10 - Liberalizing tariff-rate quotas: quantifying the effects of enhancing market access

Summary

Introduction

The tariff-rate quota (TRQ) system has become an important instrument of international trade sanctioned by the Uruguay Round Agreement on Agriculture (URAA). The TRQ regime was codified in the URAA as a new policy mechanism to ensure both tariffication and market access. Tariffication required conversion of non-tariff barriers (NTBs) into tariff-equivalents to be lowered over a period of time, while market access ensured that quantities imported before the agreement could continue to be imported. Quotification provided for import opportunities despite the high out-of-quota tariffs. There are nearly 1,400 tariff lines notified under TRQs, about 200 are country-specific rather than global (OECD, 1997). Moreover, many agricultural products covered by TRQ regimes are also subject to domestic protection in OECD countries.

Fourteen developing countries submit market access commitments to the WTO but only two – South Korea and Philippines – seem to have implemented significant TRQ regimes (Abbott and Morse, 1999, see chapter 4 in this volume). (Some developing countries that have recently entered the WTO, such as those in Eastern Europe, or that have sought to enter, such as China, have adopted TRQs to limit liberalization of their agricultural markets.)

Developing countries have adopted TRQs quite differently. The percentage of their TRQs that is actually filled is often low, indicating a lack of quota rents and few significant restrictions on trade (Abbott and Morse, 1999). Moreover, bilateral quotas are uncommon in developing countries – more significant are the TRQs that developed countries impose on the former's exports.