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Abstract

This paper examines how EU trade flows and production values are affected by introducing special treatment for developed countries’ sensitive products into a potential DDA agreement. In particular, it explores how the EU’s decisions regarding the size of the tariff cut for sensitive products and the corresponding size of TRQ expansion affect its protection levels, its own GDP and that of other countries and regions. It is assumed that the EU’s management of its sensitive product regime aims to maintain farm incomes and production values, rather than to minimise import access. A novelty of the paper is that it explores the extent to which achieving this aim depends on similar decisions taken by other developed countries. The simulation tool used to analyse thirteen scenarios, with a time horizon of 2020, is the global Computable General Equilibrium model GLOBE. Results indicate that the lowest tariff cuts for sensitive products may not necessarily lead to the smallest decrease in agricultural production. Moreover, the interdependencies between the sensitive product choices of developed countries are considerable. The extent to which EU management decisions relating to sensitive products matter for the impact of a DDA agreement on third countries’ GDP is also examined.

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