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GTAP Resource #4439

"Compound Tariffs in EU Agriculture: Linking partial and general equilibrium models to get more insights"
by Narayanan, Badri and Janine Pelikan

Disaggregated tariff and trade policy analysis has been the necessary component of trade negotiations for decades now. For detailed analysis at the tariff line level mainly partial equilibrium (PE) models have been used because they can take account of the complexity involved in specific sectors. On the other hand, computable general equilibrium (CGE) models are preferable for trade policy analysis because they capture economy wide and welfare impacts. CGE models are key to assess different policy options but they are not able to take account for highly disaggregated tariff lines. The combination of PE and CGE models (Narayanan, Hertel and Horridge, 2010), therefore, appear to provide an option to policy researchers to take advantage of both approaches. However, these models do not allow the explicit treatment of non-trivial tariff types.

For example, the standard GTAP model treats all import tariffs as ad valorem (AV) tariffs, i.e. as simple percentage of the value of the imported product. Non-AV tariffs like specific tariffs (e.g., expressed in Euro per kg or percentage of alcohol content) or tariff rate quotas (TRQs) are converted into ad valorem equivalents (AVE) and treated as AV tariffs in the simulations. The same holds true for compound tariffs which are defined as a combination of specific and ad valorem duties (e.g., 50% plus 10 Euro per kg or 50% less 10 Euro per kg).

While there have been CGE model based applications that explicitly deal with TRQs (Decreux and Ramos, 2007 or Elbehri and Pearson, 2005) or specific tariffs like Narayanan and Villoria (2013) there is no application that focuses on compound tariffs. In this paper, we combine the frameworks of Narayanan et. al (2010) and Narayanan and Villoria (2013), to develop a new sub-model that can deal with compound tariffs at disaggregated levels in a global CGE (GTAP) modelling framework. We illustrate the usefulness of this framework with some simulations for EU agricultural policy scenar...

Resource Details (Export Citation) GTAP Keywords
Category: 2014 Conference Paper
Status: Published
By/In: Presented at the 17th Annual Conference on Global Economic Analysis, Dakar, Senegal
Date: 2014
Created: Narayanan, B. (4/14/2014)
Updated: Narayanan, B. (4/14/2014)
Visits: 2,379
- Agricultural policies
- Preferential trading arrangements
- The GTAP Data Base and extensions
- Asia (East)
- European Union

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