Effects of Market Reforms in the Former Soviet Union on World Grain Trade: Results From A Multi-Market Wheat Trade Model

International Relations/Trade,

HOW SIGNIFICANT ARE EXPORT SUBSIDIES TO AGRICULTURAL TRADE? TRADE AND WELFARE IMPLICATIONS OF GLOBAL REFORMS

We analyze the impacts of removing export subsidies with or without reforms to domestic support and tariffs using a multi-country trade model. Model simulations are designed to assess both the magnitude and the direction of trade in the absence of export subsidies in connection with other domestic distortions and import barriers. Results show that the impacts of export subsidy removal, while significant for some countries and products, are comparatively smaller and are dominated by the much larger trade and welfare distortions imposed by import barriers. Hence, the removal of domestic subsidies, including export subsidies, by themselves may not be sufficient to improve global welfare and expand trade since the welfare gains by the net exporters are far outweighed by the losses of net importers. One implication from these simulations is that export subsidy reform must be combined with market access liberalization in order to benefit exporters and importers and to attract the widest support among WTO members.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,

SUPPLY RESPONSE IN FRANCE, GERMANY, AND THE UK: TECHNOLOGY AND PRICE

We extend the methodology of a two-step profit function to obtain area and yield elasticities. We then estimate the effects of price and technology on crop output of France, Germany, and the UK. Area elasticities were obtained by adding area shadow price equations to the standard dual model of output and input equations. Change in output is dominated by technology in the UK and mixed in France and Germany. The results indicate policies affecting price will have diverse responses across countries and crops.Demand and Price Analysis,

EXPORT COMPETITION: ISSUES AND OPTIONS IN THE AGRICULTURAL NEGOTIATIONS

International Relations/Trade,

Wheat Cleaning and its Effect on U.S. Wheat Exports

This analysis shows that there could be net gains to the U.S. wheat industry if all U.S. export wheat were to be cleaned to a dockage level between 0.35 to 0.40 percent. These results are based on survey results of major importers of U.S. wheat, and a model of world wheat trade. Larger benefits to the U.S. wheat industry would be possible from cleaning only wheat destined to countries that demand higher quality U.S. wheat. However, these gains in export revenue from selling cleaner wheat could be offset if other exporters, especially Canada, responded in ways that would maintain their market share.wheat, grain quality, trade model, Crop Production/Industries, International Relations/Trade,

AGRICULTURAL POLICY REFORM IN THE WTO: THE ROAD AHEAD

Agricultural trade barriers and producer subsidies inflict real costs, both on the countries that use these policies and on their trade partners. Trade barriers lower demand for trade partners' products, domestic subsidies can induce an oversupply of agricultural products which depresses world prices, and export subsidies create increased competition for producers in other countries. Eliminating global agricultural policy distortions would result in an annual world welfare gain of $56 billion. High protection for agricultural commodities in the form of tariffs continues to be the major factor restricting world trade. In 2000, World Trade Organization (WTO) members continued global negotiations on agricultural policy reform. To help policymakers and others realize what is at stake in the global agricultural negotiations, this report quantifies the costs of global agricultural distortions and the potential benefits of their full elimination. It also analyzes the effects on U.S. and world agriculture if only partial reform is achieved in liberalizing tariffs, tariff-rate quotas (limits on imported goods), domestic support, and export subsidies.Agricultural and Food Policy, International Relations/Trade,

HOW SIGNIFICANT ARE EXPORT SUBSIDIES TO AGRICULTURAL TRADE? TRADE AND WELFARE IMPLICATIONS OF GLOBAL REFORMS

We analyze the impacts of removing export subsidies with or without reforms to domestic support and tariffs using a multi-country trade model. Model simulations are designed to assess both the magnitude and the direction of trade in the absence of export subsidies in connection with other domestic distortions and import barriers. Results show that the impacts of export subsidy removal, while significant for some countries and products, are comparatively smaller and are dominated by the much larger trade and welfare distortions imposed by import barriers. Hence, the removal of domestic subsidies, including export subsidies, by themselves may not be sufficient to improve global welfare and expand trade since the welfare gains by the net exporters are far outweighed by the losses of net importers. One implication from these simulations is that export subsidy reform must be combined with market access liberalization in order to benefit exporters and importers and to attract the widest support among WTO members

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