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Rural Industries Research & Development Corporation
Opening agricultural markets through tariff cuts in the WTO ABARE e-Report 03.2
RIRDC publication 03/011
ABARE report for the Rural Industries Research and Development Corporation by Troy Podbury and Ivan Roberts
February 2003
Countries’ tariff commitments in the WTO are made on bound or maxi-mum tariffs. In many instances the bound rates are above both the tariff rates that importing countries actually apply and the effective levels of protection for agricultural products in those countries. The extent to which the bound rate exceeds the applied rate or the level of protection, whichever is the greater, is termed ‘water in the tariff’.
Unless reductions in bound tariffs exceed the water in the tariff, they will not increase imports at all. Only if the reductions in bound tariffs exceed the water in the tariff, will there be conditions under which imports can increase as a result of the cuts.
The results of the analysis in this paper show that generally, levels of ‘water’ in bound tariffs are high, and large cuts in the tariffs are required for most commodities in most countries before additional imports would result. Consequently, in general it will require large tariff cuts to expand actual imports. However, there are wide differences between countries and commodities in levels of water in the tariff. Some commodities, notably butter, cheese and beef, have relatively low amounts of water in tariffs for some important importing countries. Consequently, the prospects of expanding trade for these items through tariff cuts appear to be greater than for other commodities.
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