Emerald Management Review:
Dispelling some misconceptions about agricultural trade liberalization

Abstract:

Purpose - To explain the distortion of international agricultural markets and the consequences of removing current tariffs and subsidies.

Design/methodology/approach - Describes the patterns of agricultural support. looking at import and export tariffs as well as domestic subsidies or price supports. Compares agricultural tariffs for the USA, Canada, Australia, New Zealand, the EU, Japan, South Korea and Taiwan with those for other, developing, regions. Analyses the distribution if government payments to farmers in the USA and EU. Estimates the welfare effects of liberalizing agricultural trade to high-income countries and to developing countries, separating tariff removal from subsidy removal. Takes cotton as an example, and answers the problem of preference erosion.

Findings - Finds that agricultural trade barriers are particularly high in the EU, followed by the USA and Japan. Shows that payments to farmers are much less important, but tend to go to the largest. Reveals that removal of tariffs would be more beneficial to high-income countries than to developing countries, but removal of subsidies would lead to losses by developing countries.

Practical implications - Appeals to trade negotiators to confine their concerns to the facts and their analysis.

Originality/value - Encapsulates the controversy over world trade in agricultural products in readable terms for the student.

Keywords:

Article Type:

Technical paper / Literature review

Reference:

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