An Economic Analysis of the Impacts of Trade Liberalization on Asian Dairy Market

The objective of this paper is to develop an economic analysis of the impacts of further trade liberalization on Asian dairy markets. In order to achieve this, we first make a review of Asian dairy policies from the perspective of domestic support, market access and export subsidy. Then a world dairy model is employed, which reflects both vertical and spatial characteristics of the world dairy sector. We analyze the separate and combined impacts of eliminating Japan's domestic dairy subsidy, removing other Asian countries dairy trade policies excluding Japan, eliminating all Asian countries domestic dairy and trade policies, and multilateral dairy trade liberalization around the world. We find that Japan and Korea's producers will suffer much bigger losses from trade liberalization than other countries in the region; Japan and Korea's producers get much more protection from trade distortions than from domestic subsidy; India is a potential competitive exporter in Asia and the world; China is a potential importer in Asia but a potential competitive exporter in the world; South East Asia and other South Asian countries are potential importers in Asia and the world; greater trade liberalization around the world will help to increase exports for potential exporters and/or ease importing pressure for potential importers; the order of competitiveness of Asian economies from least competitive to most competitive is Japan, Korea, South East Asia, other South Asia, China and India; China and India consumers will lose from world trade liberalization, but the other countries consumer surplus will increase.