The first task in reviewing current policy towards a given commodity is to discover what policy instruments are already being used. This task may be complicated by the fact that a wide range of policy measures (each with its own historical origin) will often be applied simultaneously by different government and/or parastatal agencies. Below is a checklist of questions designed to ensure that no instruments are omitted from the review:
· What instruments are being used at the international trade level? Are there any import or export tariffs, taxes or subsidies? Are there quantitative restrictions or other non-tariff measures?
Is international trade the responsibility of a state or parastatal agency with monopoly power?
If so, what policy does the agency concerned pursue? Can the policy's economic effects be described in terms of tariff or non-tariff measures? Is the exchange rate in equilibrium or is it overvalued or undervalued?· What instruments are being used at the wholesale level? Is marketing done by private firms or are there state or parastatal agencies with monopoly power? Are there commodity-specific taxes or subsidies? Are there any public authorities buying or selling at predetermined prices?
Does the government attempt to control prices by other means? Is there a public storage policy?· What instruments are being used at the producer level? Is there a programme of public procurement? Are there any commodity-specific subsidies or taxes? Are there forced deliveries or quotas on production?
· What instruments are being used at the retail level? Does the government attempt to control retail prices? If so, how? Are there specific taxes or subsidies? Are there "fair price" retail outlets? Is there rationing?
