CONSUMER EFFECTS OF HARMONIZING INTERNATIONAL STANDARDS FOR TRADE IN ORGANIC FOODS

Even if governments agree on equivalency of organic standards across countries, consumers may still believe domestically produced organic foods are superior to imports. We simulated a partial equilibrium model of trade in organic wheat between the United States and Germany to illustrate the welfare gains and losses associated with international harmonization of organic standards. Six cases were examined - no equivalency in standards (the status quo), equivalency of standards with complete and incomplete import acceptance, exporters certifying in importing country with complete and incomplete import acceptance, and exporters paying educational costs, with incomplete import acceptance. Results demonstrate that importing country consumers are better off if they are willing to accept imports as equivalent to domestically produced organic foods. Strategies to reduce resistance such as educational programs or foreign certification add costs to production that reduce quantity traded and impose welfare losses on exporting country producers and importing country consumers.International Relations/Trade,

The Effect of Protection and Exchange Rate Policies on Agricultural Trade: Implications for Argentina, Brazil, and Mexico

The impacts of reducing both agricultural and nonagricultural protection on the agricultural sector are assessed with emphasis placed on Argentina, Brazil, and Mexico. By modeling simultaneously all goods sectors of the economy in a multi-country framework, we evaluate the importance of (1) the relative rates of protection between sectors and (2) exchange rate adjustments that follow trade liberalization in a world of floating rates. We find substantial improvements in net agricultural trade for Argentina and Brazil, particularly following a multilateral trade and exchange rate liberalization. Additionally, the value of gross domestic product improves for all three countries following multilateral liberalization suggesting that these countries experience gains in standard of living from lower world protection.trade liberalization, protection, exchange rates, simulation model, Argentina. Brazil, Mexico, International Relations/Trade,

TECHNICAL BARRIERS TO TRADE: A CASE STUDY OF PHYTOSANITARY BARRIERS AND U.S. - JAPANESE APPLE TRADE

Concern about the use if technical barriers as restrictions to trade has increased since the World Trade Organization Agreement on Agriculture. In this analysis, we quantify the phytosanitary barriers to U.S. apple exports to Japan by calculating tariff-rate equivalents. We examine the trade and welfare impacts of removing phytosanitary barriers and tariffs under two assumptions regarding transmission of the bacterial disease fire blight: first, that transmission via commercial fruit is not possible, and second, that it can occur. The disease losses required to eliminate the grains to trade are estimated to be much larger than those experienced in other countries.International Relations/Trade,

Agricultural Trade Liberalization in a Multi-Sector World Model

Impacts of agricultural and nonagricultural trade liberalization on agriculture are assessed in a multi-commodity, multi-country framework. By modeling simultaneously all goods sectors of the economy, we evaluate the importance of (1) relative price changes between sectors and (2) income and exchange rate adjustments that follow trade liberalization in a world of floating rates. Specifically, we compare two cases using a static world policy simulation (SWOPSIM) model: agricultural multilateral liberalization and complete multilateral liberalization with floating exchange rates for all countries/region. In both cases agricultural commodity prices tend to increase, an effect which is more pronounced when currency values adjust. The developing countries, in particular Argentina, Brazil, and Mexico, have the most significant advances in agricultural and total domestic product when exchange rates vary. Morever, the gains from international trade are extended to all countries/regions explicitly specified in the model.International Relations/Trade,

PREFERENTIAL TRADING ARRANGEMENTS IN WESTERN HEMISPHERE COUNTRIES

Many countries of the Western Hemisphere in recent years have shown interest in participating in preferential trading arrangements (PTA) in anticipation of expanding exports. Results in this paper show that export expansion depends upon the type of agreement that is formed and who else is participating. Trade of two agricultural commodities are examined; wheat, and fruit and vegetable juices. Five PTAs are examined, each including the United States and one or more Western Hemisphere countries.International Relations/Trade,

