TRQ-complications: who gets the benefits when the EU liberalizes Mercosur's access to the beef markets?

The European Union (EU) and the Mercosur countries resumed negotiations on trade liberalization in May 2010 after several years of interruption. The article analyzes who stands to benefit and who is likely to lose if the EU liberalizes Mercosur's access to domestic beef markets. This economic assessment is performed using a partial equilibrium model for beef operating at a low level of product aggregation, paying specific attention to the role of Tariff Rate Quotas (TRQs). Consultations with experts from the meat sector allowed us to identify the allocation of the quota rents to different stakeholders. Under an agreement based on the EU's negotiation proposal, trade impacts are projected to be small due to the present quota overfill. As expected, impacts are more pronounced under the conditions set out in Mercosur's proposal. The results confirm that the distribution of quota rents can be decisive in determining welfare effects.