Tariffication of European Community Corn Imports

In July 1989, U.S. negotiators presented a tariffication proposal at the General Agreement on Tariffs and Trade (GATT) meeting in Geneva. According to that proposal, all agricultural nontariff barriers (NTBs) such as quotas and variable import levies would be converted to equivalent ad valorem tariffs. The following formula, known as the price gap method, was proposed for converting the NTBs to tariffs: TE= [(PD – PW)/PW] · 100, where TE is the tariff equivalent, PD is domestic price and PW is world price. If an agreement on tariffication is reached, the next step will be to develop a schedule for a phased reduction of tariffs. The purpose of tariffication and phased reduction is to eliminate market access barriers and thus provide treatment of imports no less favorable than that accorded to domestic commodities and products