THE EFFECTS OF TRADE LIBERALIZATION - PROBLEMS OF MODELING THE EFFECTS OF LIBERALIZING AGRICULTURAL TRADE

The liberalisation of agricultural trade has been an important component of the Uruguay Round of Multilateral Trade Negotiations under the GATT. A considerable amount of research effort has been expended on estimating the costs of agricultural protectionism. Most of this activity has been based on a partial equilibrium framework with conventional quantification of the distributive benefits and costs to be expected from liberalisation. Attempts at general equilibrium analysis have been fewer but provide evidence of the economy-wide gains from the removal of protection. Whilst these analyses have had a powerful influence on the nature of the political discussions on agricultural trade policy, they have not helped define the details of politically acceptable alternatives to current agricultural supports. The reasons are the technical economic, data and statistical problems which restrict the interpretation of results to broad generalisations, and the failure of analyses to focus on the most important political concerns. Indicating these concerns may help define the focus of future research, but it is doubted if conventional economic analysis has very much more to offer. © 1991.