Tariffication; Tariff Reduction Effects; Rice; Direct Payments Program
농업경영.정책연구, v.37, no.2, pp.207 - 227
This paper examines the effects of tariffication and tariff reduction on the rice industry under the direct payments program. Unlike previous studies that took only price-related variables such as world prices and exchange rates into consideration, direct payment variables are incorporated in an analytical model to see how the tariff reduction effects will differ. Within a small open-economy partial equilibrium model, the effects of tariff reduction are first examined theoretically and then ex ante empirical simulation is conducted. The results show that although tariff reduction significantly decreases domestic market price from rising imports, the effects on producer price, farm income, and production can be small enough to be neglected due to the existing direct payments program. Some policy implication is drawn from the results that early tariffication of rice can be a better policy option than the current import scheme of minimum market access for the sake of rice producers and domestic rice industry.