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Multilateral trade liberalisation and Preference erosion: Effects on the agricultural sector of the EU's Mediterranean Partner Countries

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  • Kavallari, Aikaterini
  • Schmitz, P. Michael
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    Abstract

    This paper analyses preference erosion effects on the agricultural sector of the EU’s ten Mediterranean Partner Countries (MPCs). The modelling exercise is carried out with the partial equilibrium multi-commodity multi-region world trade model AGRISIM. The effects vary between the markets and depend mainly on the initial level of trade protection. Supposing that level of preferences granted to the MPCs by the EU remains as of 2001 then the effects are particularly distinguishable for high protected markets like beef in Turkey, milk and rice in Morocco and olive oil in all MPCs. Supposing that the free trade area with the EU is accomplished, then the impacts are evident mainly on beef, milk and sugar markets, where the prices among the preferential partners are much higher than the world market ones. The farmers are faced with lower supply and prices, which in turn reduce their income and their surplus, but to the benefit of the consumers and of the tax payers resulting to an increase of the overall welfare. Preference erosion effects on typical Mediterranean commodities such as olive oil, oranges and tomatoes are smoother when the free trade area is in force.

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    File URL: http://purl.umn.edu/44177
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    Bibliographic Info

    Paper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 44177.

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    Date of creation: 2008
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    Handle: RePEc:ags:eaae08:44177

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    Related research

    Keywords: preference erosion; Mediterranean Partner Countries; AGRISIM; International Relations/Trade;

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    1. Ravallion, Martin & Lokshin, Michael, 2004. "Gainers and losers from trade reform in Morocco," Policy Research Working Paper Series 3368, The World Bank.
    2. Joseph Francois & Bernard Hoekman & Miriam Manchin, 2006. "Preference Erosion and Multilateral Trade Liberalization," World Bank Economic Review, World Bank Group, vol. 20(2), pages 197-216.
    3. Chatti Rim, 2003. "A CGE Assessment of FTA Between Tunisia and the EU Under Oligopolistic Market Structures," Review of Middle East Economics and Finance, De Gruyter, vol. 1(2), pages 1-30, August.
    4. Rutherford, Thomas F. & Rutstrom, E. Elisabet & Tarr, David, 1997. "Morocco's free trade agreement with the EU: A quantitative assessment," Economic Modelling, Elsevier, vol. 14(2), pages 237-269, April.
    5. Patricia Augier & Michael Gasiorek, 2003. "The welfare implications of trade liberalization between the Southern Mediterranean and the EU," Applied Economics, Taylor & Francis Journals, vol. 35(10), pages 1171-1190.
    6. Harrison, Glenn W. & Rutherford, Thomas F. & Tarr, David G., 1997. "Economic implications for Turkey of a Customs Union with the European Union," European Economic Review, Elsevier, vol. 41(3-5), pages 861-870, April.
    7. Hosoe, Nobuhiro, 2001. "A general equilibrium analysis of Jordan's trade liberalization," Journal of Policy Modeling, Elsevier, vol. 23(6), pages 595-600, August.
    8. Denise Eby Konan & Keith Maskus, 1997. "Joint Trade Liberalization and Tax Reform in a Small Open Economy: The Case of Egypt," Working Papers 199703-R, University of Hawaii at Manoa, Department of Economics.
    9. Minot, Nicholas & Chemingui, Mohamed & Thomas, Marcelle & Dewina, Reno & Orden, David, 2007. "Impact of trade liberalization on agriculture in the near East and North Africa:," IFPRI books, International Food Policy Research Institute (IFPRI), number Nenatrade:2007.
    10. Piergiorgio Alessandri, 2000. "European and Euro-meditterranean Agreements: same simulation analysis on the effects of the EU trade policy," KITeS Working Papers 110, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jun 2000.
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