Freer International Trade and the Consequences for EU rural areas

General equilibrium models estimated by various authors and institutions show that, although trade liberalization leads to aggregate welfare gains, there are winners and losers when it comes to the distribution. The aim of this article is to determine to what extent rural regions have won or lost in the trade opening process that has been underway since the 1990s. The economic literature on international trade and regional development suggests the presence of opposing forces, making the global impact of international trade liberalization on rural areas ambiguous. Using a series of empirical studies, in particular the DREAM model (CEPII), the author assesses the impact of trade opening on the European Regions, observing a significant proportion of losers in the trade liberalization process among the rural regions of Europe. The article concludes with an analysis of the negative effects of welfare losses on the environment and territorial ordering in many rural regions, and suggests the need to address the problem by modifying current EU policies. Comercio internacional libre y las consecuencias para las áreas rurales europeas Resumen Los modelos de equilibrio general estimados por varios autores e instituciones muestran que, aunque la liberalización del comercio conduce a un bienestar agregado, hay ganadores y perdedores cuando se tiene en cuenta la distribución. El objetivo de este artículo es determinar que regiones rurales han ganado y cuáles han perdido en el proceso de apertura de los mercados que está en proceso desde 1990. La literatura económica sobre comercio internacional y desarrollo regional sugiere que la presencia de fuerzas de oposición, hace que el impacto global de la liberalización internacional del mercado sobre las áreas rurales sea ambiguo. Usando una serie de estudios empíricos, en particular el modelo DREAM (CEPII), el autor asegura el impacto de la apertura de mercados en las regiones europeas, observando una proporción significativa de perdedores entre las regiones rurales de Europa. El artículo concluye con un análisis de los efectos negativos de las pérdidas de protección sobre el ambiente y el territorio, y sugiere la necesidad de dirigir el problema mediante una modificación de las políticas actuales de la UE. Palabras clave: liberalización de mercado, regiones rurales europeas, política de desarrollo rural.Trade liberalization, European Rural regions, rural development policies, International Relations/Trade, O18,

WTO Contstaints and the CAP: Domestic Support in EU 25 Agriculture

The most recent EU notifications to the World Trade Organization regarding domestic support refer to the EU-15, i.e. before significant reforms of the direct payments as well as the reforms of the Mediterranean products, hops, sugar, etc. that took place after 2003. We estimate the actual level of domestic support, as measured by the WTO Aggregate Measure of Support (AMS), given the 2004 EU enlargement and the recent reforms of the Common Agricultural Policy (CAP). We then compare the different proposals for a new discipline on domestic support that were recently issued under the Doha Development Round and we assess the constraints imposed on the Common Agricultural Policy (CAP). The EU proposal prior to the 2005 Hong Kong WTO ministerial meeting was that the EU would cut its present AMS and Overall Trade Distorting Support (OTDS) ceilings by 70% in either case. We find that such a cut mainly consolidates under the WTO the significant changes made to EU domestic support policies since the conclusion of the Uruguay Round. However, there are some downside risks for the EU and much depends on the further negotiations on the details of the disciplines to be agreed (e.g. the base period for the OTDS reference). In addition, a 70% cut leave no freedom for counting some potentially controversial subsidies against the AMS if needed. Accession of Bulgarian and Romania will make the constraints more binding. The ability to meet the domestic support discipline of the EU offer relies on the assumption that its market access component will lead to a significant reduction in the remaining AMS (particularly important in the case of fruits and vegetables). Overall, the EU proposal regarding a cut in the AMS is binding, even though it requires rather minor and sectoral changes to the CAP. Proposals that beyond the EU ‘Hong Kong’ offer require reforming some common market organizations, but could be dealt with if the EU implemented a significant reform of the fruits and vegetables sector, that might give a larger degree of freedom regarding the AMS ceiling.

EUROPEAN FOOD-LABELING POLICY: SUCCESSES AND LIMITATIONS

The EU policy on voluntary food labeling emphasizes the geographical origin of the products. Specialty products from a given area (e.g., wine) benefit from a reputation premium that is well-identified by consumers. Public authorities allow exclusive use of the appellation to a group of producers in exchange for commitments on production techniques, certification and control, and obligation of a collective use of the name. In spite of many successful aspects, the future of this policy is uncertain in a globalized environment. Caveats in the regulation (moral hazard, bureaucracy), lack of international readability of the labels, and competition from registered brand names are the main limitations of the EU policy.Agricultural and Food Policy,

WTO Negotiations on Market Access in Agriculture: A Comparison of Alternative Tariff Cut Scenarios for the EU and the US

