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No. 13 TRADE POLICY SIMULATION MODELS: Estimating global impacts of agricultural trade policy reform in the Doha Round

FAO TRADE POLICY TECHNICAL NOTES

Year of publication 2005

Pages 11

Author Trade and Markets Division

Product type Book (stand-alone)

Series title Trade policy briefs

Edition 1

Synopsis (short abstract) There has been a recent proliferation of simulation modelling exercises attempting to quantify the potential economic gains from further liberalization of agricultural trade, and in doing so, seeking to inform the current Doha Round of multilateral trade negotiations. This paper seeks to contribute to a better appreciation of what the results of simulation models actually mean, and the extent to which they can be used to inform debates relating to trade policy reform.

Language English

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    L'on a assisté récemment à une prolifération d'exercices de simulation au moyen de modèles qui essaient de quantifier les gains économiques que devrait apporter une libéralisation plus poussée du commerce agricole et, ce faisant, d'éclairer les négociations commerciales multilatérales de l'actuel Cycle de Doha. Le présent document a pour objet de faire mieux comprendre ce que signifient effectivement les résultats des modèles de simulation et la mesure dans laquelle ils peuvent être utilisés pour éclairer les débats touchant la réforme des politiques commerciales.
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    Agricultural trade liberalization in the Doha round. Alternative scenarios and strategic interactions between developed and developing countries
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    The paper explores the impact of an agricultural trade agreement, simulating alternative liberalization scenarios, and studying the outcomes of the interaction between the strategies of country groups in the negotiations. The analysis is based on the model of the Global Trade Analysis Project (GTAP), and on the related version 5.4 database. Scenarios are run on a 2013 baseline, built by taking into account a number of events that have affected (and will further affect) world agricultural markets up to that period, focusing on the effects that are specifically attributable to further trade liberalization in the Doha Round. The policy strategies analyzed are two liberalization scenarios based on the proposals made in the present round of agricultural negotiations in terms of market access and export competition, plus a free agricultural trade benchmark scenario. Simulations are employed to study the interactions between the possible strategies of two wide country groups – developed and d eveloping countries on the basis of game theory, and to search for mutually advantageous agreements to be compared with actual agreement hypotheses. Results indicate that welfare gains could be reaped both by developed and developing countries and the possibility of inter-country compensations would allow, at least in principle, an agreement to be reached.
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