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GTAP Resources: Resource Display

GTAP Resource #1010

"Bound Tariffs, Unused Protection, and Agricultural Trade Liberalisation"
by Walkenhorst, Peter and Nora Dihel

The Uruguay Round Agreement on Agriculture (URAA) in 1994 brought trade in agricultural products for the first time within the ambit of GATT rules. Signatory countries committed themselves to reductions in border protection, export subsidies, and domestic support. Follow-up negotiations on further agricultural trade liberalisation were launched as part of the URAA's build-in agenda, and country representatives agreed on a comprehensive work programme for the negotiations at the WTO Ministerial Meeting in Doha/Qatar in November 2001.
There have been a number of studies that have evaluated and quantified the effects of the URAA on agricultural markets. Given the complexity of the Agreement, it is difficult to fully represent its features in economic models. Yet, this paper shows that covering some central elements of the URAA in detail can have important consequences for the modelling results. In particular, the analysis in the paper explicitly considers policy reforms applying to bound tariff rates rather than to (often much lower) applied rates. Hence, it allows for the existence of "unused protection", which is important for some commodities in some countries.
The paper uses information on bound and applied tariffs from the Agricultural Market Access Database, and the Global Trade Analysis Project (GTAP) computable general equilibrium model to assess the effects of tariff reforms under alternative assumptions. Effective tariffs as the minimum of bound rates after negotiated tariff cuts and applied rates are calculated and integrated into the GTAP database. Based on this information, several trade policy reform scenarios are evaluated, comparing the outcome of model-runs in which tariff reductions are based on effective rates with ones in which the reforms are represented through cuts in either applied tariffs or bound tariffs. The results highlight the commodities and countries for which a detailed representation of tariff schedules in economic models seems particularly warranted.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
2002 Conference Paper
Status: Published
By/In: Presented at the 5th Annual Conference on Global Economic Analysis, Taipei, Taiwan
Date: 2002
Created: Dihel, N. (4/29/2002)
Updated: Walkenhorst, P. (8/27/2007)
Visits: 3,323
- Agricultural policies

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