This paper provides a summary measure of the possible new commitments in the area of market access undertaken by the European Union and the United States, using the Trade Restrictiveness Index (TRI) as the tariff aggregator. Indicators such as the TRI, based on welfare theory, integrate economic behavioural assumptions within a balance of trade framework. We take the 2000 bound tariffs as the starting point and attempt to assess how much liberalisation in agriculture could be achieved in the European Union and the United States as a result of the present negotiations. We compute the index for agricultural commodity aggregates assuming a specific (Constant Elasticity of Substitution) functional form for import demand. The present levels of the TRI under the actual commitments of the Uruguay Round are computed and compared with three hypothetical cases: a repetition of the same set of commitments of the Uruguay Round, a uniform 36 percent reduction of each tariff, an harmonization formula based on the "sliding scale" scheme. This makes it possible to infer how reducing tariff dispersion would help improve market access in future trade agreements.international agricultural trade, agricultural price, income, policy analysis, International Relations/Trade,

TARIFF RATE QUOTAS IN THE EU

The European Union has opened tariff rate quotas (TRQs) after the Uruguay Round (UR), following the agreement that minimum access should be provided and current access not be restricted. The EU TRQs are described and their origin is explained. Descriptive statistics are provided in order to assess the implementation of the market access provisions of the 1994 UR Agreement. Transparency of the EU TRQ system and fill rates of TRQs are examined. Overall, the EU's record in the area of TRQs is relatively satisfactory, compared with those of other countries. Concerns remain, however, as to the exact articulation of the (regional) Europe Agreement and some quotas under minimum access.International Relations/Trade,

Bridging Micro- and Macro-Analyses of the EU Sugar Program: Methods and Insights

Crop Production/Industries,

Agricultural trade restrictiveness in the European Union and the United States

The paper provides a summary measure of the Uruguay Round tariff reduction commitments in the European Union and the United States, using the Mercantilistic Trade Restrictiveness Index (MTRI) as the tariff aggregator. We compute the index for agricultural commodity aggregates assuming a specific (Constant Elasticity of Substitution) functional form for import demand. The levels of the MTRI under the actual commitments of the Uruguay Round are computed and compared with two hypothetical cases, the Swiss Formula leading to a 36 percent average decrease in tariffs and a uniform 36 percent reduction of each tariff. This makes it possible to infer how reducing tariff dispersion would help improve market access in future trade agreements. Classification-international agricultural trade; protection, tariffs and tariff factors

EU Agricultural Policy: What Developing Countries Need to Know

This paper provides a consolidated, up-to-date overview of the changes to the CAP and the factors making for further reform from the particular perspective of decision-makers in developing countries. It discusses the principles and mechanisms by which EU farmers are supported under the CAP, and the way in which these mechanisms have been changing since the first major reform of the CAP was adopted in 1992. The main pressures for further reform of the CAP are identified, emphasising the political economy of further reform to provide some sense to developing country policy-makers of how these pressures for reform might play out in the future. Taking a horizontal approach, the impact of reform on developing countries of the three main policy instruments – domestic support, border protection and export subsidies – are then discussed, followed by a focus on a few commodities of particular interest to developing countries. The conclusion develops a checklist of factors which developing country policymakers can use to help track the evolution of the debate on CAP reform and its impact on developing countries.Common Agricultural Policy, Agricultural trade, WTO, developing countries.

Agricultural Trade Liberalization: Assessing the Consequences for Developing Countries

Recent analyses suggest that the impact of agricultural trade liberalization on developing countries will be very uneven. Simulations suggest that the effects of agricultural trade liberalization will be small, overall, and are likely to be negative for a significant number of developing countries. The Doha Round focuses on tariff issues, but these countries currently have practically duty-free access to European and North American markets under preferential regimes. Multilateral liberalization will erode the benefits of these preferences, which are presently rather well utilized in the agricultural sector. The main obstacles to the exports of the poorest countries appear to be in the non-tariff area (sanitary, phytosanitary standards) which increasingly originate from the private sector and are not dealt with under the Doha framework (traceability requirements, etc.). An agreement in Doha is unlikely to solve these problems and open large markets for the poorest countries. While this is not an argument to give up multilateral liberalization, a more specific and differentiated treatment should be considered in WTO rules, and corrective measures should be implemented.agricultural trade liberalization, WTO, developing countries, International Development, International Relations/Trade, F13, Q17,

The Consequences of Agricultural Trade Liberalization for Developing Countries

International Relations/Trade,