Who Benefits from Quality Labelling? Segregation Costs, International Trade and Producer Outcomes

This paper analyses the impact of quality based labelling on product prices, factor allocation and the resulting effects on producers within the context of an international trading system. A general equilibrium model, calibrated to 1998 data, describes United States and European Union labelling regimes for genetically modified agricultural products. The results indicate that the labelling choice of trade partners have large distributive impacts within national economies, as well as across countries and highlight the importance of using general equilibrium framework to understand the system wide impacts of segregation and quality labelling.Labelling, price premium, international trade, political economy, biotechnology.

GM food technology abroad and its implications for Australia and New Zealand

The potential economic benefits from agricultural biotechnology adoption by ANZ need to be weighed against any likely loss of market access abroad for crops that may contain genetically modified (GM) organisms. This paper uses the global GTAP model to estimate effects of other countries' GM policies without and with ANZ farmers adopting GM varieties of various grains and oilseeds. The benefits to ANZ from adopting GM crops under a variety of scenarios are positive even in the presence of the ban on imports from GM-adopting countries by the EU (but not if East Asia also applied such a ban).Biotechnology, GMOs, regulation, trade policy, computable general equilibrium, Crop Production/Industries, Food Consumption/Nutrition/Food Safety, C68, D58, F13, O3, Q17, Q18,

STANDARDS, TRADE AND PROTECTION: THE CASE OF GMOS

A global economy-wide model (GTAP) is used to go beyond estimating how GM crop variety adoption affects adopting and non-adopting economies, with or without policy responses to this technology, by indicating effects also on real incomes of farmers. The results suggest the EU moratorium on imports of GM food helps EU farmers even though it requires them to forego the productivity boost they could receive from the new biotechnology. An upper-bound estimate of the cost of that EU moratorium to developing countries and the world also is provided.International Relations/Trade,

GM crop technology and trade restraints: economic implications for Australia and New Zealand

How much might the potential economic benefit from enhanced farm productivity associated with crop biotechnology adoption by Australia and New Zealand (ANZ) be offset by a loss of market access abroad for crops that may contain genetically modified (GM) organisms? This paper uses the Global Trade Analysis Project (GTAP) model to estimate effects of other countries’ GM policies without and with ANZ farmers adopting GM varieties of various grains and oilseeds. The gross economic benefits to ANZ from adopting GM crops under a variety of scenarios could be positive even if the strict controls on imports from GM-adopting countries by the European Union are maintained, but not if North-East Asia also applied such trade restaints. From those gross economic effects would need to be subtracted society’s evaluation of any new food safety concerns and negative environmental externalities (net of any new environmental and occupational health benefits), as well as any extra costs of segregation, identity preservation and consumer search.biotechnology, computable general equilibrium, genetically modified organisms, regulation, trade policy, Crop Production/Industries, International Relations/Trade,

WHY ARE US AND EU POLICIES TOWARD GMOs SO DIFFERENT?

The development of genetically modified (GM) agricultural products requires new policies to manage potential food safety and environmental risks. The policy positions taken to date on GM foods by the United States and the European Union are very different. The US has few restrictions on production and trade in GM food products and no costly labelling requirements, whereas the EU has close to a ban on the production and importation of GM foods. This paper seeks to explain (a) why both the US and EU policies are extreme in the light of the uncertainty about the risks associated with GM foods, (b) what their consequences are for income distribution and trade in farm products, and (c) what it means for the GM policies and economic welfare of people in other (particularly developing) countries. In this paper we use the GTAP global economy wide model to estimate the extent of the trade, national welfare and income distributional effects of the actual policy choices of the US and the EU as compared with what they would be if GM products were adopted with less-distortionary GM policies. The distributional effects are used to also shed light on why the US and EU have adopted such different sub-optimal GM policies.genetically modified crops, trade barriers, productivity growth, political economy of agricultural protection, Agricultural and Food Policy, Crop Production/Industries, International Relations/Trade,

Implications of genetically modified food technology policies for Sub-Saharan Africa

