The Joint Impact of Specific Tariffs and Preferential Trade Agreements: Do Low Income Countries Gain or Lose?

Sohini Chowdhury

No 331865, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: My paper attempts to evaluate the distortions from the non-MFN features of the applied import tariff schedules of WTO member countries, in agricultural trade. Although these countries are bound by the WTO MFN clause to levy MFN import tariffs, the advalorem equivalents of their applied tariff schedule contains non-MFN features – due to the presence of specific tariffs and preferential trade agreements (PTAs). My results show that the global distortions generated by specific tariffs in agriculture are big enough to completely wash out any gains from PTAs in agriculture, suggesting that the non-MFN features of applied import tariff schedules generate a net loss in global welfare and trade surplus. Moreover, the biggest chunk of these losses accrue to the low income countries (LICs)1 and developing countries, which is ironical since it is the interests of precisely these low income countries that the WTO’s MFN clause is meant to protect A policy implication of these results is that future WTO ministerial conferences should focus more on eliminating specific tariffs in agriculture rather than on increasing PTAs in agriculture, since the efficacy of these PTAs is compromised in the presence of specific tariffs.

Keywords: International Relations/Trade; Labor and Human Capital (search for similar items in EconPapers)
Pages: 41
Date: 2009
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