Import Access Requirements
J. M. Alston and J. D. Spriggs
Previous studies of trade policy reform have treated domestic quotas as exogenous. In our more realistic model, quotas on imports are chosen jointly with domestic production quotas to '"optimize" total welfare and its distribution among producers, consumers, importers and taxpayers. The General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFIA) agreements impose minimum import access requirements. This chapter shows the unintended consequences of GATT and NAFTA regulations that arise from the optimizing response of the Canadian government subject to the constraints of the minimum access requirements.
In Canada, supply management programs currently exist for eggs, broiler chickens, turkeys, and milk. In these programs, domestic supply is regulated by controlling both domestic production and imports. Trade barriers that prevent international arbitrage from undermining domestic prices, are an essential feature of this system. In the negotiations leading up to the Canada-` United States Free Trade Agreement (CUSTA), the NAFIA, and the Uruguay Round GATT agreements it was argued that the import quotas involved in supply management programs were trade-distorting. 1 Consequently, these agreements included provisions that will modify supply management in Canada in the post-GATT era. The main features of these agreements, as they relate to supply management, are tariffication and minimum access requirements. Tariffication refers to the agreement to replace import quotas on supply-managed commodities with tariffs, which are to be gradually phased down. It is widely acknowledged, however, that there is a great deal