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Non-tariff measures, particularly sanitary and phytosanitary measures and tariff-rate quotas, are two critical policy barriers that impede agricultural trade. Unlike simple tariffs, both measures contain non-linear effects and binding conditions that make their treatment in modeling trade liberalization challenging. In addition, the coexistence of these measures carries important interactive effects that restrict trade. This study investigates these joint effects by developing a conceptual framework that considers different partial liberalization scenarios. Our framework points to three cases that may arise: (a) binding tariff-rate quota, nonprohibitive sanitary and phytosanitary measure; (b) non-binding tariff-rate quota, non-prohibitive sanitary and phytosanitary measure; and (c) non-binding tariff-rate quota, prohibitive sanitary and phytosanitary measure. We then use a Computable General Equilibrium model to examine partial trade liberalization scenarios for these cases, using the ongoing Transatlantic Trade and Investment Partnership negotiations as our motivation. Our simulations provide a more nuanced analysis of complex trade liberalization and demonstrate the importance of modeling the interplay between these different types of barriers.

This paper analyzes risk aversion in discriminatory share auctions. I generalize the k‐step share auction model of Kastl (2011, 2012) and establish that marginal profits are set‐identified for any given coefficient of constant absolute risk aversion. I also derive necessary conditions for best‐response behavior, which allows determining risk preferences from bidding data. Further, I show how the bidders' optimality conditions allow computing bounds on the marginal profits that are tighter than those currently available. I use my results to estimate import rents from Swiss tariff‐rate quotas on high‐quality beef. Rents are overestimated when ignoring risk aversion, and rent extraction is underestimated. Small bidders (small, privately owned butcheries) are more risk averse than large bidders (general retailers). Best response violations are few and uniform across bidder sizes.

A highly disaggregated, \"tariff line,\" source-differentiated, partial equilibrium model of U.S. specialty cheese imports is developed to investigate reform options for tariff-rate quotas (TRQs). A mixed-complementarity framework is used to represent bilateral and most favored nation (MFN) tariff quotas. The impacts of liberalizing U.S. specialty cheese imports via bilateral and MFN quota expansions, out-of-quota tariff cuts, and simultaneous liberalization scenarios are evaluated. We find that the path of liberalization is quite different, depending on the reform approach undertaken, particularly if the United States adopted an MFN quota administration mechanism for specialty cheese imports.

Global Agricultural Trade and Developing Countries presents research findings based on a series of commodity studies of significant economic importance to developing countries. First, the book sets the stage with background chapters and investigations of cross-cutting issues. Trade and domestic policy regimes affecting agricultural and food markets are described, and the resulting patterns of production and trade are assessed. The book follows with an analysis of product standards and costs of compliance and their effects on agricultural and food trade. An investigation of the impact of preferences given to selected countries and their effectiveness is next. The evidence on the attempts to decouple agricultural support from agricultural output is then reviewed. The last background chapter explores the robustness of the global gains of multilateral agricultural and food trade liberalization. Given this context, the book presents detailed commodity studies for coffee, cotton, dairy, fruits and vegetables, groundnuts, rice, seafood products, sugar, and wheat. These markets feature distorted policy regimes among industrial or middle-income countries. The studies analyze current policy regimes in key producing and consuming countries document the magnitude of these distortions and estimates the distributional impacts–winners and losers-of trade and domestic policy reforms. By bringing the key issues and findings together in one place, Global Agricultural Trade and Developing Countries aids policy makers and researchers, both in their approach to global negotiations and in evaluating their domestic policies on agriculture. This book also complements the recently published Agriculture and the WTO that focuses primarily on the agricultural issues within the context of the WTO negotiations.

This paper analyzes risk aversion in discriminatory share auctions. I generalize the k-step share auction model of Kastl (2011, 2012) and establish that marginal profits are set-identified for any given coefficient of constant absolute risk aversion. I also derive necessary conditions for best-response behavior, which allows determining risk preferences from bidding data. Further, I show how the bidders' optimality conditions allow computing bounds on the marginal profits that are tighter than those currently available. I use my results to estimate import rents from Swiss tariff-rate quotas on high-quality beef. Rents are overestimated when ignoring risk aversion, and rent extraction is underestimated. Small bidders (small, privately owned butcheries) are more risk averse than large bidders (general retailers). Best response violations are few and uniform across bidder sizes.

