The tariff reduction on Agricultural sector in Iran

Abstract

This study explains the results of trade reforms for a scenario where reduced tariffs for all imported commodities under the Uruguay Round (UR) since 1995. The Computable General Equilibrium (CGE) analysis and input-output data for Iran using a base year, 1991, were applied simulating the short and long-run effects under the UR. It was proposed that 24 per cent and 27 per cent decreases in ad valorem tariffs on imported agricultural and non-agricultural commodities, respectively, could occur in the short run from 1995. The same scenario was simulated in the long run to examine the impact of trade reforms on Iran for the past decade. Three crops results of this scenario were analysed by considering the projections. The results confirm a positive impact on the economy of Iran if tariffs were reduced under the UR. The domestic prices and production costs would fall and primary factors such as labour and capital would move to industries which have a greater comparative advantage. Rice was estimated to grow by 2.98 per cent but sugar beet and sugar cane decreased by 1.02 per cent in the short run.