How does Tariff-rate quota modelling affect CGE results?: an application for MIRAGE

Yvan Decreux and Maria Ramos

No 331613, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: Since the Uruguay Round Agricultural Agreement (URAA), tariff-rate quotas (TRQs) have become the most useful trade policy instrument to improve agricultural market access by controlling at the same time import volumes. This is the case of many agricultural markets where the level of protection is very high, such as for beef or sugar in the European Union or in the United States. Until now, MIRAGE CGE model only take into account the exogenous quota rents calculated at HS6 level using MAcMap database. The detailed information about TRQ's rents is then aggregated to the chosen level of GTAP data aggregation. Moreover, the model assumes that the quota rents are allocated entirely to exporters, this is a strong hypotheses because the quota rent allocation changes, not only from a country to another, but also between products for the same importer country according the TRQ administration methods. Unfortunately this methodology does not lead to model regime shifting as a consequence of changes in the trade policy, such as the increase of the quota volume for very sensitive agricultural products or tariffs reduction. In order to improve the TRQ treatment in MIRAGE we model them at a detailed level (bilateral TRQ at HS6 level using MAcMapHS6-v2 database). Assuming a simple scenario of bilateral trade agreement between the European Union and Mercosur, we test the previous TRQ modeling and we compare its results with the present versions of MIRAGE. The welfare and trade results will give us an idea of the biases introduced by the negligence of TRQ modelling.

Keywords: International Relations/Trade; Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 37
Date: 2007
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Working Paper: How does tariff-rate quota modelling affect CGE results? An application for MIRAGE (2007)
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