Domestic Processing of Supply‐managed Products Under Tariffication: Is the Rate of Protection Positive?

Abstract

Following the Uruguay round import quotas under former article XI have been replaced by tariff equivalents. For some products like cheese, the tariff equivalents put in place reach the astounding level of 300% and go even beyond. The first section of the paper provides a short description of the nature of tariffication and its implementation in the case of cheese. The second section of the paper searches in the literature a basis for the 300% level and provides a criticism of the method proposed at GATT to compute tariff equivalents. Based on some earlier work, an alternative estimate of the tariff equivalent of cheese import quotas is presented in the third section of the paper. An effective rate of protection provided to cheese making is computed in the next section. The paper concludes with some observations on trade policy strategy and the adjustment of supply management in the case of dairy.