An Assessment of the Distributional Impact of Agricultural Trade Policies in the Triad

This paper estimates the distributional impact of agricultural trade policies in the Triad using the new concept of effective protection developed by Anderson (1998). The level of protection received by an industry is measured by the uniform tariff, which is equivalent in terms of sector specific rents to the actual differentiated tariff structure. It thus reflects the ability of specific factors owners to preserve their incomes at the expense of general welfare. In order to evaluate the cost of agricultural trade policies we construct an original computable general equilibrium framework, which incorporates three sources of price distortions: ad-valorem tariffs (which include ad-valorem equivalents of specific tariffs and tariff quotas), export and production subsidies or taxes. Our estimations allow us to evaluate international differences in levels of trade liberalization in agricultural sectors and to bring out some properties of the effective protection rates developed by Anderson. On the first point, we show that the cost of agricultural trade policies in the Triad is far from being trivial. This cost, measured in terms of the sacrifice bear by the community to protect sectoral rents is particularly high in Japan and in the European Union in the cereal sector. On the second point, we stress the discrepancy between the new concept of effective protection and the usual one defined as the percentage change in value added per unit induced by the tariff structure.