WTO Negociations on Market Access in Agriculture: a Comparison of alternative Tariff Cut Proposals for the EU and the US

This paper provides a summary measure of the possible new commitments in the area of agricultural market access undertaken by the European Union and the United States, using the Trade Restrictiveness Index (TRI) as the tariff aggregator. Indicators such as the TRI, based on welfare theory, integrate economic behavioural assumptions within a balance of trade framework. We take the 2000 bound tariffs as the starting point and attempt to assess how much liberalisation in agriculture could be achieved in the European Union and the United States as a result of the present negotiations. We compute the index for 20 agricultural commodity aggregates under the actual commitments of the Uruguay Round assuming a specific (Constant Elasticity of Substitution) functional form for import demand. Then, we estimate the deadweight losses implied by each tariff structure in order to assess the benefits of future trade agreements in terms of increased efficiency. We compare the present levels of the TRI with three hypothetical cases: a repetition of the same set of tariff cuts commitments of the Uruguay Round according to the EU proposal, a uniform 36 percent reduction of each tariff, an harmonization ("Swiss") formula based on the US proposal.