Martina Brockmeier

Agricultural market access: A moving target in the WTO negotiations?

This article analyzes the impact of multilateral market access liberalization of the Doha Round agricultural negotiations. At the center are the effects of variations in the magnitudes of tariff cuts, different tariff cutting formulas, the tariff capping as well as different numbers and width of tariff bands. The simulations are conducted with an extended version of the GTAP model and the GTAP database (6.0) including bound and applied rates and a module to cut tariffs at the 6-digit tariff line level. The results reveal that the heights of the tariff cuts and the kind of tiered formula applied are most important for the outcome of the Doha Round, while the width of tariff bands and the tariff capping only have a moderate influence on the countries trade pattern and welfare. In contrast, the number of tariff bands is not important for the results.

Food Price Pass-Through and the Role of Domestic Margin Services

type=main xml:id=jage12110-abs-0001> The recent volatility in international agricultural markets has drawn attention to the impact of rising international agricultural prices and the induced price-insulating measures on consumer food prices. Analyses based on simulation models on this topic typically ignore the role of domestic margin services. We extend the standard Global Trade Analysis Project (GTAP) model to allow for variations in the share of domestic margin services in consumed food across countries. This approach enables us to differentiate consumer prices from producer prices. Following the extension, the results show that domestic margin services reduce the consumer food price volatility for all countries, especially in high-income countries, where the share of domestic margin services in final food consumption is higher. The effect of price-insulating border policies is also reduced in the extended model. We find that our extension of the GTAP model greatly improves simulations of the 2007 surge in international agricultural prices. We validate our extension of the GTAP model by showing that the econometrically estimated food price pass-through is decreasing with income and thus, is smaller in high-income countries.

Implications of Domestic Support Disciplines for Further Agricultural Trade Liberalization

This paper employs the GTAP computable general equilibrium model and dataset to analyse the implications of domestic support reductions in the context of agricultural trade liberalisation. Three specific issues are addressed: overhang in domestic support, the accurate distinction of the boxes in the GTAP dataset and the treatment of market price support in the amber box. An extensive domestic support database is used to calculate the change in applied domestic support rates from a specified cut in bound rates, and to identify the impact on the different domestic support boxes and the required reductions in each support category. The GTAP model is extended to incorporate an explicit representation of the market price support element of the AMS. The results from these extensions of the standard database and model support the view that the impact of an agreement to reduce domestic support will be limited and lower than conventionally estimated. Results of simulations combining domestic support cuts with market access and export competition disciplines show that the effect of import tariff reductions dominate the gains from domestic support cuts once full account is taken of the issues addressed in this paper.

Agricultural Market Access: A Moving Target in the WTO Negotiations?

This paper analyses the economic effects of different magnitudes of tariff cuts, different tariff cutting formulas, the implications of tariff capping as well as different numbers and width of tariff bands in the market access pillar of the Doha Round agricultural negotiations. The simulations are conducted with an extended version of the GTAP model and an extended version of the GTAP data base (6.0) including bound and applied rates. The results reveal that the EU-27 experiences a negative change of its trade balance in the highly protected beef and sugar sectors. The relative increase of EU beef and sugar imports is mainly evoked by the magnitude of tariff cuts and, to a lesser extent, by the kind of formula used to implement the tariff cuts. In contrast, the EU trade balance for milk and cereals is hardly influenced by different options to cut tariffs. Here, the negative change of the trade balance is mainly driven by the elimination of export subsidies. The results also indicate a relative increase of EU exports for other meat, if tariff cuts are high enough to open third countries markets to the EU.

The Effect of Aggregation Bias: An NTB-modelling Analysis of Turkey's Agro-food Trade with the EU

We explore how different data aggregation levels affect the gravity estimates of non-tariff barriers (NTBs) in the agro-food sector, and we examine their related impacts on policy simulations of an expansion to the European Union (EU) that would include Turkey. We calculate two sets of ad valorem equivalents (AVEs) of NTBs using the gravity approach to disaggregated and aggregated Central Product Classification data for 15 Global Trade Analysis Project (GTAP) agro-food sectors. We find that the AVEs of NTBs vary substantially across products and that using aggregated data primarily results in greater effects of NTBs. In a second step, we incorporate the AVEs of NTBs into the GTAP model to evaluate Turkeys EU membership and conclude that aggregation bias has considerable effects on both the estimation of NTBs and the general equilibrium simulation results. Utilising different data aggregation levels leads to a great variability of trade costs of NTBs and, hence, to misleading trade and welfare effects.

Impact of increasing agricultural domestic support on China’s food prices considering incomplete international agricultural price transmission

Purpose - The purpose of this paper is to develop a modelling approach that enables the analysis of long-term food security policies. Specifically, the authors explore the effect of China’s agricultural domestic support on its agricultural and food market by also considering the impact of incomplete price transmission. Design/methodology/approach - The authors extend the standard Global Trade Analysis Project (GTAP) modelling framework. First, the authors incorporate incomplete price transmission into the GTAP model by generating tariff-equivalent price transmission elasticities. Second, the authors improve the current representation of China’s agricultural domestic support in the GTAP model and the underlying database by considering the production requirements and the trade-distorting effect of different policy instruments. Running a set of simulations, the authors examine first how the incorporation of incomplete price transmission affects the model’s results and second how increased agricultural domestic support affects China’s agricultural and food market accounting for incomplete price transmission. Findings - Considering incomplete price transmission mitigates the domestic price increases as responses to high international agricultural prices, which also lead to an increase in China’s trade deficit and prohibits net food sellers from receiving high prices. In the long term, an increase in China’s agricultural domestic support to its World Trade Organisation Originality/value - This paper contributes to the literature by examining the impact of increased agricultural domestic support on the domestic market while innovatively accounting for incomplete food price transmission. The authors combine econometric estimated price transmission elasticities and an extended GTAP framework to underscore the importance of enhancing the model’s ability in accounting for incomplete price transmission when analysing the impact of agricultural policies.