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GTAP Resource #3902

"Methodological issues in assessing the implications of trade agreements"
by Martin, Will and Aaditya Mattoo

The agreements on agriculture and on non-agricultural market access involve line-by-line tariff cutting rules that would sharply cut both bound and applied tariffs. While these formulas are very attractive from an economic point of view, they are likely to generate very large political costs because they involve large cuts in protection to producers that appear to be politically very strong.

Perhaps partly because of these high political costs, the agreements also involve considerable latitude to subject particular products to smaller-than-formula cuts in protection. This paper develops a representation of the political costs of tariff cutting used in the book and uses it to predict the choices that policy makers are likely to make to minimize the political costs of tariff cutting given agreed choices on the number of products allowed to be designated as sensitive or special. These choices, in turn, affect the valueof the agreement in terms of creating market access.

The answer to this specific problem depends upon the nature of the agreement on tariff cutting, and on parameters such as the degree of binding overhang-- the extent to which bound tariffs exceed the initial applied rates-- and the limitations on the products to be subjected to smaller tariff cuts...

Resource Details (Export Citation) GTAP Keywords
Category: 2012 Conference Paper
Status: Published
By/In: Presented at the 15th Annual Conference on Global Economic Analysis, Geneva, Switzerland; CEPR and World Banks
Date: 2011
Created: Martin, W. (4/30/2012)
Updated: Batta, G. (7/3/2012)
Visits: 1,172
- Agricultural policies
- Economic development

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