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Searching for an Appropriate Ad Valorem Equivalent for TRQs: The Case of CETA

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  • Döbeling, Tatjana
  • Pelikan, Janine

Abstract

Tariff-rate quotas have become an increasingly popular policy instrument in contemporary trade agreements; however, the real effect of this policy tool is often not very clear. One way to consider tariff-rate quotas in policy impact assessment is the calculation of ad valorem equivalents. Ad valorem equivalents can be used with little effort to compare different policies, summarize them or use them in large-scale modelling analyses. Such an ad valorem equivalent can be calculated with the help of the fill rate of the quota. For newly applied trade agreements that are phased in over a longer period of time, the fill rates of quotas are, however, not known. This makes a prefixed model necessary. We set up a demand driven model and compare different options for calculating ad valorem equivalents of tariff-rate quotas using the example of the trade agreement between Canada and the EU. We find that a marginal tariff can serve as a good ad valorem equivalent because it produces the same imports, welfare and prices as the quota. In our case study, it is also sufficiently robust in the sensitivity analysis, especially if a simplified version of it is being used.

Suggested Citation

  • Döbeling, Tatjana & Pelikan, Janine, 2019. "Searching for an Appropriate Ad Valorem Equivalent for TRQs: The Case of CETA," 59th Annual Conference, Braunschweig, Germany, September 25-27, 2019 292302, German Association of Agricultural Economists (GEWISOLA).
    • Handle: RePEc:ags:gewi19:292302
    DOI: 10.22004/ag.econ.292302
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    File URL: https://ageconsearch.umn.edu/record/292302/files/C2-171-D%C3%B6beling-Searching%20for%20an%20Appropriate%20Ad%20Valorem%20Equivalent%20for%20TRQs_c.pdf
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    Cited by:

    1. Ngavozafy, Antonia & Latorre, María C., 2021. "New EU-MERCOSUR Association Agreement: Quantitative Assessment of its Impacts on Global Trade in Agricultural Commodities," Conference papers 333294, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Ngavozafy, Antonia & Suarez-Cuesta, David & Latorre, María C., 2022. "New EU-MERCOSUR Association Agreement: Quantitative Impact Assessment of the Liberalization through Tariff Rate Quotas," Conference papers 333466, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    Keywords

    International Relations/Trade;

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