Access to European dairy product markets: A Computable Partial Equilibrium analysis to assess Argentine exporters surplus

Abstract

A partial equilibrium model is used to quantify price differentials not explained by tax policy and efficiency cost in the international trade of dairy products between Argentina and some countries of European Union (EU). Prices of imports of EU from Argentina and European producer of the domestic variety welfare fall when liberalization of non-tariff barriers are reduced or eliminated as well as European consumer’s welfare and Argentinean exporter’s earnings are increased. A sensibility analysis is carried out, changing substitution and supply elasticity and exporter’s earnings are shown for four alternative stages. The conclusions are that exporters obtain higher earnings by eliminating or reducing non-tariff barriers when substitution elasticity is higher, mainly for cheese. More inelastic supply products obtain higher earnings for Argentinean exporters (mainly in powdered milk). Finally, an alternative stage is explored where elimination of non-tariff barriers results in higher imports from the rest of the world. Results show a greater increase in Argentinean exporter’s earnings for cheese products and lower earnings for powdered milk.Computable partial equilibrium; dairy market; non-tariff barriers