DAIRY TRQ LIBERALIZATION: CONTRASTING BILATERAL AND MOST FAVORED NATION REFORM OPTIONS

We develop a highly disaggregated, tariff line, source-differentiated partial equilibrium model of U.S. specialty cheese imports to investigate alternative reform options for tariff-rate quotas. A mixed-complementarity framework is used to represent bilateral and multilateral tariff-quota administration methods within the U.S. dairy industry. The impact of liberalizing U.S. specialty cheese 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 in the agricultural negotiations