Impact Evaluation of the Tariff Reduction on the Fisheries Sector in Taiwan: A Comparison of Multi-Sector CGE Model and Single-Sector Multi-Activity Sector Model

This study tries to evaluate the impact of the 35.5% tariff reduction in average on the fisheries sector after Taiwan’s accession to the WTO by two different specified models, i.e., a multi-sectors CGE model, which is derived from ORANI and implemented by the GEMACK software, and a single-sector multi-activities partial equilibrium (PE) model, which is derived from the welfare maximization and implemented by the GAMS software. According to the 1996 Taiwan’s Input-Output tables, there are 160 commodities and sectors. The fishery sector is specified as one single sector. Even though the fishery products are highly substituted among consumers, the fishery sector should be disaggregated to distant water fishery, which targets the export market, and the aquaculture and offshore/coastal fisheries, which mainly target the domestic market. For example, the aquaculture and offshore/coastal fishery commodity outputs value for domestic market would decrease by 4.29% and 10.73%, respectively. The total supplies of imported aquaculture and imported offshore and coastal fishery commodity would increase 86.89% and 134.24%, respectively, and the employment in this sector would decrease 2.71% and 9.10%, respectively, after the WTO tariff reductions. Based on the differences in production activity and the input cost structure for various fisheries products, this paper has further specified a single-sector multi-activities partial equilibrium (PE) model to disaggregate three fisheries sector into 52 production activities. The PE model is derived from the welfare maximization and implemented by the GAMS software. The results show that the impact would be more severely. The output value of the aquaculture and offshore/coastal fishery for domestic market will decrease 14.53% and 13.89%, respectively. The difference between the multi-sector CGE model and the multi-activities PE model are substantial. It is important to build a linkage to incorporate the macro effect of the tariff reduction from the multi-sectors CGE model to the multi-activities partial equilibrium fishery model.