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Abstract
Agricultural protection in rich countries, which had depressed Australian farm
incomes via its impact on Australia’s terms of trade, has diminished over the past two
decades. So too has agricultural export taxation in poor countries, which has had the
opposite impact on those terms of trade. Meanwhile, however, import protection for
developing country farmers has been steadily growing. To what extent are Australian
farmers and rural regions still adversely affected by farm and non-farm price- and
trade-distortive policies abroad? This paper draws on new estimates of the current
extent of those domestic and foreign distortions: first, to model their net impact on
Australia’s terms of trade (using the World Bank’s Linkage model of the global economy);
and second, to model the effects of that terms of trade impact on output and real
incomes in rural versus urban and other regions and households within Australia as of
2004 (using Monash’s multi-regional TERM model of the Australian economy).