Gains from agriculture trade liberalization

Appetites for esti­mates of the impact of agri­cul­tur­al trade lib­er­al­iza­tion are prob­a­bly sat­ed, but the need for reform remains great because the ben­e­fits of more appro­pri­ate poli­cies for the world’s poorest—and the world’s richest—countries are huge. “This paper”: by Antoine Bou­et et. al. was first pub­lished six months ago, before the Can­cún deba­cle. But it remains rel­e­vant and well worth skim­ming. bq. Spe­cial empha­sis is put on mea­sur­ing prop­er­ly pro­tec­tion and domes­tic sup­port. Pro­tec­tion data, from the MAcMaps data­base, describes applied tar­iffs, tak­ing pref­er­en­tial agree­ments exhaus­tive­ly into account. Domes­tic sup­port data is updat­ed to 2001 for the EU and the US, and accounts for the Agen­da 2000 reform and the New Farm Bill. The results pro­vide a con­trast­ed pic­ture of the ben­e­fits devel­op­ing coun­tries may draw from agri­cul­tur­al lib­er­al­iza­tion. The MAcMaps data­base is a unique resource com­piled by some very clever sta­tis­ti­cians at the “Inter­na­tion­al Trade Center”: It is the only source of glob­al data on trade flows that inte­grates up-to-date offi­cial infor­ma­tion on tar­iffs (includ­ing anti-dump­ing and CVD duties), and mul­ti­lat­era, region­al and bilat­er­al trade pref­er­ences at low lev­els of prod­uct aggre­ga­tion (HS6 and fin­er). As Bou­et and his co-authors point out: when you are try­ing to accu­rate­ly esti­mat­ed the impact of trade lib­er­al­iza­tion on agri­cul­tur­al import­ing and export­ing coun­tries, the ini­tial con­di­tions of trade (lev­el of pro­tec­tion) make a great deal of dif­fer­ence to the estimates.

*Gains from imple­men­ta­tion of ‘Harbin­son’ pro­pos­als* (rev. 1)
_percent change from 2001 baseline_ |Region|EU_25|US|DA|ACP|RoW|China|Cairns|O_Eur|FSU|World|
|GDP|0.88|0.08|0.41|-0.07|-0.02|-0.15|0.71|2.38|-0.21| | DA = Devel­oped Asia (Japan, Korea, Tai­wan); ACP = Africa, Car­ribbean & Pacif­ic devel­op­ing coun­tries;
O_EUR = Non-EU Europe; FSU = For­mer Sovi­et Union

The EU and Japan/Korea/Taiwan have high­er incomes because they reduce cost­ly pro­tec­tion for agri­cul­ture, while the Cairns Group mem­bers and the world as a whole gain from big­ger mar­ket access. The ACP group suf­fers a terms of trade rever­sal which accounts for their ‘wel­fare’ (= ‘con­sumer buy­ing power&#8217)falling slight­ly although their nation­al income hard­ly changes.

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