The application of spatial models in the analysis of bilateral trade flows: An alternative to the Armington approach for the world sugar market

This paper suggests spatial models as an alternative to the Armington approach to model bilateral trade. While the use of spatial models has been accepted for decades, they are rarely chosen for such analyses. However, problems inherent in the application of the Armington approach can be overcome through the use of spatial models. To demonstrate, a simple spatial model of the world sugar market is built and used to simulate a multilateral liberalization scenario. Additionally, an identical model is constructed, applying the Armington approach. The results of the spatial model of the sugar market are found to be more plausible than those generated by the Armington-based model.bilateral trade, trade preferences, partial equilibrium models, Armington approach, sugar, International Relations/Trade, F11, F15, C69,

THE FUTURE OF THE WORLD SUGAR MARKET--A SPATIAL PRICE EQUILIBRIUM ANALYSIS

A spatial price equilibrium (SPE) model of the world sugar market is programmed. The model covers more than hundred regions and contains sugar in as a sole product. It has a detailed coverage of policies and bilateral trade agreements. It is programmed as a mixed complementarity problem (MCP) in GAMS and uses the PATH solver. The SPE framework offers considerable advantages over other model approaches applied to the sugar market before. Four scenarios are simulated: A baseline scenario until 2015/16, accounting for implementation of the EU reform and market access commitments already decided upon. The liberalization scenarios include an implementation of the Falconer proposal for the current round of WTO negotiations, a full liberalization by the EU and a liberalization of all sugar policies world-wide. In the latter the world market price increases by around 30%. Results are discussed and related to special properties of the SPE approach. Strengths and weaknesses are identified and an outlook on the further refinement of the analysis is given.Sugar, Partial Equilibrium Model, Spatial Price Equilibrium Model, MCP, Crop Production/Industries, International Relations/Trade, Research Methods/ Statistical Methods,

Food Quality Standards in Equilibrium Models: A Discussion of Current Modeling Approaches

Throughout recent year food quality standards have become a ubiquitous phenomenon that nationally and globally influences agri-food markets. With equilibrium models commonly used in the quantitative analysis of market and trade effects, we review possible approaches to modeling standards existent in the literature, elaborate the reasoning behind them and discuss their suitability to reflect "real world" situations. While the modeling approaches identified may respectively depict a specific situation, they may not be appropriate in others. That is they capture certain effects of standards only. With increasing ability to account for the various effects of standards, the modeling approaches become more complex and the data requirements increase.food quality, standards, modeling approaches, equilibrium models, Food Consumption/Nutrition/Food Safety, F1, C6, Q18,

MODELLING THE EFFECTS OF EU SUGAR MARKET LIBERALIZATION ON AREA ALLOCATION, PRODUCTION AND TRADE

This paper presents a partial equilibrium simulation analysis of EU sugar market reforms with a version of the European Simulation Model (ESIM) addressing three issues: preferential EU imports are a function of the price differential between world market and EU price, EU supply functions are estimated based on FADN data, and the production of bioethanol in the EU and the rest of the world is taken into account as an important component in sugar beet and sugar cane demand. It is found that the current sugar market reform including the restructuring process until the end of 2007 is sufficient to allow the EU to comply with its WTO commitments only very narrowly. EU sugar supply is simulated to decrease from roughly 19 million tons in the base period to 15.5 million tons by 2015 and the EU price remains at a level of about 450 €/t and thus significantly above the reference price. In case of full liberalization production in the EU is projected to decrease to 7.5 million tonnes by 2015.Sugar, Common Agricultural Policy, Sugar Market Reform, Partial Equilibrium Modelling, Everything But Arms, Agricultural and Food Policy, Crop Production/Industries, International Relations/Trade,

The Development and Future of EU Agricultural Trade Preferences for North-African and Near-East Countries

The EU recently completed negotiating a series of Association Agreements with Mediterranean countries. Trade preferences for agricultural goods granted under these Agreements, as well as under former arrangements, are analyzed by calculating the value of preference margins at several stages in the evolution of preferences. The total value of preference margins for all countries covered was about 130 million under the agreements of the mid-1970s and increased by 48 per cent until 1995; by 2000 this value declined by about 14 per cent due to reduced EU MFN tariffs. The extended preferences under the new Agreements more than compensate for this decline and will result in a total value of preference margins of 226 million once all Agreements have entered into force.preferential trade, preference margin, Mediterranean countries, Euro-Mediterranean Agreements, preference erosion, International Relations/Trade,

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Crop Production/Industries, Demand and Price Analysis, International Relations/Trade,

Modelling the effects of EU sugar market liberalization on area allocation, production and trade

This paper presents a partial equilibrium simulation analysis of EU sugar market reforms with a version of the European Simulation Model (ESIM) addressing three issues: preferential EU imports are a function of the price differential between world market and EU price, EU supply functions are estimated based on FADN data, and the production of bioethanol in the EU and the rest of the world is taken into account as an important component in sugar beet and sugar cane demand. It is found that the current sugar market reform including the restructuring process until the end of 2007 is sufficient to allow the EU to comply with its WTO commitments only very narrowly. EU sugar supply is simulated to decrease from roughly 19 million tons in the base period to 15.5 million tons by 2015 and the EU price remains at a level of about 450 €/t and thus significantly above the reference price. In case of full liberalization production in the EU is projected to decrease to 7.5 million tonnes by 2015