A Reevaluation of Processed Food Tariffs Facing Exporters: Implications for Liberalization

Tariffs on processed food trade are highly uneven across countries and products. This can present a problem for aggregation at the GTAP sector level where there is a wide range of products. In the current version a simple average is used where all exporters face a common tariff. This paper reconstructs tariffs for the food processing sectors using a weighting scheme that takes into account exporter’s trade composition at a detailed product level. Weighting by this method reduces the average tariff while creates differential rates by faced by individual exporters. In comparing impacts from the different weighting schemes, global welfare gains from a 50 percent reduction in tariffs are of similar magnitude however, there are differences in gains for individual countries. Differences are most apparent in net exports of individual sectors. For example impacts on U.S. vegetable oil exports are overstated using a simple average tariff while net exports of beef and sheep meat are understated using the simple average method.