In this paper, we develop a global supply chain network model in which profit-maximizing firms engage in competition in the production and distribution of products in the presence of quantitative trade policy instruments in the form of tariff rate quotas. Tariff rate quotas are two-tiered tariffs, in which a lower in-quota tariff is applied to the units of imports until a quota or upper bound is attained and then a higher over-quota tariff is applied to all subsequent imports. They are utilized to protect domestic producers in the case of a wide range of products, from agricultural ones to fabrics and even steel, and can be challenging to formulate. We construct the governing set of novel equilibrium conditions associated with the product flows and Lagrange multipliers, which correspond to quota rent equivalents, and derive the variational inequality formulation. Qualitative properties are presented along with an effective algorithm, which is then applied to compute solutions to numerical examples comprising an agricultural product case study on avocados and global trade. This work is the first to model and solve general, competitive supply chain network problems consisting of oligopolistic firms with multiple production sites and demand markets in multiple countries subject to tariff rate quotas.

Higher levels of quota granted can induce and increase exports, but the impact is not the same across all tariff lines. Answers are sought to the question of how the level of exports changes as the quota size of tariff rate quotas changes, thus enabling the investigation of whether unilateral quotas granted to South Africa by the European Union have influenced fruit products' export flows in the presence of non-tariff measures. Drawing on panel data regression techniques, this study observes five fruit products' tariff rate quotas repeatedly from 2004 to 2021. It also incorporates a variable to capture non-tariff measures based on the data from the WTO I-TIP database. The findings indicate a positive relationship between quota size and exports, further showing that for a given quota size, the increase in exports is small in the presence of non-tariff measures. These findings draw attention to future trade reforms that focus on seeking the expansion of quota size for the most productive tariff lines in terms of export growth while aiming for the simultaneous reduction of non-tariff measures and tariff rates.

Selected South African fruit products exports enter the European Union (EU) market under the preferences policy, which includes tariff-rate quotas (TRQs) embedded in bilateral trade agreements. The rationale for using TRQs is to guarantee and enhance market access. However, unfilled TRQs such as the frozen strawberries TRQ granted to South Africa by the EU characterise implementation inadequacies of negotiated trade outcomes. This paper introduced and analysed the frozen strawberries TRQ as a new sector in the Global Trade Analysis Project (GTAP) database and model to quantify the untapped market access potential of the TRQ. The results show that high tariffs incurred on exports outside the preferential TRQ lead to welfare losses in equivalent variation and quota rents. However, welfare results of simulations on quota expansion and non-tariff measures (NTMs) reduction are positive. Thus, trade policy negotiations should seek to include provisions on NTMs reduction.

Korea replaced its rice import quota with a tariff rate quota (TRQ) in 2015. A structural model representing the Korean rice market is developed to evaluate this new trade policy and examine the possibility of Korean rice imports under uncertainty. Results indicate that rice imports in excess of the current TRQ quantity are unlikely for a range of market conditions. Two scenarios, which are the over-quota tariff rate reduction and the TRQ quantity expansion, show how the market responds to policy changes. In addition, Korean rice imports are sensitive to consumer preferences for different rice types.

The US complaint about Chinese tariff-rate quotas (TRQs) on certain grain products helps illustrate several key issues in US–China trade relations and the effectiveness of WTO disputes. First, do international obligations based on transparency and fairness work in relation to an authoritarian country not known for the rule of law domestically? Second, can there be a disconnect between the legal aspects of a dispute and the underlying economic interests, with a DSB ruling sometimes not leading to improved trade flows? And third, given the bilateral trade war and ‘phase one’ trade deal between the United States and China, has the WTO been superseded in this trade relationship? This paper summarizes the facts and law of the China–TRQs dispute, and examines each of these questions in that context.