Evaluating the effect of domestic support on international trade: a mercantilist trade restrictiveness approach

TY - CONF

T1 - Evaluating the effect of domestic support on international trade

T2 - 18th Annual Cofenerence on Global Economic Analysis

AU - Urban, Kirsten

AU - Brockmeier, Martina

AU - Jensen, Hans Grinsted

PY - 2015

Y1 - 2015

N2 - We use the Mercantilist Trade Restrictiveness Index (MTRI) to develop an extended index that measures the overall trade effects of domestic support payments in a general equilibrium framework environment. Our index is capable of analyzing the development of the trade restrictiveness of domestic support payments over time and across countries and of comparing these payments with other protection instruments. Furthermore, our index helps evaluate agricultural policy reforms that introduce changes into the composition of domestic support payments. We conduct this analysis with an extended version of the GTAP model and database using the EU as an example. Thus, we incorporate detailed EU domestic support payments taken from the OECD Producer Support Estimate (PSE) tables in the GTAP framework and reconcile PSE data with the WTO classification scheme. Although our index slightly increases from 2004 to 2007, the results indicate a decrease in trade distortion stemming from the implementation of decoupled support in the EU. The trade-equivalent protection rate determined under the index shows that domestic support payments restrict trade more than tariffs and export subsidies. Additionally, the index indicates that reducing WTO amber box domestic support payments would lead to decreased trade restrictiveness.

AB - We use the Mercantilist Trade Restrictiveness Index (MTRI) to develop an extended index that measures the overall trade effects of domestic support payments in a general equilibrium framework environment. Our index is capable of analyzing the development of the trade restrictiveness of domestic support payments over time and across countries and of comparing these payments with other protection instruments. Furthermore, our index helps evaluate agricultural policy reforms that introduce changes into the composition of domestic support payments. We conduct this analysis with an extended version of the GTAP model and database using the EU as an example. Thus, we incorporate detailed EU domestic support payments taken from the OECD Producer Support Estimate (PSE) tables in the GTAP framework and reconcile PSE data with the WTO classification scheme. Although our index slightly increases from 2004 to 2007, the results indicate a decrease in trade distortion stemming from the implementation of decoupled support in the EU. The trade-equivalent protection rate determined under the index shows that domestic support payments restrict trade more than tariffs and export subsidies. Additionally, the index indicates that reducing WTO amber box domestic support payments would lead to decreased trade restrictiveness.

M3 - Paper

Y2 - 17 June 2015 through 19 June 2015

ER -