Number 3/2002/p.62-74
www.CAFRI.org
Current
Agriculture, Food
& Resource Issues
A Journal of the Canadian Agricultural Economics Society
Investigating Canadian Chicken Importers’
Preferences Towards TRQ Import Licensing Mechanisms1
David Surprenant
Agricultural Economist, Agrculture and Agri-food Canada
Jean-Philippe Gervais
Assistant Professor, CRÉA and Department of Agricultural Economics and
Consumer Studies, Laval University
The Issue
The Agreement on Agriculture ratified at the end of the Uruguay Round of WTO
negotiations called for the conversion of non-tariff barriers to trade into bound
tariffs. This tariffication would have resulted in excessively high tariffs, which would
have threatened historic market access levels if not for WTO member countries agreeing
to introduce tariff-rate quotas (TRQs). TRQs are two-tier tariffs. Imports below an agreed
quota are taxed at a usually low (or zero) in-quota tariff rate while imported commodities
in excess of the quota level are taxed at the higher (often prohibitive) over-quota tariff
rate. In the process of implementing TRQs, WTO members failed to explicitly regulate
TRQ administration procedures. As a result, numerous administration procedures for
allocating import licences were developed in many countries.
Importing activities in the Canadian chicken industry have been regulated with a TRQ
since 1995. Firms holding the right to import chicken products at the in-quota tariff can
potentially enjoy significant rents due to the spread between domestic and world prices.
The magnitude of these rents depends upon a number of domestic factors such as market
concentration in the processing and retail sectors, production technology, farm output
regulation, and so on. This analysis evaluates the preferences of Canadian chicken
importers towards TRQ import licensing mechanisms and provides insights about
importers’ attitudes towards Canadian trade policy in the chicken sector.
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