DP7219 | EU Trade Barriers in the Agri-food Sector: When Protection Breeds Dependence

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This paper looks for firm-level evidence that high rates of protection breed concentration of firm activities into highly protected sectors, endogenously generating vested interests in the maintenance of protection. We combine data on the EU?s trade protection for food and agricultural products measured by ad-valorem equivalents (AVEs) with survey data on France?s agri-food sector to show that indeed, small and mid-size firms and cooperatives in that sector are heavily concentrated in product lines protected by tariff-rate quotas (TRQs) at high rates. Those firms and cooperatives can be expected to be at the forefront of resistance to multilateral tariff cuts, in particular in the meat and dairy sectors. Overcoming their resistance would call for targeted adjustment assistance.