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Measuring the Trade Restrictiveness of Domestic Support using the EU Common Agricultural Policy as an Example

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  • Kirsten Boysen‐Urban
  • Martina Brockmeier
  • Hans G. Jensen
  • Ole Boysen

Abstract

We develop an index that measures the overall trade effects of domestic support payments. Our index is based on the Mercantilist Trade Restrictiveness Index (MTRI) and is capable of analysing the development of the trade restrictiveness of domestic support payments over time and across countries. It facilitates the evaluation of agricultural policy reforms introducing changes in the composition of domestic support payments. We conduct this analysis with a computable general equilibrium model that is extended to depict detailed agricultural policies using the Common Agricultural Policy of the European Union (EU) as an example. For the representation of agricultural policies, we updated the underlying database by incorporating detailed EU domestic support payments taken from the OECD Producer Support Estimate (PSE) tables and reconcile PSE data with the WTO classification scheme. Our index confirms a decrease in trade distortion stemming from the implementation of decoupled support in the EU. In addition, the trade‐equivalent protection rate shows that the trade restrictiveness of domestic support payments depends on the assumptions made with regard to the degree of decoupling of those payments.

Suggested Citation

  • Kirsten Boysen‐Urban & Martina Brockmeier & Hans G. Jensen & Ole Boysen, 2020. "Measuring the Trade Restrictiveness of Domestic Support using the EU Common Agricultural Policy as an Example," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(1), pages 27-49, February.
    • Handle: RePEc:bla:jageco:v:71:y:2020:i:1:p:27-49
    DOI: 10.1111/1477-9552.12337
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    Cited by:

    1. Anderson, Kym & Corong, Erwin & Strutt, Anna & Valenzuela, Ernesto, 2023. "The Relative Importance of Global Agricultural Subsidies and Tariffs, Revisited," World Trade Review, Cambridge University Press, vol. 22(3-4), pages 382-394, October.
    2. Pierre Boulanger & Kirsten Boysen-Urban & George Philippidis, 2021. "European Union Agricultural Support ‘Coupling’ in Simulation Modelling: Measuring the Sustainability Impacts," Sustainability, MDPI, vol. 13(6), pages 1-17, March.
    3. Magdana Kondaridze & Jeff Luckstead, 2023. "Determinants of dairy‐product trade: Do subsidies matter?," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(3), pages 857-873, September.

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