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

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

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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File URL: http://purl.umn.edu/21409
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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2006 Annual meeting, July 23-26, Long Beach, CA with number 21409.

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Date of creation: 2006
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Handle: RePEc:ags:aaea06:21409
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  1. Skully, David W., 1999. "The Economics Of Trq Administration," Working Papers 14584, 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. Rutherford, Thomas F. & Böhringer, Christoph, 2006. "Combining Top-Down and Bottom-up in Energy Policy Analysis: A Decomposition Approach," ZEW Discussion Papers 06-07, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Hertel, Thomas, . "Global Trade Analysis: Modeling and applications," GTAP Books 7685, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  6. Meilke, Karl D. & Lariviere, Sylvain, 1999. "The Problems And Pitfalls In Modeling International Dairy Trade Liberalization," Working Papers 14579, International Agricultural Trade Research Consortium.
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