ANNEX 2: SIMULATION RESULTS WITH ICAC SUBSIDY SCENARIO

Annex 2 Table 1: Policy parameters used for the base period for the ICAC subsidy scenario ^1/

^1/ The table only shows those countries that have one or more positive parameters (tariff or domestic subsidy). For all the rest of the countries in the ATPSM, both import tariffs and domestic subsidies on cotton were zero.

^2/ As said in the text, these are actual tariffs that cotton imports face, and are either applied MFN rates or in-quota tariffs where there are tariff quotas (that are assumed - based on a review of recent policies - not to be binding).

^3/ The levels of domestic subsides are based on the ICAC estimates and are simple averages for the period 1998-2000 from Table 1 in the text.

^4/ These are ad valorem equivalent subsidy rates corresponding to the level of subsidies in column 2 and were computed as the ratio (percent) of per unit subsidy to world market price of cotton (see text for details).

^5/ The second column is the sum of the numbers while the first and third columns are weighted averages. The weights used are import volumes (for 28 countries with 65 percent share of global import) for tariffs and cotton production shares for domestic subsidy rates.

Annex 2 Table 2: Impact on world market price of cotton following complete elimination of domestic subsidies and import tariffs, ICAC subsidy scenario

^1/ The numbers next to S and D indicate multiples of the elasticity values in the base scenario. For example, the elasticities for the base scenario (S=1, D=1) are the same as in Annex 1 Table 2, while in the scenario S=3, D=0.25, the supply and demand elasticities assumed are 3 and 0.25 times their base values, respectively.

Source: ATPSM simulation results.

Annex 2 Table 3: Impact on production of full trade liberalization, ICAC subsidy scenario

^1/ See the note in the previous table.
^2/ BBCM sub-group includes Benin, Burkina Faso, Chad and Mali.
Source: ATPSM simulation results.

Annex 2 Table 4: Impact on exports of full trade liberalization, ICAC subsidy scenario

^1/ and ^2/ - see previous two tables for explanation.
Source: ATPSM simulation results.

Annex 2 Table 5: Impact of complete liberalization on welfare measures, ICAC subsidy scenario^1/ (base scenario and two others with extreme values)

^1/Change in total welfare (DTS) = change in producer surplus (DPS) + change in consumer surplus (DCS) + change in government revenue or savings (DGR), which is savings resulting from the policy reform. Details are shown for the base scenario only because DGR is same for other scenarios also; so, given the DGR, the remaining difference between DTS and DPS is DCS.

^2/ BBCM sub-group includes Benin, Burkina Faso, Chad and Mali.

Source: ATPSM simulation results.

Annex 2 Table 6: Impact on export earnings of complete liberalization, ICAC subsidy scenario

Notes ^1/ and ^2/: See previous tables for explanation.
Source: ATPSM simulation results.