Distortions to Agricultural Incentives in Japan, Korea and Taiwan

Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,

An econometric analysis of world wheat trade: a trade flow approach

The central purpose of this study is to investigate the structure and mechanism of commercial world wheat trade with a primary emphasis on the networks of international trade flows of wheat. This was accomplished by constructing an econometric model of world wheat trade. First of all, the world was divided into five exporting countries and ten importing regions. For importing regions, two types of equations were estimated: total import demand equations on per capita basis and trade flow equations. The total import demand equations were specified in the framework of the traditional excess demand theory. In the estimation, special attention was paid to price and income variables to adjust for exchange rate changes. The trade flow equations were based on the theory of demand for products differentiated by place of production, which was originated with Armington. The elasticity of substitution for each importing region was estimated in the linear specification of Armington\u27s model, which was provided by Hickman and Lau. For the supply side analysis of world wheat trade, domestic factors in each exporting country were examined by estimating three kinds of equations; production equations, domestic demand equations, and inventory equations. Each equation was specified and estimated separately for each exporting country;All the equations were incorporated into a system representing the world wheat trade model by introducing the price linkage equations, which were also estimated, and the quantity balanced equations. The complete system of the world wheat trade model was evaluated by historical simulation. The model showed a good ability to simulate most of the endogenous variables with small root-mean-square errors. The simulation model was also used to analyze the impacts of changes in several exogenous variables on world wheat trade. The impacts of income increases, population increases, ending PL 480 exports, and preference changes in importing regions were examined

Rethinking the Growth Strategy: Competition is the Way toward Strengthening Agriculture

Japan’s dairy industry is under heavy governmental regulation. This has serious consequences; for instance, controls on the imports of butter leads to periodic butter shortages. The collection of raw milk from farmers is monopolized by agricultural cooperatives in the region, which blend the raw milk from many farmers and sell it to dairy processing firms. Therefore, there is no opportunity for farmers to save money, increase quality and reap the benefits of a higher quality product. Regarding pork, Japan’s tariffs are highly irregular. Japan imposes a specific tariff of ¥482 per kilogram on inexpensive pork parts imported at a CIF price less than ¥64.53 per kg. For imported pork at the CIF import price, which is between ¥64.53 and ¥524 per kg, Japan uses a “gate price system” in which the tariff equals the difference between the benchmark price of ¥546.53 and the CIF import price. Imported pork products that are more expensive than the ¥524 per kg (expensive pork parts) are subject to a conventional ad valorem tariff of 4.3%. This system maintains a domestic price of at least ¥524/kg regardless of quality. It also produces a huge incentive to lie about the true import price. Another incentive is to mix expensive and cheap pork parts to reduce the average import price to ¥524 per kg in order to minimize tariffs to be paid. This system discourages Japanese farmers from producing high quality pork, since expensive imports may be sold cheaper as part of the mixed pork shipment. Agricultural reform should be fundamental, not cosmetic, since the whole system needs to be overhauled. The realization of “Strengthening Agriculture” through Abenomics depends on the success or failure of these reforms

IMPROVED FUZZY-SET TEMPERATURE DISTRIBUTION CONTROL FOR ELECTRIC FURNACE

In many control applications, it has always been a challenge to the control engineer to control complex system or non-linear system. To overcome these difficulties this paper presents an improved fuzzy-set control method whose derivation is based on knowledge of variable control systems rather than operator\u27s experience. Therefore, the proposed fuzzy controller is more simply designed, since a sliding curve (reference model) is utilized. The improved fuzzy-set controller which requires less computational time is proposed. A fuzzy control algorithm is, generally, used to implement linguistically expressed heuristic control policies. Then it is applied to controlling a temperature for an electric furnace. The resulting system, which has multi-structures, yields better control performance unrealized by linear controllers such as a PID controller

