Comparing the effects of different approaches to liberalising world grains markets

Abstract

The success of the current Doha Round of the WTO negotiations on agriculture will require substantial reform in each of the three areas of market access, export subsidies and domestic support. Substantial improvement in market access for agricultural products will be an essential requirement for achieving a successful outcome. However, the extent of improvement in market access resulting from the current negotiations will largely depend on the form and the approach followed to reduce tariffs and expand tariff rate quotas. In this paper different approaches to expanding market access for grains area analysed using a partial equilibrium model. Simulated scenarios include linear reductions in applied tariffs and expansions in tariff rate quotas, which are contrasted with a scenario representing market access proposals of the Cairns Group of countries in the current WTO agricultural negotiations. The effects of these two trade liberalisation scenarios on world prices and trade are analysed and discussed. Results indicate that to achieve a meaningful gain in market access for grains, WTO members must agree to either directly reduce the current applied tariffs or make large percentage reductions to the WTO bound rates, which lead to effective reductions in the current applied rates.