The first generation of genetically modified (GM) crop varieties sought to increase farmer profitability through cost reductions or higher yields. The next generation of GM food research is focusing also on breeding for attributes of interest to consumers, beginning with"golden rice,"which has been genetically engineered to contain a higher level of vitamin A and thereby boost the health of unskilled laborers in developing countries. The authors analyze empirically the potential economic effects of adopting both types of innovation in Sub-Saharan Africa (SSA). They do so using the global economy-wide computable general equilibrium model known as GTAP. The results suggest that the welfare gains are potentially very large, especially from nutritionally enhanced GM wheat and rice, and that-contrary to the claims of numerous interests-those estimated benefits are diminished only slightly by the presence of the European Union's current barriers to imports of GM foods. In particular, if SSA countries impose bans on GM crop imports in an attempt to maintain access to EU markets for non-GM products, the loss to domestic consumers due to that protectionism boost to SSA farmers is far more than the small economic gain for these farmers from greater market access to the EU.Economic Theory&Research,Crops&Crop Management Systems,Agricultural Knowledge&Information Systems,Environmental Economics&Policies,Agricultural Research,Crops&Crop Management Systems,Environmental Economics&Policies,Agricultural Research,Economic Theory&Research,Agricultural Knowledge&Information Systems

LABELING, TRADE AND GENETICALLY MODIFIED ORGANISMS (GMOS): A PROPOSED SOLUTION

The purpose of this brief article is to assess the current controversy over Genetically Modified Organisms (GMOs) in agriculture and its potential implications for the global trading system. More importantly, it offers a solution to the serious potential for injury to this system, to be developed below. The remainder of this article is divided into three sections. The next section will discuss labeling of GMO agricultural products, distinguishing between issues of food products and those affecting seed. Next, it will argue in favor of a particular type of "negative" label ("this product contains no GMOs") as distinct from a "positive" label ("this product may contain GMOs"). This proposal draws on the U.S. experience in the dairy sector with milk from cows treated with recombinant bovine somatotropin, or rBST. Finally, it concludes with a discussion of issues which are left unresolved by the labeling proposal, and some of the remaining challenges posed by GMOs for the global food and agricultural system.International Relations/Trade, Research and Development/Tech Change/Emerging Technologies,

Recent and prospective adoption of genetically modified cotton : a global computable general equilibrium analysis of economic impacts

The authors provide estimates of the economic impact of initial adoption of genetically modified (GM) cotton and of its potential impacts beyond the few countries where it is currently common. They use the latest version of the Global Trade Analysis Project (GTAP) database and model. The results suggest that by following the lead of China and South Africa, adoption of GM cotton varieties by other developing countries-especially in Sub-Saharan Africa-could provide even larger proportionate gains to farmer and national welfare than in those first-adopting countries. Furthermore, the estimated gains are shown to exceed those from a successful campaign under the World Trade Organization's Doha Development Agenda to reduce and remove cotton subsidies and import tariffs globally.Crops&Crop Management Systems,Environmental Economics&Policies,Economic Theory&Research,Textiles, Apparel&Leather Industry,Livestock&Animal Husbandry

Trade, standards, and the political economy of genetically modified food

A common-agency lobbying model is developed to help understand why North America and the European Union have adopted such different policies toward genetically modified (GM) food. Results show that when firms (in this case farmers) lobby policy makers to influence standards and consumers and environmentalists care about the choice of standard, it is possible that increased competition from abroad can lead to strategic incentives to raise standards, not just lower them as shown in earlier models. We show that differences in comparative advantage in the adoption of GM crops may be sufficient to explain the trans-Atlantic difference in GM policies. On the one hand, farmers in a country with a comparative advantage in GM technology can gain a strategic cost advantage by lobbying for lax controls on GM production and usage at home and abroad. On the other hand, when faced with greater competition, the optimal response of farmers in countries with a comparative disadvantage in GM adoption may be to lobby for more-stringent GM standards. Thus it is rational for producers in the EU (whose relatively small farms would enjoy less gains from the new biotechnology than broad-acre American farms) to reject GM technologies if that enables them and/or consumer and environmental lobbyists to argue for restraints on imports from GM-adopting countries. This theoretical proposition is supported by numerical results from a global general equilibrium model of GM adoption in America without and with an EU moratorium.Agricultural Knowledge&Information Systems,Environmental Economics&Policies,Economic Theory&Research,Labor Policies,Health Economics&Finance,Environmental Economics&Policies,Economic Theory&Research,Agricultural Knowledge&Information Systems,Crops&Crop Management Systems,Health Economics&Finance