THE URUGUAY ROUND AGREEMENT ON AGRICULTURE: AN EVALUATION

Contact for this paper: Laura Bipes/University of Minnesota/Department of Applied Economics/ 1994 Buford Avenue./ St. Paul, MN 55108 USA. From the start, agriculture played a central role in the Uruguay Round of GATT trade negotiations. The Punta del Este Declaration called for a solution to the problems facing agricultural trade through modified trade rules and an agreement to lower protection levels. It was recognized that such an improvement implied negotiations on the national farm policies as well as just trade policies. The time that it took to reach agreement reflected the political sensitivity and technical complexity of this task. The Agreement embodied in the Final Act of the Uruguay Round breaks new ground for agriculture, and takes a big step towards placing this sector of world trade under rules more consistent with those in operation in other areas. However, the degree of liberalization of markets is modest, and much remains to be done in future rounds of negotiations. The most far-reaching element in the Agreement is a change in the rules regarding market access. With very few exceptions, all participating countries have agreed to convert all existing non-tariff barriers (along with unbound tariffs) into bound duties and not to introduce new non-tariff measures. Negotiations agreed to reduce these new bound tariffs, as well as tariffs already bound earlier, according to Schedules included as a part of the Agreement. "Tariffication" will impose changes in import policies for a number of countries. Canada will replace import quotas for dairy and poultry products with tariffs, initially at a high level. The European Union will replace its variable levy with tariffs, though a maximum duty-paid price for cereals has been negotiated which puts a limit on the tariff charged. Latin American countries have generally engaged in tariffication in recent years in advance of the Uruguay Round Agreement: for these, and other countries their tariffs will now be bound. The US will forgo the use of Section 22 import quotas and the negotiation of voluntary export restraint agreements with beef suppliers, but the impact on these markets is likely to be small. Japan and Korea have been allowed to delay tariffication in the case of rice for the next few years. The Agreement provides in cases of tariffication for "minimum access opportunities", to guard against the impact of high initial tariff rates. This will open up reduced-tariff quotas for a number of products including beef, cereals and fruits and vegetables. The quotas will be expanded to about 5 percent of consumption over the 6 year period. Japan and Korea have agreed to a greater expansion of market access for rice in compensation for the delay in introducing tariffs. The ability of countries to control export subsidies in agricultural markets was one of the main issues under discussion in the negotiation. Under the Agreement, countries accept commitments on reducing expenditure on export subsidies as well on the quantity of subsidized exports. This will limit export subsidies by the EU and other countries, for such products as wheat, dairy products and beef, and should lead to firmer world market prices in these commodities. These quantities are also expressed in the Schedules which form part of the Agreement. Countries have also agreed not to apply export subsidies to commodities not subsidized in the base period. The Agreement also sets rules and commitments for domestic support policies. It defines a set of policies which are deemed to be less trade-distorting than others, and allocates them to a "green box" which is broadly immune to challenge. Other policies not sheltered in this way are subject to reduction through a limit on the total support given by domestic subsidies and administered prices. It was decided that neither the U.S. deficiency payments (under current legislation) nor the new hectarage compensation payments under the reformed Common Agricultural Policy of the EU need to be reduced. It was also agreed that subsidies that conform to the new rules are sheltered from international challenge under the GATT. Developing Countries generally face less stringent commitments, having 10 years rather than six to make the changes, and having to meet only two-thirds of the reduction targets. In addition, development policies are included broadly in the "green box". Along with the provisions on domestic and trade policies in the Agreement, participants also concluded an Agreement on Sanitary and Phytosanitary Measures (SPS Agreement). The goal was to make it easier to distinguish between genuine health and safety issues and disguised protection. The right of countries to set their own safety and health standards is reaffirmed, but with the provision that such standards should be based on scientific justification and that use be made of international standards where possible. The extent to which the Agreement will lead to greater market access, curb export subsidies and modify domestic policies in the next few years can only be determined from a detailed inspection of the Schedule of commitments made by the individual countries. Paradoxically, the immediate impact on national policies is likely in most cases to be small. Many countries have been engaged in a process of reducing government support to agriculture, and making such support more closely targetted to needs, in advance of the outcome of the Round. Policy reforms in the EU, Canada, Sweden, Australia and New Zealand, along with much of Latin America, have been strongly influenced by the negotiations in the Uruguay Round. The Agreement thus takes on the task of supporting and locking-in such reforms, and encouraging them in other countries. In some aspects the Agreement falls short of expectations (or at least initial demands). It does not constitute a major move toward free trade in agricultural products: the cost of changing the rules has been to give up some degree of liberalization. The tariffs which countries will impose in place of non-tariff barriers are in many cases so high that trade will be restricted to the agreed access quantities. Export subsidy programs will continue though at a reduced level. The major pressure to reinstrument farm policies will continue to be from domestic budget constraints. It will take further rounds of negotiations to reduce protection in agricultural markets to a level comparable to that for most manufactured products. However, with the rule changes and the new types of country commitments agreed, a much more promising basis bas been created for future negotiations.International Relations/Trade,

an economic analysis of the market

PRIFPRI

An econometric analysis of world wheat trade: a trade flow approach

The central purpose of this study is to investigate the structure and mechanism of commercial world wheat trade with a primary emphasis on the networks of international trade flows of wheat. This was accomplished by constructing an econometric model of world wheat trade. First of all, the world was divided into five exporting countries and ten importing regions. For importing regions, two types of equations were estimated: total import demand equations on per capita basis and trade flow equations. The total import demand equations were specified in the framework of the traditional excess demand theory. In the estimation, special attention was paid to price and income variables to adjust for exchange rate changes. The trade flow equations were based on the theory of demand for products differentiated by place of production, which was originated with Armington. The elasticity of substitution for each importing region was estimated in the linear specification of Armington's model, which was provided by Hickman and Lau. For the supply side analysis of world wheat trade, domestic factors in each exporting country were examined by estimating three kinds of equations; production equations, domestic demand equations, and inventory equations. Each equation was specified and estimated separately for each exporting country;All the equations were incorporated into a system representing the world wheat trade model by introducing the price linkage equations, which were also estimated, and the quantity balanced equations. The complete system of the world wheat trade model was evaluated by historical simulation. The model showed a good ability to simulate most of the endogenous variables with small root-mean-square errors. The simulation model was also used to analyze the impacts of changes in several exogenous variables on world wheat trade. The impacts of income increases, population increases, ending PL 480 exports, and preference changes in importing regions were examined.</p

In search of agricultural policy reform in Japan

PRISI; IFPRI