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

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  • Jana Hranaiova
  • Harry de Gorter

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

  • Jana Hranaiova & Harry de Gorter, 2006. "State Trading and Tariff Rate Quotas: The Case of Korea’s Rice Imports," Review of Development Economics, Wiley Blackwell, vol. 10(4), pages 632-651, November.
    • Handle: RePEc:bla:rdevec:v:10:y:2006:i:4:p:632-651
    DOI: 10.1111/j.1467-9361.2006.00337.x
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    References listed on IDEAS

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    1. Ingco, Merlinda & Ng, Francis, 1998. "Distortionary effects of state trading in agriculture : issues for the next round of negotiations," Policy Research Working Paper Series 1915, The World Bank.
    2. Dixit, Praveen M. & Josling, Timothy E., 1997. "State Trading In Agriculture: An Analytical Framework," Working Papers 14608, International Agricultural Trade Research Consortium.
    3. Skully, David W., 1999. "The Economics Of Trq Administration," Working Papers 14584, International Agricultural Trade Research Consortium.
    4. Sexton, Richard J. & Sheldon, Ian M. & McCorriston, Steve & Wang, Humei, 2003. "Analyzing Vertical Market Structure And Its Implications For Trade Liberalization And Market Access," Working Papers 14600, International Agricultural Trade Research Consortium.
    5. Veeman, M. & Fulton, M. & Larue, B., 1999. "International Trade in Agricultural and Food Products: The Role of State Trading Enterprises," Papers 1999, Gouvernement du Canada - Agriculture Canada.
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    Cited by:

    1. Balié, Jean & Valera, Harold Glenn, 2020. "Domestic and international impacts of the rice trade policy reform in the Philippines," Food Policy, Elsevier, vol. 92(C).

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