The effects of freer trade on global agriculture

Abstract

AbstractIntransigency among developed and developing countries to reduce trade‐distortive policies—domestic subsidies, export subsidies, and import tariffs—created deadlock in the Doha Round negotiations. Because of this impasse, many countries continue to heavily subsidize their agricultural production and high import tariffs continue to persist in the world market. This study empirically quantifies the benefits of a global free trade agreement utilizing a large‐scale computable general equilibrium model. The results show that a global trade agreement increases welfare by $60 billion as commodity production and consumption adjust to reflect their comparative advantage patterns, accentuating the benefits of completing a global free trade agreement.