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Abstract

The Swiss tariff schedule is characterized by many disparities and distortions. Already in the Tokyo Round countries have recognized that in that case only a harmonizing formula for tariff reduction is effective. It prevents protectionists from escaping from tariff peak reduction and rewards countries that already have considerably reduced tariffs. The implementation of the Green Box, with direct payments as the central element of Swiss agricultural policy, is the basis for further liberalization of market access. Green Box measures are more efficient and transparent compared to trade distorting tariff rate quotas and tariffs. The Flexible Swiss Formula is a middle ground between the Uruguay and the Swiss Formula. Its progressive character reduces tariff peaks, tariff escalation and the binding overhang. The formula is transparent and fair and allows countries some flexibility for tariff reduction. Further, it provides a consistent framework to reduce tariff escalation and to mitigate the tariff rate quota problem. It would harmonize tariff schedules between countries and also ease distortions and disparities within each country's agricultural sector.

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