Groundnut Trade Liberalization: Could the South Help the South?

Abstract

This paper analyzes policies affecting global groundnut-products markets. The new US groundnut policy is now a minor source of distortion in world markets where India and China stand out as the major distorters. We analyze and quantify the effects of groundnut-products trade liberalization on consumer welfare and producer income. Our analysis shows that African exporters would gain significantly from reductions in protection and subsidies in India, and to a lesser extent, China, although Chinaï¾’s exports of food-quality groundnuts would expand dramatically. Net-importing OECD countries would suffer from higher world prices. The paper draws direct implications for the Doha trade negotiations.