IDEAS home Printed from https://ideas.repec.org/p/ags/pugtwp/332615.html
   My bibliography  Save this paper

Evaluating the Effect of Domestic Support on International Trade: A Mercantilist Trade Restrictiveness Approach

Author

Listed:
  • Urban, Kirsten
  • Brockmeier, Martina
  • Jensen, Hans Grinsted

Abstract

Recent years have witnessed an ongoing debate regarding trade-distorting effects of domestic support provided to agricultural producers. High-income economies, such as the European Union (EU), initiated several reforms of their agricultural policies to decrease such distortions. New instruments, such as the Single Farm Payment (SFP) of the EU, which are supposedly decoupled from production, are also controversial because the extent to which these decoupled payments stimulate production through other coupling channels remain unclear. This study aims to assess, first, how trade-restrictive agricultural domestic support for international trade is and second, whether the introduction of decoupled support decreases the magnitude of this effect. Analyses of multilateral trade liberalization are commonly conducted using Computable General Equilibrium (CGE) models. Methodologies to analyze the effects of market access policies and their restrictiveness to trade are sophisticated and well established, whereas the detailed representation of different and country-specific domestic support payments, and in particular decoupled payments, is still in the early stages of development. In addition, literature on the development of an index that measures the restrictiveness, and hence the distortions, of domestic support and its application remain scarce. This paper utilizes the standard GTAP framework as starting point. It is based on the version 8.2 GTAP database, which incorporates domestic support in form of price wedges taken from the most recent OECD’s PSE table. We apply an elaborate updating procedure to extend the GTAP modeling framework to capture more detailed domestic support payments, particularly distinguishing different payment categories and types according to their effect on farm-level output decisions. Then we disentangle the domestic support payments to match the OECD’s PSE data with the WTO box classification scheme and integrate this information into the ...

