The effects of trade policies for fresh fruit and vegetables of the European Union

Abstract

This paper examines the economic effects of the trade policies for fresh fruit and vegetables adopted by the European Union (EU) after the Uruguay Round Agreement on Agriculture (URAA). The new import regimes are based on entry prices that in effect work as minimum prices. At the same time, the EU has signed trade preference agreements particularly with Southern Mediterranean countries that are important suppliers of fruit and vegetables to the EU. The management of the import regime is a balance between two conflicting objectives: to support internal producers and to preserve trade flows from preferred countries. On the side of export subsidies, to handle the reduction commitments under the URAA the EU has introduced rationing trough tender procedures. The analysis shows that such subsidies do not seem able to boost the exports of eligible products. Therefore, EU policy makers should ask whether the EU should continue to offer such subsidies.