Analyzing the Potential Impacts of Trade Liberalization on Agricultural Backward and Forward Linkages Using the Updated Input-Output Table in 2011

Establishing the free trade and removing the customs barriers will create a competitive environment internationally. Therefore, it is likely that by the liberalization of trade, activities formed under the umbrella of strong supportive policies will be difficult. The Iranian agricultural sector is strongly supported by the import tariff tool, as compared to many countries and the region. Hence, the analysis of the effects of the removal of tariffs on the liberalization of agricultural sector and the impact of intergenerational links are essential. In order to carry out this research, the import tariffs for agricultural sector were determined. For this purpose, HS codes were initially equated with ISIC codes; and out of 5473 items with 8 digit HS codes, 210 items were identified for the agricultural sector. After equating and identifying the imports of agricultural sector, the tariff rate was calculated in 2011. The results showed that the agricultural sector's agricultural tariff was 15.14 percent. In the next step, the effects of full liberalization of the agricultural sector were simulated in the framework of the input-output table updated in 2011. The results showed that the final demand and value added in the country's economy would increase with the liberalization of agricultural trade; and consequently, the output value would increase. Additionally, the backward and forward linkages of the three subsectors of agriculture including horticulture, animal husbandry and forestry would be smaller. However, key sectors of the Iranian economy, before and after the liberalization of the agricultural sector, would not change. According to the results, liberalization begins with sections that show the slightest changes in past and present links.