Study on Trade Restrictiveness of Agricultural Policies in Iran

In this paper the trade restrictiveness of agricultural policies in Iran was measured by the TRI index for the nine major agricultural products including wheat, rice, barely, maize, soybean, meat (beef meat), soybean oil, sugar and banana over the period 1981 to 2007. The main results indicate that there is no trend in above index and high volatility especially in 2006 and 2007 years due to considerable increases in tariff of sugar, rice, meat and oil. Based on calculated advalorem equivalents (AVEs) of non-tariff barriers (NTBs), these barriers have a significant contribution to the level of trade restrictiveness measured by the TRI index. Thus, neglecting the restrictiveness of NTBs identify can be very misleading. Moreover, two sets of protected products: First, Over-protected products (rice, oil, sugar and banana) which their actual tariffs are higher than their optimum ones. Second, Under-protected products (wheat, barely, maize, soybean and beef meat) which their actual tariffs are lower than their optimum ones. Due to this, we found that most products are heavily protected and trade policies in agriculture sector have the prohibitive role on welfare and import. This can lead to the decrease in domestic welfare level as well as country’s trade volume with trading partners. Thus, it is necessary to adjust Iran’s agricultural trade tariff regime in order to bridge the gap between the current structure of protection and optimum import duties.