Research Proposal:
Doha Impacts on Korean Agriculture: Simulation and Policy Implications.
Korea has thrived to integrate its economy into the global system. In fact, many believe that an export-driven strategy and trade expansion has become the engine of development transforming the country from one of the poorest into an emerging economy. During the industrialization process, whether it was willing or unwilling, the agricultural sector had to cope with unexpectedly rapid structural reforms. Young people's migration into urban areas and low job mobility for aged farmers shaped the population pyramid on its head and is expected to make the pyramid slimmer.
In contrast to most developed countries which had more than 100 years of a time cushion to bear with structural reforms in agriculture, a rapid progress of economic growth in Korea made its agricultural sector embrace demographic and economic straits. Among others, a series of multilateral and regional trade agreements have caused an increase in competition between domestic products and imports. As of September 2006, Korea is engaging in Doha and Korea-US FTA negotiations.
The implementation of the Uruguay Round Agreement on Agriculture contributed to reduction in tariffs and domestic support. But, the average tariff rate of 63 percent for agricultural products is still higher than the OECD average and the tariff lines by HS 10 digits over 100 percent account for almost 9 percent of the total. Increasing concern is that the Doha negotiations embarked in 2001 will bring about a drastic cut in tariffs and agricultural protection and thus devastate agricultural base relying on the high cost production system. It is thus important to carry out an ex-ante analysis of Doha effects on agriculture which will be a critical basis to forge appropriate government policies including structural reforms and compensations.
For example, the government decided to run 1.2 trillion won of the Free Trade Agreement Fund to help fruit farms that could be adversely affected by the Korea-Chile FTA in 2004. Another case is the rice policy transferred from dual-price support to compensatory direct payments starting from 2005. In the rice negotiation in 2004, while exporting countries allowed Korea to maintain a non-tariff measure, the country agreed to annually import up to 7.9 percent of domestic consumption, nearly two times greater than the UR concession. Research works provided a solid basis for the above policy responses.
To measure the overall effects of the Doha negotiations, this research will perform Microsoft Excel-based Monte Carlo simulations and provide a consequent tariff profile (market access). If Doha talks are not completed during the research, probabilities for negotiating parameters including tariff reduction rates and the number of sensitive and special products and their treatment will be carefully assigned for the simulation. Likewise, domestic support will be assessed by Doha modalities and their policy implications will be explored centering on structural reforms and greening policy instruments. |
