Quantifying appropriate levels of the WTO bound tariffs on basic food products in the context of the Development Box proposals

Year of publication2003

AuthorFAO

PublisherFAO

AbstractMany developing countries in their WTO negotiating proposals on market access have called for the option for them to set appropriate levels of bound tariffs, as special and differential treatment, for selected products vital for food and livelihood security. None of the proposals however is specific on the level of these tariffs, and it is the purpose of this paper to illustrate an approach to quantify them. From a reading of the proposals, including the justifications made, appropriate tariffs are sought not so much for the purpose of protection but to safeguard domestic markets from such external shocks as depressed import prices and/or import surges. Appropriate tariffs, defined as the maximum rates that permit importing countries to raise applied tariffs to fully offset depressed world prices, are computed for 18 basic foods using world price fluctuations of the 1990s as the main basis. The resulting maximum tariffs are in the 40-60 percent range for various foods. This range is not out of line with tariffs actually applied temporarily by several developing countries in recent years when world prices were very low. The computed maximum tariffs do not include protective element for basic foods, which should not be more than 10-15 percent in most lower-income developing countries. Access to simpler safeguards, such as the special safeguard of the Agreement on Agriculture, obviates the need for raising tariffs to the extent computed in the paper. The paper also discusses some issues arising out of this option, which basically amounts to tariff “rationalization” rather than the GATT/WTO tradition of tariff “reduction”.

 

Product typeBook (stand-alone)

SeriesFAO Commodity and Trade Policy Research Working Paper

Areas of workTrade Policy and Partnerships

KeywordsWTO, Agreement on Agriculture, tariff binding, special and differential treatment, Development Box, basic foods, developing countries.