Extending General Equilibrium to the Tariff Line: U.S. Dairy in the Doha Development Agenda

Abstract

We extend general equilibrium (GE) analysis to the “tariff line” by embedding a detailed, partial equilibrium (PE) model of the global dairy sector into a global GE framework. A mixed-complementarity formulation PE model is used to represent bilateral and multilateral dairy trade policy within the broader GE framework with US import protection as our focal point. The impact of liberalizing US dairy imports via bilateral and multilateral tariff-rate quota expansions, out-of-quota tariff cuts, and simultaneous liberalization scenarios is evaluated. We find that the path of liberalization is quite different, depending on the reform approach undertaken. The results have important policy implications for agricultural negotiations in the Doha Development Agenda.

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