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Type: Journal article
Title: The relative importance of global agricultural subsidies and market access
Author: Anderson, K.
Martin, W.
Valenzuela, E.
Citation: World Trade Review, 2006; 5(3):357-376
Publisher: Cambridge University Press
Issue Date: 2006
ISSN: 1474-7456
Statement of
Kym Anderson, Will Martin, and Ernesto Valenzuela
Abstract: The claim by global trade modelers that the potential contribution to global economic welfare of removing agricultural subsidies is less than one-tenth of that from removing agricultural tariffs puzzles many observers. To help explain that result, this paper first compares the OECD and model-based estimates of the extent of the producer distortions (leaving aside consumer distortions), and shows that 75% of total support is provided by market access barriers when account is taken of all forms of support to farmers and to agricultural processors globally, and only 19% to domestic farm subsidies. We then provide a back-of-the-envelope (BOTE) calculation of the welfare cost of those distortions. Assuming unitary supply and demand elasticities, that BOTE analysis suggests 86% of the welfare cost is due to tariffs and only 6% to domestic farm subsidies. When the higher costs associated with the greater variability of trade measures relative to domestic support are accounted for, the BOTE estimate of the latter's share falls to 4%. This is close to the 5% generated by the most commonly used global model (GTAP) and reported in the paper's final section.
Keywords: Markets and Market Access
Economic Theory & Research
Tax Law
Trade Law
Free Trade
Description: Published online by Cambridge University Press 19 Oct 2006 An earlier version is circulated as CEPR Discussion Paper No. 5569, London, and as World Bank Policy Research Working Paper 3900, Washington DC, April 2006
Rights: © Kym Anderson, Will Martin, and Ernesto Valenzuela
DOI: 10.1017/S1474745606002916
Published version:
Appears in Collections:Aurora harvest 6
Economics publications

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