The Effect of Direct Payments of the OECD Countries in World Agricultural Markets. Evidence From Partial and General Equilibrium Frameworks

The effect of decoupled payments granted to Oecd farmers on world agricultural markets is one of the controversial issues surrounding the Doha Development Agenda. The paper aims at providing additional evidence on the range of effects that such payments may determine under general and partial equilibrium assumptions. Simulations are run on a modified version of the model of the Global Trade Analysis Project (GTAP). Scenarios hypothesise the removal of decoupled payments only, and of all domestic support in Oecd countries; they are run on a baseline referred to year 2004. Results indicate that only few developing countries would gain substantially from the removal of decoupled payments and of domestic support in general; rather, few major exporters may gain substantially, including some of the Oecd countries themselves. Impact is sensitive to the modelling approach, and the partial equilibrium closure rule produces systematically a higher impact than the general equilibrium one in both the scenarios. Results are compared to those of other quantitative assessments, particularly the evidence recently produced by the Co.Si.Mo. project, run jointly by the Oecd and FAO.