8 - Market access, export subsidies, and domestic support: developing new rules  pp. 151-175


By Harry De Gorter

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The Uruguay Round Agreement on Agriculture (URAA) requires countries to reduce agricultural protection in three broad areas: market access, export subsidies, and domestic support. This chapter evaluates the effectiveness of commitments under each of these three pillars, and offers recommendations for strengthening their effectiveness under a new round.

Re-evaluating market access

Tariffs and liberalizing trade

Countries have fulfilled their market access commitments through “tariffication” and “quotification.” To meet their access commitments, many countries scheduled two tariffs under tariff-rate quotas (TRQs): a lower first-tier for in-quota imports, and a higher second-tier tariff for out-of-quota imports. The URAA imposed no uniformity across countries or commodities regarding these tariffs, so quota rents are also unequal across countries and commodities. Thus the agreement has produced different effects – realized and potential – on trade liberalization in different countries. Many second-tier tariffs have been prohibitively high (aided by the process of “dirty tariffication”), while some countries have used creative methods to minimize access (known as “dirty quotification”).

Negotiators did not assume that countries would fill their TRQs: the in-quota tariff may be so high or the quota so large that underfill occurs. What's more, a low quota fill rate does not necessarily imply inefficiency, as supply may be unavailable or demand insufficient.

Nor does a fill rate of 100 percent or more necessarily imply efficiency.

8

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