Economics of Tariff-Rate Quota Administration

David W. Skully

Technical Bulletin No. (TB1893) 27 pp, April 2001

The 1996 Uruguay Round Agreement on Agriculture was a step toward free trade. The Agreement lifts bans and quotas on imports, but allows their conversion into tariff-rate quotas (TRQs), which function like quotas. At present, many of the 1,300 TRQs increased market access to imports, but some have preserved pre-Agreement levels of protection. The World Trade Organization’s intent as to the administration of TRQs is open to interpretation. This report analyzes seven administrative methods in light of the principle of nondiscrimination. We conclude that auctions are the best way to administer a TRQ. First-come, first-served and license-on-demand methods present a moderate risk of biased trade. State trading organizations and producer groups that directly administer TRQs can also bias trade. Historical allocation is the method most likely to be discriminatory. Two case studies illustrate our conclusion.

Keywords: Tariff-rate quotas, quantitative restrictions, trade barriers, tariffs

In this report ...

Chapters are in Adobe Acrobat PDF format.

• Abstract, 8 kb
• Contents, 20 kb
• Summary, 23 kb
• Introduction and Tariff-Rate Quotas (TRQs), 33 kb
• TRQ Administrative Methods, 38 kb
• Economic Analysis of TRQ Administrative Methods, 98 kb
• Conclusion, 20 kb
• References, 27 kb
• Appendix, 21 kb

• Entire report, 141 kb

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Updated date: April 1, 2001