Do Sensitive Products Undermine Ambition?

The long-running WTO negotiations remain unresolved. Agriculture is the main stumbling block. Members have agreed to linear tariff reductions within bands, but proposed exemptions for sensitive products, while providing for much needed flexibility, threaten to undermine the ambition. A detailed partial equilibrium global agricultural trade model is used to analyse the likely impact of exemptions from the formula tariff reductions. Applying one third of the formula cuts to the five per cent of lines with the highest tariffs increases the final developed country average agricultural tariff from 16 to 24 per cent but the negative impacts on trade and welfare are less dramatic.