Tariff Rate Quotas and New Zealand’s Meat and Dairy Trade

Abstract

The tariff rate quota (TRQ) system was formalised in the Uruguay Round with the aim of maintaining and improving market access for agricultural products. Under this system, a lower tariff rate is applied to imports up to the quota limit, with a higher (and often prohibitive) tariff rate levied on products imported beyond this quota. However, the success of the TRQ system has been limited, with dairy and meat products in particular still facing relatively high barriers to international trade. In this paper, we examine the impact of the TRQ system on New Zealand’s meat and dairy trade. We draw together theoretical and empirical insights and present preliminary findings arising from interviews with key stakeholders. In particular, we examine whether the TRQ system has achieved its objectives from the perspective of the dairy and meat sectors in New Zealand and we analyse problems that appear to exist with the system. We also examine implications of reform of the TRQ system, including lower in- and over-quota rates, increased quota limits and more transparent and efficient administration methods.