India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

The simulated effects in table 5.3 have been aggregated to 26 broad product groups. 85
The table shows 2007 U.S. exports, corresponding <strong>India</strong>n applied tariff rates, <strong>and</strong>
simulated U.S. export effects for these product groups, which contain all U.S. agricultural
products under consideration in this report. In 2007, U.S. agricultural exports to <strong>India</strong>
were $477.6 million. The trade-weighted import tariff levied by <strong>India</strong> on agricultural
imports from the United States was about 24 percent.
There is a wide variation in simulated effects by product group. For example, in the
absence <strong>of</strong> <strong>India</strong>n tariffs, U.S. exports to <strong>India</strong> <strong>of</strong> the product group “vegetables, fruits,
<strong>and</strong> nuts” would have exp<strong>and</strong>ed by a large dollar value, $48.5–60.2 million. 86 In contrast,
U.S. exports <strong>of</strong> “vegetable oils <strong>and</strong> fats” would experience a large percentage expansion,
232–324 percent. 87 In general, the simulated U.S. export effects are positive <strong>and</strong> are
driven by the magnitude <strong>of</strong> the tariff <strong>and</strong> the degree <strong>of</strong> sensitivity <strong>of</strong> <strong>India</strong>n consumers to
prices. General equilibrium effects, however, may contribute to lower U.S. exports for
certain product groups. In the absence <strong>of</strong> <strong>India</strong>n tariffs, agricultural sectors in <strong>India</strong> would
contract <strong>and</strong> release productive resources to the rest <strong>of</strong> the <strong>India</strong>n economy. Other sectors
would absorb these resources <strong>and</strong> thus exp<strong>and</strong> their level <strong>of</strong> production. Because <strong>of</strong> the
relatively small average <strong>India</strong>n tariff for “cereal grains, not elsewhere specified” (i.e.,
corn <strong>and</strong> sorghum), this product group could be one <strong>of</strong> the exp<strong>and</strong>ing domestic sectors,
<strong>and</strong> thus <strong>India</strong>n imports in this sector would decline.
Table 5.4 reports U.S. export effects for the 50 HS6 product categories with the highest
U.S. export effects in dollar terms. These 50 product categories accounted for
$380.7 million, or 79.7 percent, <strong>of</strong> total U.S. agricultural exports to <strong>India</strong> in 2007. In the
absence <strong>of</strong> <strong>India</strong>n tariffs, U.S. exports <strong>of</strong> these 50 products to <strong>India</strong> would have been
$189.7–279.2 million greater, a 50–73 percent expansion. Almonds, certain vegetable
fats <strong>and</strong> oils, soybean oil, fresh apples, cotton, <strong>and</strong> fresh grapes accounted for
$301.7 million, or 63.2 percent, <strong>of</strong> U.S. agricultural exports to <strong>India</strong> in 2007. In the
absence <strong>of</strong> <strong>India</strong>n tariffs, these exports would have exp<strong>and</strong>ed by $85.2–134.2 million, or
37–54 percent.
Several other studies have analyzed <strong>India</strong>n tariffs. One study that used methodologies
similar to those used in this report found that, in the absence <strong>of</strong> <strong>India</strong>n tariffs, <strong>India</strong>n
imports <strong>of</strong> agricultural commodities from all countries would have exp<strong>and</strong>ed by
$6.5 billion, or 93.9 percent, in 2001. 88 The study found that <strong>India</strong>n imports <strong>of</strong> “vegetable
oils <strong>and</strong> fats” would have exp<strong>and</strong>ed by $3.9 billion, or 127.7 percent; “vegetables, fruits
85 The 26 product groups are those specified in the Global Trade Analysis Project (GTAP) global trade
model, one <strong>of</strong> the models used in this analysis. The GTAP model is discussed in appendix H. For more
information about the GTAP model, see Hertel, Global Trade Analysis: Modeling <strong>and</strong> Applications, 1997;
<strong>and</strong> Narayanan <strong>and</strong> Walmsley, Global Trade, Assistance, <strong>and</strong> Production: The GTAP 7 Data Base, 2008.
86 Table 5.4 shows that the expansion in this product group is driven by growth in three products:
almonds (product rank 2 in table 5.4), fresh apples (rank 5), <strong>and</strong> fresh grapes (rank 10). These three products
account for about 97 percent <strong>of</strong> the expansion in the aggregate group.
87 Table 5.4 shows that the expansion in this product group is driven by growth in two products: (1) fixed
vegetable fats <strong>and</strong> oils <strong>and</strong> their fractions (product rank 3 in table 5.4), <strong>and</strong> (2) soybean oil (rank 4). These
two products account for about 98 percent <strong>of</strong> the expansion in the aggregate group.
88 For an analysis <strong>of</strong> the effects <strong>of</strong> the 2001 <strong>India</strong>n agricultural tariffs using the GTAP model, see
Ganesh-Kumar, P<strong>and</strong>a, <strong>and</strong> Burfisher, “Reforms in <strong>India</strong>n Agro-processing <strong>and</strong> Agriculture Sectors in the
Context <strong>of</strong> Unilateral <strong>and</strong> Multilateral Trade Agreements,” 2005.
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