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“Tariffication” of a quota: EU bananas

“Tariffication” of a quota: EU bananas. “Tariffication” of a quota: EU bananas. Quota rents: estimation from independent cost data. Notes CPT: costs per ton (sum of a, b and c) IQT: « in-quota » tariff at €75 per ton for MFN producers, zero for ACP EUPRTN: CIF price per ton on the EU market

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“Tariffication” of a quota: EU bananas

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  1. “Tariffication” of a quota: EU bananas

  2. “Tariffication” of a quota: EU bananas

  3. Quota rents: estimation from independent cost data Notes CPT: costs per ton (sum of a, b and c) IQT: « in-quota » tariff at €75 per ton for MFN producers, zero for ACP EUPRTN: CIF price per ton on the EU market RENTPT: quota rent per ton, without the IQT

  4. The gravity model of international trade Distant Large country Large country Close by Small country Distant Distant Large country

  5. “Tariffication” of a quota: EU bananas Gravity estimation

  6. Calculating the tariff equivalent of a quota Rewrite the gravity equation in condensed form: Difference between quota-constrained and unconstrained market (effect of quota) Difference between a market with tariff t and no tariff at all (effect of tariff) Equate the last two expressions (effect of quota and effect of tariff) or

  7. (a) (tariff-quota) €/ton SEU SACP pEU S$(t) tPG S$ p* + t p* DEU €75/t in-quota tariff Million tons QEU Q$ = 2.65 QACP = 0.85 (b) (tariff only at rate tPG) €/ton SACP SACP+ SEU SACP + SEU + S$ (tPG) pEU tPG S$ DEU (b) (tariff only at rate tPG) €/ton SACP SEU S$ (tPG) pEU tPG S$ DEU Million tons QACP > 0.8 Q$ < 2.65 QEU

  8. (a) (tariff-quota) (b) (tariff only at rate tPG) €/ton €/ton SEU SACP SACP+ SEU SACP + SEU + S$ (tPG) SACP pEU pEU S$(t) tPG S$ p* + t tPG p* S$ DEU €75/t in-quota tariff DEU Million tons QEU Q$ = 2.65 QACP = 0.85 (b) (tariff only at rate tPG) €/ton SACP SEU S$ (tPG) pEU tPG S$ DEU Million tons QACP > 0.8 Q$ < 2.65 QEU

  9. Banana production costs compared $ per ton Source: FAO, 1994

  10. Protecting ACPs: really necessary? Production costs of Africa and most efficient LA, per box Notes: FOB: Free on Board, embarkation port FOR: Free on rail, after disembarkation port Costs per box

  11. “Third-country” tariff-quota 2.2 m tons @ 75 ECU/ton ACP quota tariff-free 857,700 tons EU OST quota price support 854,000 tons Exporting country breakdown • “F.A. countries”: • Costa Rica 23.4% • Columbia 21% • Nicaragua 3% • Venezuela 2% Other countries 50.6% - 90,000 tons Dom. Rep. Belize Ivory Coast Cameroon 90,000 tons Licence allocation breakdown (by type of operator) Category C: 3.5% New entrants Category A: 66.5% “Dollar” importers Category B: 30% ACP/OST importers Primary importers 57% Custom clearers/ ripeners 43% Regulation 404/93 and the Framework Agreement

  12. (a) (tariff-quota) €/ton SEU SACP pEU S$(t) S$ p* + t p* DEU Million tons QEU Q$ = 2.65 QACP = 0.85 Rent-sharing (a) (tariff-quota) €/ton SEU SACP pEU S$(t) Rentes totales S$ p* + t p* DEU Rentes aux sociétés américaines Million tons Rentes aux sociétés européennes QEU Q$ = 2.65 QACP = 0.85

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