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How does tariff-rate quota modelling affect CGE results? An application for MIRAGE

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  • Decreux, Yvan
  • Ramos, Maria Priscila

Abstract

Since the Uruguay Round Agricultural Agreement (URAA) entered into force in 1994, tariff-rate quotas (TRQs) have become the most widely used trade policy instrument to improve agricultural market access while at the same time controlling import volumes. Until now, the MIRAGE CGE model only takes into account the exogenous quota rents (MAcMap-HS6 database) allocated entirely to exporters. Unfortunately, this methodology does not authorise any regime when trade policy changes (e.g. a quota-volume increase for very sensitive agricultural products or a tariff reduction). In order to improve the treatment of TRQs in MIRAGE we model them as bilateral TRQs at the HS6 level using MAcMapHS6-v2 database. Assuming a simple scenario of bilateral trade agreement between the European Union and Mercosur, we test the previous TRQ modeling and we compare its results to the present version of MIRAGE (aggregation biases and TRQ modeling). The macroeconomic and trade results give us an idea of the biases introduced by the negligence of TRQ modeling.

Suggested Citation

  • Decreux, Yvan & Ramos, Maria Priscila, 2007. "How does tariff-rate quota modelling affect CGE results? An application for MIRAGE," Working Papers 7206, TRADEAG - Agricultural Trade Agreements.
  • Handle: RePEc:ags:tragwp:7206
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    File URL: http://purl.umn.edu/7206
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    References listed on IDEAS

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    1. Decreux, Yvan & Valin, Hugo, 2007. "MIRAGE, Updated Version of the Model for Trade Policy Analysis: Focus on Agriculture and Dynamics," Working Papers 7284, TRADEAG - Agricultural Trade Agreements.
    2. Marcelo Olarreaga & Çaglar Özden, 2005. "AGOA and Apparel: Who Captures the Tariff Rent in the Presence of Preferential Market Access?," The World Economy, Wiley Blackwell, vol. 28(1), pages 63-77, January.
    3. Skully, David W., 1999. "The Economics Of Trq Administration," Working Papers 14584, International Agricultural Trade Research Consortium.
    4. 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.
    5. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
    6. Elbehri, Aziz & Ken Pearson, 2000. "Implementing Bilateral Tariff Rate Quotas in GTAP using GEMPACK," GTAP Technical Papers 475, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    7. Philip C. Abbott, 2002. "Tariff-rate quotas: failed market access instruments?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(1), pages 109-130, March.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Yvan Decreux & Lionel Fontagné, 2011. "Economic Impact of Potential Outcome of the DDA," Working Papers 2011-23, CEPII research center.
    2. Yvan Decreux & Lionel Fontagné, 2014. "What next for the DDA? Quantifying the role of negotiation modalities," RSCAS Working Papers 2014/61, European University Institute.
    3. Decreux, Yvan & Fontagné, Lionel, 2015. "What Next for Multilateral Trade Talks? Quantifying the Role of Negotiation Modalities," World Trade Review, Cambridge University Press, vol. 14(01), pages 29-43, January.
    4. Yvan Decreux & Lionel Fontagné, 2013. "What Did Happen in the DDA? Quantifying the Role of Negotiation Modalities," Working Papers 2013-38, CEPII research center.

    More about this item

    Keywords

    Tariff-rate quota; TRQ; TRQ administration methods; CGE model; MIRAGE; International Relations/Trade; F13; F15; F17; Q17;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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