Bilateral Harmonization of EC and U.S. Agricultural Policies

Agricultural policies in both Europe and the United States provide commodities with an excessively high and distorted pattern of support. The economic interdependencies of the policies give rise to adverse fiscal and economic costs, which are viewed as disharmonies in the existing policy measures both within and between the two regions. Unilateral and simultaneous EC and U.S. policy changes are simulated with an international trade model. They are carried in three steps: (1) grains and feeds, (2) beef and dairy, and (3) sugar. Both cross effects and own effects are examined on typical policy targets. Results suggest that while world prices are sometimes drastically altered, the magnitude of cross effects is small and sometimes ambiguous compared to own effects. Feed livestock linkages are dominant factors in the economic rationale behind the interactions between countries. The case for cooperation in this trade game is, however, supported by the evidence from at least a budget point of view.

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Bulletin 88-2

 Record created 2017-04-01, last modified 2018-01-22

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