Imperfect Competition, State Trading and Japan's Imports of Rice

In the negotiations on agriculture in the World Trade Organization, itwas asserted that an importing state trading enterprise affects the domestic market but not the international market. This claim is investigated through specifying a model of intermediaries in international trade. There are two kinds of intermediaries: first, a state trading enterprise; and second, an n-firm Cournot oligopsony/oligopoly that acts as the counterfactual. Using Japanese market priceand quantity data for rice, and elasticity parameters drawn from the literature,the equations of the model are calibrated to these data and parameters. The resulting equations then permit the calculation of the tariff equivalence of the state trading enterprise under different assumptions about market structure, as wellas the welfare effects associated with them. The equations are re-specified to model the existing import regime for rice, which is a tariff quota. The conclusions are: first, that, compared with the counterfactual, an importing state trading enterprise acts like a tariff by restricting imports; and second, the currentimport regime of a tariff quota causes a welfare loss compared with the counterfactual.

Uncertainty Aversion and Technical Barriers to Trade: An Australian Example

International Relations/Trade,

CONSUMERS’ PREFERENCES, CREDENCE GOODS AND THE WTO SPS AGREEMENT

The SPS Agreement in the WTO exists to regulate the use of import barriers to protect, inter alia, human health. Yet consumers’ preferences for food safety or for other information about food, play no part in the Agreement. The purpose in this paper is to argue that consumers’ preferences should be taken into account for food products which possess the credence characteristic, quality.Food Consumption/Nutrition/Food Safety, Health Economics and Policy, International Relations/Trade,

The Economic Effects of State Trading Enterprises: Market Access and Market Failure

International Relations/Trade,

An Assessment of the Economic Effects of COFCO

International Relations/Trade,

A Trade Restrictiveness Index of theLevel of Protection in Australian Manufacturing

In this paper we provide a new 31 year time series of the level of protection in the Australian Manufacturing Sector. The index used is the partial equilibrium form of the Trade Restrictiveness Index recently developed by the World Bank. This is the theoretically correct welfare-based average of levels of nominal protection provided to sub-industries. The paper outlines the index and its properties. The method of calculation uses series of the mean level of protection and its dispersion, which have been published by the Productivity Commission. Some comments are made on the insights gained from the new series

Trade barriers and food-safety standards

[Conclusion]: Barriers to international trade in agricultural and food products exist for several reasons, one of which is to ensure food safety. Food safety is a credence characteristic and this attribute causes market failure through imperfect and asymmetric information. One way in which government intervention in importing countries can improve upon the market outcome is to impose trade regulations as a way of providing the missing information. Any such regulations need to be consistent with the SPS Agreement. It is also in the interests of governments in exporting countries to overcome the market failure by putting in place regulations to ensure that their exports of food meet minimum levels of food safety. The issue for them is whether their regulations should be enforced through public or private agencies. Because of the credence characteristic of food safety, it is not possible for private firms credibly to commit to the provision of high-quality food exports in the absence of regulation. In the application of the SPS Agreement to the area of consumer health and food safety, there is no scope for consumers preferences to be taken into account. The consistency of import regulations is based on risk assessment involving only estimates of probabilities. There is no place for consumers preferences about risk or for economic considerations. This omission is perhaps the outcome of the original negotiations based upon pragmatism and the need to get agreement but it is an inherently unsatisfactory aspect of the Agreement. A better approach would be to incorporate consumers preferences and non-additive probabilities into a more comprehensive decision-making framework. The link between food-safety standards, trade barriers and the gains from trade would then be better defined

COMPETITION POLICY AND INTERNATIONAL AGRICULTURAL TRADE

International Relations/Trade,

Measuring assistance to the agricultural industry in Australia using a Production Assistance Index

The history of the reforms of the assistance given to Australian agriculture over the past fifty years is a remarkable story, especially when contrasted with the experiences of most other OECD countries. The effects of these reforms have been captured by the Productivity Commission (and its predecessors) and by Lloyd through time series of the nominal rates of assistance to individual agricultural commodities and to the industry as a whole. In this paper the concept of a partial equilibrium production assistance index is developed to obtain a more accurate picture of the implicit welfare consequences of this assistance for the period 1955-59 to 2000-04. This index is a mean of order 2. It is shown that the conventional average, the mean of order 1, substantially underestimates the mean of order 2, which is the correct definition of the average level of assistance.Production Assistance Index, industry assistance, Trade Restrictiveness Index, Australian agricultural policy, Research Methods/ Statistical Methods, Agricultural and Food Policy,