier, vol. 24(4), pages 611-635, July.
    3. Antoine Bouët & Yvan Decreux & Lionel Fontagné & Sébastien Jean & David Laborde, 2004. "A Consistent, Ad-Valorem Equivalent Measure of Applied Protection Across the World: The MAcMap-HS6 Database," Working Papers 2004-22, CEPII research center.
    4. Skully, David W., 1999. "The Economics Of Trq Administration," Working Papers 14584, International Agricultural Trade Research Consortium.
    5. Rutherford, Thomas F. & Böhringer, Christoph, 2006. "Combining Top-Down and Bottom-up in Energy Policy Analysis: A Decomposition Approach," ZEW Discussion Papers 06-007, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. 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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    Citations

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    Cited by:

    1. Deppermann, Andre & Grethe, Harald & Offermann, Frank, 2010. "Effekte Einer Eu-Agrarmarktliberalisierung Auf Betriebsebene: Simulationen Anhand Eines Europäischen Agrarsektormodells Und Eines Angebotsmodells Für Den Deutschen Agrarsektor," 50st Annual Conference, Braunschweig, Germany, September 29-October 1, 2010 93958, German Association of Agricultural Economists (GEWISOLA).
    2. Caron, Justin, 2012. "Estimating carbon leakage and the efficiency of border adjustments in general equilibrium — Does sectoral aggregation matter?," Energy Economics, Elsevier, vol. 34(S2), pages 111-126.
    3. Listorti, Giulia & Tonini, Axel & Kempen, Markus & Adenauer, Marcel, 2013. "How to Implement WTO Scenarios in Simulation Models: Linking the TRIMAG Tariff Aggregation Tool to Capri," 135th Seminar, August 28-30, 2013, Belgrade, Serbia 160388, European Association of Agricultural Economists.
    4. Ramos, Maria Priscila, 2007. "Politique Commerciale, Qualité et Environnement: une Application aux Négociations Commerciales entre l’Union Européenne et le Mercosur," MPRA Paper 12640, University Library of Munich, Germany.
    5. Ramos, Maria Priscila & Bureau, Jean-Christophe & Salvatici, Luca, 2007. "Shipping the good beef out: EU trade liberalization to Mercosur exports," Working Papers 7215, TRADEAG - Agricultural Trade Agreements.
    6. Braymen, Charles B., 2011. "Sectoral structure, heterogeneous plants, and international trade," Economic Modelling, Elsevier, vol. 28(4), pages 1967-1976, July.

    More about this item

    Keywords

    International Relations/Trade;

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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