WTO Public Symposium 2003: Agriculture
Agriculture: Tariffication
At the Uruguay Round, all non-tariff barriers to trade in
agriculture were converted into tariffs in a process known as “tariffication”.
The resulting tariff amounts were set as ceilings above which
tariffs could not henceforth be set. Rules were then created to push all
members in the direction of ultimate elimination of agricultural tariffs.
Industrialized countries were expected to lower tariffs on agricultural
imports by an average of 36% between 1995 and 2000, and each tariff was to
be reduced by at least 15%. Developing countries were mandated to reduce
agricultural tariffs by an average of 24% between 1995-2004, with each
tariff being reduced by at least 10%.
However, in acknowledgement of the fact that even these
changes might not cut significantly into agricultural protectionism, the
Uruguay Round also created the “tariff quota system” to ensure market
access for agricultural goods subject to tariffs.
Under this system, a quota of a specific agricultural good would be
subject to a special low tariff rate. Imports of that good above the quota
would be subject to the normal, relatively high rate. According to the UNDP, “The tariff quota system is the only
mechanism that provided real improvements in market access under the
agricultural agreement” (1).
Indeed, results so far have not only shown that
agriculture remains one of the most highly protected sectors, with an
average tariff rate of 62%, but also that implementation of the Agreement
on Agriculture rules has not brought about dramatic changes in the
structure of agricultural protectionism.
Industrialized countries in particular remain highly protective of
sectors which they consider sensitive. Goods for which particularly high
tariffs are applied are said to be subject to “tariff peaks”.
For other goods which are traded on a relatively small scale and
which are not considered sensitive, tariff rates have been lowered
dramatically, and sometimes eliminated altogether, thus bringing
industrial countries’ average rates down the stipulated 36%.
Another problem which has been found with the tariff
reduction system is that although many industrial countries may have low
or essentially no tariff for raw agricultural goods, they often apply
tariffs at increasing rates to goods at higher stages of production
(“tariff escalation”). Many are concerned that this has stagnated
growth for developing countries by limiting their exports to raw
materials, and preventing them from expanding into production of
intermediate and processed goods.
The process of tariffication itself has also been
criticized for its flaws. In
converting non-trade barriers into tariffs, some goods have been given
tariff ceilings that provide higher protection than the effective
protection they had before tariffication.
In addition to this, many developing countries had been required to
eliminate or reduce non-tariff barriers unilaterally by the World Bank or
the IMF prior to the agreement. Therefore
the process of tariffication did not help these countries, especially
since many of the goods for which industrial countries applied tariff
peaks were developing countries’ main exports.
Visit these pages for more information about global trade
in agriculture:
(1). Making
Global Trade Work for People by the UNDP [See page 146 of PDF file (p.
112 of text)]
Additional Resources
Tariff Escalation –
A Tax on Sustainability by CUTS
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