TRADE POLICY AND ENVIRONMENTAL QUALITY: THE CASE OF EXPORT SUBSIDIES

The United States and the European Union both employ export subsidies to stimulate wheat trade and to increase their competitiveness in world markets. The environmental consequences of these policies are being questioned. We simulate reducing or removing export subsidies for wheat from the United States and the EU using a multicountry partial equilibrium model, and we analyze the impact of export subsidy policy reform on nitrogen fertilizer and other chemical use. Our findings indicate that the U.S. EEP program cannot be blamed for environmental degradation in terms of nitrate leaching, while EU wheat subsides make only a small contribution to nitrate pollution.Environmental Economics and Policy, International Relations/Trade,

How Does the Limited Base Acre Provision in the 2008 Farm Act Affect Small Farms?

Under the Food, Conservation, and Energy Act of 2008 (Farm Act), U.S. farms with 10 or fewer base acres became ineligible to receive Direct and Countercyclical Payment (DCP) or Average Crop Revenue Election (ACRE) program payments(Section 1101(d) and 1302(d)) from USDA. Limited resource and socially disadvantaged owners are exempt from this “base 10” provision. Eliminating payments on farms with 10 or fewer base acres reduces payments made by USDA Farm Service Agency (FSA) and the cost of administering the DCP and ACRE programs. We examine the characteristics of the farms affected by the limited base acre provision and answer the question: How does the provision affect small farms?US Farm Policy, Limited Base Acres Provision, 2008 Farm Act, Agricultural and Food Policy,

Estimated Impacts of a Potential U.S.-Mexico Preferential Trading Agreement for the Agricultural Sector

We develop a three region - U.S., Mexico, and Rest-of-World - simulation model to analyze the effects on the agricultural sector of a potential preferential trading arrangement (PTA) between Mexico and the United States. The simulation exercises indicate that two-way agricultural trade increases and welfare improves in the United States and Mexico from a bilateral preferential agreement on agricultural products. Our results show that when border protection is eliminated by the United States and Mexico, bilateral agricultural trade expands by over 15 percent. Relative to the size of the two agricultural sectors, however, the overall impact is very small for the U.S. agricultural sector but there is a more significant adjustment for Mexican agriculture.preferential trading arrangements, simulation model, agricultural trade, United States and Mexico, International Relations/Trade,

Exploring Linkages Among Agriculture, Trade, and the Environment: Issues for the Next Century

Many trade and environment issues will confront agriculture over the next several years. This report provides an economic framework to better understand these issues and discusses prior empirical inquiries and findings. Four primary issues are addressed: (1) how will environmental policies affect agricultural trade?; (2) how will agricultural trade liberalization affect environmental quality?; (3) to what extent should there be international harmonization of environmental policies and product standards?; and (4) is there economic justification for using trade measures to protect the environment? This report demonstrates that basic economic paradigms can provide a basis for understanding how trade and the environment interact. The few empirical studies based on these concepts have found many of the linkages between trade and the environment to be weak or the effects small. Trade and environment issues remain important to monitor, however, because economic and environmental relationships and domestic and international policies are continually evolving, and decision-makers need good information to confirm or disprove the numerous hypotheses that have surfaced in international discussions.environmental policy, agricultural policy, trade policy, trade, environment, harmonization, Agricultural and Food Policy, Environmental Economics and Policy, International Relations/Trade,

A closer look at the role of the fruit and vegetable planting restriction provision on land use in the United States

Current U.S. farm programs make payments to farmers based in part on historical base acres planted in particular program crops such as corn, soybeans, cotton, wheat and soybeans. Eligibility for payments includes regulations on the crops allowed to be grown on base acres, and there are restrictions on planting horticultural crops on such base acres. The fruits and planting restriction on base acres has potentially influenced the number of acres planted to fruits and vegetables over the past two decades. This research carefully examines the effects of planting restrictions applied to vegetables and program crops, using county-level data in the United States in 1982, 1987, 1992 and 1997. The paper employs the difference-indifference (DiD) approach to estimate acreage response to planting restrictions. The results show planting restrictions crowded out land used for growing fruits and vegetables, most notably in the Great Lakes region that produces processing vegetables.Crop Production/Industries, Land Economics/Use,