The market dynamics of tariff-rate quotas in the case of CETA : Conference paper for the 2021 International Conference of Agricultural Economists (ICAE), August 17-31, 2021, Virtual
2021
Döbeling, Tatjana | Pelikan, Janine
After the conclusion of the Comprehensive Economic and Trade Agreement between the EU and Canada, both trading partners gradually open their markets. For the agricultural and food sector, many tariffs are abolished but also tariff-rate quotas are introduced for sensitive agricultural commodities. In this paper, we analyze the market dynamics that are caused by such tariff-rate quotas, while putting special attention to the effects of an efficient quota license allocation. Additionally, we compare our model results with the real trade figures of Canada and the EU that appeared since the implementation of their trade agreement. As our analysis shows, the restrictiveness of tariff-rate quotas does not only lie in their limited volumes or their high tariffs outside the quota – rather, through an efficient allocation of quota licenses, more expensive commodities have a much better chance of entering the market compared to cheaper commodities. Thereby, tariff-rate quotas are a measure to make sure that market prices do not plummet as a result of a liberalization effort.
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