Trade and Welfare Effects of EEC Tariff Policy: A Case Study of Oranges

Gerald W. Dean and Norman R. Collins

American Journal of Agricultural Economics, 1966, vol. 48, issue 4_Part_I, 826-846

Abstract: The price, trade, and welfare consequences of shifts to alternative EEC policies regarding winter oranges are presented. The EEC policy changes considered are (1) a shift from continuance of pre-EEC tariffs on oranges to prospective EEC tariffs, (2) elimination of the EEC tariff on oranges, and (3) entry of winter oranges from selected non-EEC countries into the EEC market with zero tariffs. Spatial equilibrium models are used to quantify the changes in prices, consumption, trade, and welfare which are expected to result from the alternative policies. Welfare effects are evaluated in terms of economic surplus. A shift to the prospective EEC tariff policy on winter oranges is expected to result in a sharp increase in orange prices in the EEC by 1970 (except in France). A net welfare gain to the EEC bloc will occur, with the gains for Italian producers and French consumers more than offsetting the losses suffered by consumers in the other EEC countries because of higher prices. If the EEC were to take unilateral action and remove the tariffs on winter oranges, it would be expected to suffer a substantial welfare loss. Permitting tariff-free imports of winter oranges from selected producing countries would also be expected to cause a welfare loss to the EEC bloc. There appears to be little incentive for the EEC to reduce its tariff unilaterally or to permit special access to non-EEC producers.

Date: 1966
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