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Impacts of BSE on World Trade in Cattle and Beef: Implications for the Canadian Economy

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  • Randall Wigle
  • Jeevika Weerahewa
  • Maury Bredahl
  • Sudarma Samarajeewa

Abstract

This paper evaluates the impact of BSE‐related trade restrictions on Canada using a general equilibrium model. It links selected results of the Global Trade Analysis Project (GTAP) approach, a global computable general equilibrium model, with Basic Model of Regional Trade (BMRT), a Canadian regional model. We find first, that while producers were hurt a lot, there are other general equilibrium considerations (gains to processors and/or consumers) and sectoral adjustments that at the regional level tend to partially offset the losses suffered by producers. We also assess the extent to which opening of the U.S. border is important relative to access to the rest of the world. Our results indicate that the losses to the Canadian economy are around $1 billion and they were reduced significantly when Canada resumed beef trade with the United States, as a result of various government allegations. Le présent article évalue, à l'aide d'un modèle d'équilibre général, les répercussions des restrictions commerciales imposées envers le Canada à la suite de la découverte d'un cas d'ESB. Il établit un lien entre les résultats sélectionnés du Projet d'analyse des échanges commerciaux (GTAP), un modèle d'équilibre général mondial et programmable, et ceux du Modèle de base des échanges régionaux (Basic Model of Regional Trade – BMRT), un modèle régional canadien. Bien que les producteurs aient été très touchés, il faut considérer d'autres éléments d'équilibre général (gains réalisés par les transformateurs et/ou les consommateurs) et des ajustements sectoriels qui, à l'échelle régionale, tendent à compenser partiellement les pertes subies par les producteurs. Nous avons évalué l'étendue de l'importance de l'ouverture des frontières des États‐Unis par rapport à l'accès au marché du reste du monde. Selon nos résultats, les pertes pour l'économie canadienne avoisinent le milliard de dollars et ont considérablement diminué lorsque le Canada a repris le commerce duf avec les États‐Unis à la suite de diverses allégations de la part du gouvernement.

Suggested Citation

  • Randall Wigle & Jeevika Weerahewa & Maury Bredahl & Sudarma Samarajeewa, 2007. "Impacts of BSE on World Trade in Cattle and Beef: Implications for the Canadian Economy," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 55(4), pages 535-549, December.
    • Handle: RePEc:bla:canjag:v:55:y:2007:i:4:p:535-549
    DOI: 10.1111/j.1744-7976.2007.00108.x
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    References listed on IDEAS

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    1. Weerahewa, Jeevika & Meilke, Karl D. & Le Roy, Danny G., 2008. "An Economic Assessment of the BSE Crisis in Canada: Impact of Border Closure and BSE Recovery Programs," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 9(1), pages 1-26.
    2. Samarajeewa, Sudarma & Weerahewa, Jeevika & Bredahl, Maury E. & Wigle, Randy, 2006. "Impacts Of Bse Crisis On The Canadian Economy: An Input-Output Analysis," Annual Meeting, 2006, May 25-28, Montreal, Quebec 34179, Canadian Agricultural Economics Society.
    3. Carlberg, Jared G. & Brewin, Derek G., 2005. "Managing an Industry in Crisis: BSE in Canada," 2005 Annual Meeting, February 5-9, 2005, Little Rock, Arkansas 35529, Southern Agricultural Economics Association.
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    Cited by:

    1. Mellado, Aida Gonzalez, 2008. "Analysing effects of trade liberalization on household expenditure with an extended version of the GTAP model: The case of Mexico," Conference papers 331740, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Dimitrios Panagiotou & Azzeddine M. Azzam, 2010. "Trade Bans, Imperfect Competition, and Welfare: BSE and the U.S. Beef Industry," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(1), pages 109-129, March.
    3. Aldy, Joseph E. & Viscusi, W. Kip, 2013. "Risk Regulation Lessons from Mad Cows," Foundations and Trends(R) in Microeconomics, now publishers, vol. 8(4), pages 231-313, December.
    4. Clark, J. Stephen & Thibodeau, David R. & Grant, K. Gary & Prochazkova, Katerina, 2008. "Disease Outbreaks and Agricultural Trade: The Case of Potatoes," Working Papers 43464, Canadian Agricultural Trade Policy Research Network.
    5. Chen‐Ti Chen & John M. Crespi & William Hahn & Lee L. Schulz & Fawzi Taha, 2020. "Long‐run impacts of trade shocks and export competitiveness: Evidence from the U.S. BSE event," Agricultural Economics, International Association of Agricultural Economists, vol. 51(6), pages 941-958, November.

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