Agricultural Trade Liberalization in the Doha Round. Alternative Scenarios and Strategic Interactions between Developed and Developing Countries

The paper explores the impact of an agricultural trade agreement, simulating alternative liberalization scenarios, and studying the outcomes of the interaction between the strategies of country groups in the negotiation. The analysis is based on the model of the Global Trade Analysis Project (GTAP), and on the related version 5.4 database. Scenarios are run on a 2013 baseline, built by taking into account a number of events that have affected (and will further affect) world agricultural markets up to that period, allowing to focus on the effects that are specifically attributable to further trade liberalization in the Doha Round. The policy strategies analyzed are two liberalization scenarios based on the proposals made in the present round of agricultural negotiations in terms of market access and export competition, plus a free agricultural trade benchmark scenario. Simulations are employed to study the interactions between the possible strategies of two wide country groups – developed and developing countries - on the basis of game theory, and to search for mutually advantageous agreements to be compared with actual agreement hypotheses. Results indicate that welfare gains could be reaped both by developed and developing countries and the possibility of inter-country compensations would allow, at least in principle, to reach an agreement.