Interaction with World Economy and Impacts of Reductions in Tariff Rate on Iranian Agricultural Sector Using Computable General Equilibrium Model (CGE)

In this paper, the impacts of tariff on key variables in the agricultural sector is examined, applying Computable General Equilibrium Model for Iran and using a Social Accounting Matrix in year 2001 in the form of two scenarios, that is, gradual reduction of tariffs, and unification of tariffs on imports. In the first scenario these steps will be followed: gradual increase of imports, reduction of exports, reduction of employment, increasing the supply of goods and consequent raise in the household consumption of agricultural products. In the second scenario these steps will be followed: import reduction, export increase, employment raise, and reduction in the supply of goods with a subsequent decline in households’ consumption. The findings of the study showed that in parallel with the regulations and rules of World Trade Organization it is necessary to raise the agricultural export competitiveness through the reduction of final price and observation of health standards which can be formulated and implemented through an appropriate policy package.