Suggested Citation

  • Urban, Kirsten & Brockmeier, Martina & Jensen, Hans Grinsted, 2015. "Evaluating the Effect of Domestic Support on International Trade: A Mercantilist Trade Restrictiveness Approach," Conference papers 332615, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332615
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/332615/files/7499.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kym Anderson & Johanna Croser, 2011. "Novel indicators of the trade and welfare effects of agricultural distortions in OECD countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(2), pages 269-302, June.
    2. Hiau LooiKee & Alessandro Nicita & Marcelo Olarreaga, 2009. "Estimating Trade Restrictiveness Indices," Economic Journal, Royal Economic Society, vol. 119(534), pages 172-199, January.
    3. Feenstra, Robert C., 1995. "Estimating the effects of trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 30, pages 1553-1595, Elsevier.
    4. Anderson, James E & Bannister, Geoffrey J & Neary, J Peter, 1995. "Domestic Distortions and International Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(1), pages 139-157, February.
    5. Barry K. Goodwin & Ashok K. Mishra, 2005. "Another Look at Decoupling: Additional Evidence on the Production Effects of Direct Payments," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1200-1210.
    6. Croser, Johanna & Anderson, Kym, 2011. "Changing contributions of different agricultural policy instruments to global reductions in trade and welfare," World Trade Review, Cambridge University Press, vol. 10(3), pages 297-323, July.
    7. Josling, Tim & Mittenzwei, Klaus, 2013. "Transparency and timeliness: the monitoring of agricultural policies in the WTO using OECD data," World Trade Review, Cambridge University Press, vol. 12(3), pages 533-547, July.
    8. Anderson, James E & Neary, J Peter, 1994. "Measuring the Restrictiveness of Trade Policy," The World Bank Economic Review, World Bank, vol. 8(2), pages 151-169, May.
    9. Jean‐Christophe Bureau & Luca Salvatici, 2005. "Agricultural trade restrictiveness in the European Union and the United States," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 479-490, November.
    10. Johanna L. Croser & Peter J. Lloyd & Kym Anderson, 2010. "How Do Agricultural Policy Restrictions on Global Trade and Welfare Differ Across Commodities?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 698-712.
    11. Antimiani, Alessandro & Salvatici, Luca, 2005. "EU Trade Policies: Benchmarking Protection in a General Equilibrium Framework," Working Papers 18856, TRADEAG - Agricultural Trade Agreements.
    12. Peter Lloyd & Donald MacLaren, 2010. "Partial‐ and General‐Equilibrium Measures of Trade Restrictiveness," Review of International Economics, Wiley Blackwell, vol. 18(5), pages 1044-1057, November.
    13. Bhaskar, Arathi & Beghin, John C., 2009. "How Coupled Are Decoupled Farm Payments? A Review of the Evidence," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), pages 1-24, April.
    14. James E. Anderson & J. Peter Neary, 2005. "Measuring the Restrictiveness of International Trade Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012200, April.
    15. Urban, Kirsten & Jensen, Hans Grinsted & Brockmeir, Martina, 2014. "Extending the GTAP Data Base and Model to Cover Domestic Support Issues using the EU as Example," Technical Papers 283434, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    16. Nigel Key & Michael J. Roberts, 2009. "Nonpecuniary Benefits to Farming: Implications for Supply Response to Decoupled Payments," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 1-18.
    17. Pelikan, Janine & Brockmeier, Martina, 2008. "Methods to Aggregate Import Tariffs and their Impacts on Modeling Results," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 685-708.
    18. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    19. Key, Nigel D. & Roberts, Michael J., 2007. "Nonpecuniary Benefits To Farming And Decoupled Payments," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9831, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maria Cipollina & Luca Salvatici, 2008. "Measuring Protection: Mission Impossible?," Journal of Economic Surveys, Wiley Blackwell, vol. 22(3), pages 577-616, July.
    2. John Christopher Beghin & Anne-Célia Disdier & Stéphan Marette, 2017. "Trade restrictiveness indices in the presence of externalities: An application to non-tariff measures," World Scientific Book Chapters, in: John Christopher Beghin (ed.), Nontariff Measures and International Trade, chapter 5, pages 81-104, World Scientific Publishing Co. Pte. Ltd..
    3. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2013. "Estimating Effects of Price-Distorting Policies Using Alternative Distortions Databases," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 877-931, Elsevier.
    4. Pelikan, J. & Brockmeier, M., 2009. "Wohlfahrtswirkungen einer Handelsliberalisierung: Welchen Einfluss hat die Zollaggregation auf die Modellergebnisse?," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 44, March.
    5. Janine Pelikan & Martina Brockmeier, 2008. "Tariff Aggregation and Market Access: An Empirical Assessment for Canada and the EU," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(4), pages 413-427, December.
    6. Hiau LooiKee & Alessandro Nicita & Marcelo Olarreaga, 2009. "Estimating Trade Restrictiveness Indices," Economic Journal, Royal Economic Society, vol. 119(534), pages 172-199, January.
    7. Anderson, Kym & Lloyd, Peter J & Croser, Johanna L., 2009. "Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1955 to 2007," CEPR Discussion Papers 7160, C.E.P.R. Discussion Papers.
    8. Chen, Bo & Ma, Hong & Xu, Yuan, 2014. "Measuring China’s trade liberalization: A generalized measure of trade restrictiveness index," Journal of Comparative Economics, Elsevier, vol. 42(4), pages 994-1006.
    9. Antimiani, Alessandro & Conforti, Piero & Salvatici, Luca, 2006. "Assessing Market Access: Do Developing Countries Really Get a Preferential Treatment?," Working Papers 18870, TRADEAG - Agricultural Trade Agreements.
    10. Antimiani, Alessandro & Fusacchia, Ilaria & Salvatici, Luca, 2016. "Value Added Trade Restrictiveness Indexes. Measuring Protection with Global Value Chains," Conference papers 332745, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    11. Kym Anderson, 2016. "Contributions Of The Gatt/Wto To Global Economic Welfare: Empirical Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 30(1), pages 56-92, February.
    12. Kym Anderson & Johanna Croser, 2011. "Novel indicators of the trade and welfare effects of agricultural distortions in OECD countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(2), pages 269-302, June.
    13. Alessandro Antimiani & Piero Conforti & Luca Salvatici, 2008. "Measuring Restrictiveness of Bilateral Trade Policies: A Comparison between Developed and Developing Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(2), pages 207-224, July.
    14. Kym Anderson, 2010. "Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1960 to 2007," Centre for International Economic Studies Working Papers 2010-03, University of Adelaide, Centre for International Economic Studies.
    15. Ilaria Fusacchia & Alessandro Antimiani & Luca Salvatici, 2021. "An assessment of import tariff costs for Italian exporting firms," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(1), pages 31-56, April.
    16. Beyza Ural Marchand, 2019. "Inequality and Trade Policy: The Pro‐Poor Bias of Contemporary Trade Restrictions," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(S1), pages 123-152, November.
    17. David Laborde & Will Martin & Dominique van der Mensbrugghe, 2017. "Measuring the Impacts of Global Trade Reform with Optimal Aggregators of Distortions," Review of International Economics, Wiley Blackwell, vol. 25(2), pages 403-425, May.
    18. Sharma, Anupa & Grant, Jason & Boys, Kathryn, 2015. "Truly Preferential Treatment? Reconsidering the Generalized System of (Trade) Preferences," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205890, Agricultural and Applied Economics Association.
    19. Costinot, Arnaud & Rodríguez-Clare, Andrés, 2014. "Trade Theory with Numbers: Quantifying the Consequences of Globalization," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 197-261, Elsevier.
    20. Johanna L. Croser & Peter J. Lloyd & Kym Anderson, 2010. "How Do Agricultural Policy Restrictions on Global Trade and Welfare Differ Across Commodities?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 698-712.

    More about this item

    Keywords

    International Relations/Trade;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:332615. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.