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Abstract
This paper aims to evaluate the effects of additional tariff
quotas on some Brazilian agricultural exports. The study focuses on the
European offer in the negotiations for a Mercosur-European Union free
trade agreement in May 2004. The economic analysis of the tariff quota
shows that – given the demand curve – only one of the three components
(the volume and the intra and extra tariffs rates) will effectively pose
a restriction to the imports. So, the concession of an additional quota
does not necessarily imply an equivalent increase in exports. In the es-timation of the gains, one must consider the change in the quota rent.
Besides the administration of the quota systems will play crucial role on
the allocation of the quota rent. If Mercosur gets in charge, the estimates
indicate an addition of US$ 728 million in exports, of which US$ 525
million result from the appropriation of the quota rents and US$ 476
million from exports. The sum of both is indeed close to the value of the
additional quotas at current prices. If the administration goes to the EU,
the gains will derive exclusively from the expansion in exports, which
corresponds to 63.7% to the value of the quota.