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Can Trade Policies Soften the Economic Impacts of an Avian Influenza Outbreak? Simulations From a CGE Model of the Philippines

Author

Listed:
  • U-Primo E. Rodriguez

    (College of Economics and Management, University of the Philippines Los Banos)

  • Yolanda T. Garcia

    (College of Economics and Management, University of the Philippines Los Banos)

  • Arnulfo G. Garcia

    (Southeast Asian Regional Center for Graduate Study and Research in Agriculture, Philippines)

  • Reynaldo T. Tan

    (College of Economics and Management, University of the Philippines Los Banos)

Abstract

The paper examines the possibilities of using trade policy to address the adverse economic effects of an avian influenza outbreak in the Philippines. In particular, it employs a computable general equilibrium (CGE) model for analyzing the likely effects of two options; namely, a) a ban on imported poultry, and b) the removal of tariffs on non-poultry meat products. Using six model scenarios (i.e., production shocks, consumption shocks, ban on poultry imports, removal of tariff on non-poultry imports, and selected combinations of these shocks), the simulation results reveal that (a) the consumption and production shocks are expected to have a contractionary effect on real GDP; (b) the expected fall in the output of poultry products explains most of the decline in real GDP; (c) the production shock appears to have a larger impact since this explains most of the decline in real GDP as well as the increase in the general price level; (d) while the consumption shock tends to have a larger impact on the poultry products, the production shock dominates the aggregate responses because of its effects on other industries, and (e) avian influenza is likely to have far-reaching effects on the economy, way beyond the poultry sector. Based on these results, this paper supports the use of an import ban as a preventive measure against the occurrence of an avian influenza attack. This is based on the finding that the economic costs from such a measure appear to be lower than the costs associated with the disease. In contrast, the study finds that there is a weak case for removing tariffs on non-poultry meat products as a means to soften the harmful impacts of an avian influenza outbreak.

Suggested Citation

  • U-Primo E. Rodriguez & Yolanda T. Garcia & Arnulfo G. Garcia & Reynaldo T. Tan, 2007. "Can Trade Policies Soften the Economic Impacts of an Avian Influenza Outbreak? Simulations From a CGE Model of the Philippines," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 4(2), pages 41-50, December.
    • Handle: RePEc:sag:seajad:v:4:y:2007:i:2:p:41-50
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    References listed on IDEAS

    as
    1. Helen Cabalu & U-Primo Rodriguez, 2007. "Trade-offs in Trade Liberalization: Evidence from the Philippine 2005 Tariff Changes," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 637-663.
    2. Warwick McKibbin & Alexandra Sidorenko, 2006. "Global Macroeconomic Consequences of Pandemic Influenza," CAMA Working Papers 2006-26, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
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    Cited by:

    1. Zamani, Omid & Chibanda, Craig & Pelikan, Janine, 2021. "Investigating Alternative Poultry Trade Policies in the Context of African Countries: Evidence from Ghana," 2021 Conference, August 17-31, 2021, Virtual 315173, International Association of Agricultural Economists.
    2. Zamani, Omid & Chibanda, Craig & Pelikan, Janine, 2020. "Tariff Escalation and Import Bans in the Economic Partnership Agreement between the EU and West Africa," Conference papers 333239, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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