State Trading and Tariff Rate Quotas: The Case of Korea's Rice Imports

20 Pages Posted: 19 Oct 2006

See all articles by Jana Hranaiova

Jana Hranaiova

Public Company Oversight Board

Harry de Gorter

Cornell University - School of Applied Economics and Management

Abstract

This paper analyzes the effects of trade liberalization of tariff-rate quotas under import state trading enterprises (STEs) in agriculture. An analytical framework is provided to determine the importance of which instrument is binding under competition (the in-quota or out-of-quota tariff or the quota) and under the initial STE equilibrium. It also depends on whether or not the STE controls both the domestic market prices and owns/controls the import quota (and whether it is obligated to fill the quota or not). An empirical example of the rice STE in South Korea has simulations showing that an increase in imports can be achieved through a moderate expansion of the quota or a decrease in the out-of-quota tariff to the level where it becomes binding. However, a significant level of quota expansion induces the STE to switch to the autarky solution and social welfare declines.

Suggested Citation

Hranaiova, Jana and de Gorter, Harry, State Trading and Tariff Rate Quotas: The Case of Korea's Rice Imports. Review of Development Economics, Vol. 10, No. 4, pp. 632-651, November 2006. Available at SSRN: https://ssrn.com/abstract=938595 or http://dx.doi.org/10.1111/j.1467-9361.2006.00337.x

Jana Hranaiova (Contact Author)

Public Company Oversight Board ( email )

1666 Kase Street
Washington, DC 20006
United States

Harry De Gorter

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States
607-255-8076 (Phone)

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