Modeling Agricultural Trade Liberalization And Its Implications For The European Union

The paper reviews the models used in the past 10 years or so to analyze the expected effects of liberalizing agricultural trade with specific reference to the implications for agriculture and agricultural policies in the European Union. Its main aim is to provide the reader with an overview of models which have been used to assess, first, during the Uruguay Round, the implications of alternative hypothetical trade liberalization scenarios, then, the Agreement itself, and, more recently, the implications of further steps in liberalizing agricultural markets as a result of the on-going WTO negotiations. The conclusion is that the efforts to model agricultural trade and trade policies, taken as a whole, are not fully satisfactory. Although there are several models which offer accurate representations of international agricultural markets and trade policies, there are many others, including several developed and used by governments and relevant multilateral institutions, which are structurally incapable of providing reliable answers to certain policy questions they are posed. The final part of the paper identifies priorities for actions to be taken in order to improve modeling of trade policies and WTO commitments.