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Abstract

U.S. peanut, sugar, and tobacco tariff rate quotas (TRQs) are allocated to suppliers on an historical market share basis. Once allocated they become difficult to redistribute to accommodate changes in comparative advantage among suppliers. The distribution of trade departs increasingly from the tariff-equivalent distribution advocated by the WTO principle of nondiscrimination. Article XIII of the GATT regarding the rules for historical allocation is examined and applied to four cases of historical allocation: domestic tobacco quota and TRQs for peanuts, sugar and tobacco. The difference between the law enforcement objective of the WTO and the Pareto optimization objective assumed by economists is stressed throughout.

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