IMPROVING MARKET ACCESS: THE ROLE OF AUCTIONS IN CONVERTING TARIFF-RATE QUOTAS INTO SINGLE TARIFFS

This paper analyses the conversion of TRQs into single tariffs under perfect and imperfect competition. Based on experiences from Switzerland, auctions allow the determination of the equivalent tariffs. Results from auctions of TRQs of dried meat products under perfect competition show that the observed auction prices would lead to tariffs which are below the equivalent tariffs. Hence, if the ‘new tariffs’ would be determined through auctions, market access would be improved, but also farm prices would lower. However, under imperfect competition, based on Bhagwati’s theorem of the non-equivalence of tariffs and quotas, market access could be improved by converting TRQs into single tariffs even if farm prices are held constant. In order to ensure that auctions are competitive and collusion among bidders is prevented, the ‘variable supply’ auction format which re¬sists collusion needs to be adopted in the event of high buyer’s concentration. Despite the various benefits of auctions, quota holders’ persisting rent-seeking behaviour hinders that auctions are mainstreamed in allocating TRQs.