Searching for an Appropriate Ad Valorem Equivalent for TRQs: The Case of CETA

Tatjana Döbeling and Janine Pelikan

No 292302, 59th Annual Conference, Braunschweig, Germany, September 25-27, 2019 from German Association of Agricultural Economists (GEWISOLA)

Abstract: Tariff-rate quotas have become an increasingly popular policy instrument in contemporary trade agreements; however, the real effect of this policy tool is often not very clear. One way to consider tariff-rate quotas in policy impact assessment is the calculation of ad valorem equivalents. Ad valorem equivalents can be used with little effort to compare different policies, summarize them or use them in large-scale modelling analyses. Such an ad valorem equivalent can be calculated with the help of the fill rate of the quota. For newly applied trade agreements that are phased in over a longer period of time, the fill rates of quotas are, however, not known. This makes a prefixed model necessary. We set up a demand driven model and compare different options for calculating ad valorem equivalents of tariff-rate quotas using the example of the trade agreement between Canada and the EU. We find that a marginal tariff can serve as a good ad valorem equivalent because it produces the same imports, welfare and prices as the quota. In our case study, it is also sufficiently robust in the sensitivity analysis, especially if a simplified version of it is being used.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Date: 2019-08-26
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:ags:gewi19:292302

DOI: 10.22004/ag.econ.292302

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