Studying the effects of domestic support provisions on global agricultural trade: WTO and OECD policy indicators in the CAPRI model

This paper illustrates the potential benefits of implementing policy indicators on domestic support provisions to agriculture in the large-scale agricultural sector model CAPRI (Common Agricultural Policy Regional Analysis) designed for European agriculture and global trade. With the reduction of trade barriers and opening up of market access, domestic support plays a potentially increasing role as a means to provide support to agriculture. Domestic support provisions are captured in the WTO and OECD support classification systems. We use the two databases to develop indicators that mirror domestic support as measured by the WTO through a member’s notifications and measured by the OECD through monitoring policies in the PSE-database. By comparing the two databases we find, that some green box measures are regarded by the OECD as requiring production and as such potentially in conflict with green box rules. We develop a scenario in which green box measures are abolished to investigate this claim. Our model results indicate only small effects in production and trade even if the green box of the EU is completely abolished.