8th Geneva Roundtable on Trade-related Issues

COMMODITY-SPECIFIC TRADE ISSUES AND THE IMPLICATIONS OF POSSIBLE

MODALITIES FOR COMMITMENTS IN THE CONTEXT OF THE

WTO NEGOTIATIONS ON AGRICULTURE


Geneva, 8 November 2002

Paper No. 4

Implications for specific commodity markets of possible modalities for commitments in the areas of domestic support, market access and export competition

Commodities and Trade Division

Implications for specific commodity markets of possible modalities for commitments in the areas of domestic support, market access and export competition

The paper presents an assessment of how alternative modalities for commitments in the areas of domestic support, market access and export competition might impact on agricultural commodity markets. Two hypothetical modalities or scenarios are constructed to guide the analysis, one reflecting more limited reforms and the other involving deeper changes. Assessments are based on a number of informational sources, including FAO’s work on commodities, ATPSM model results and other analyses in the literature.

I. INTRODUCTION

1. The current work programme of the WTO negotiations on agriculture envisages the preparation, by the Chairman of the Special Sessions of the Committee on Agriculture, of an overview document towards the end of 2002 on modalities, to be agreed upon, for commitments in the negotiations. The actual draft of modalities will be prepared in January and a final document agreed by 31st March 2003. Given this timing, it is natural that there is a heightened interest among all those involved in the negotiations on modalities, which are key to the preparation of draft country Schedules.

2. The objective of this paper is to contribute to this process by analysing the possible impact on the main agricultural commodity markets of alternative modalities for commitments. The focus is on commodity markets at the global level, rather than on the quantitative analysis of gains and losses from trade liberalization across countries.

3. The next section considers two alternative sets of modalities derived from country proposals so far in the negotiation. Section III then summarizes commodity-specific assessments. Some issues for further consideration are outlined in Section IV.

II. POSSIBLE MODALITIES AND ASSESSMENT METHODOLOGY

4. The elements of two alternative sets of modalities derived from country proposals in the negotiations so far are outlined in Table 1. On the basis of these modalities, or scenarios of commitments, the implications for specific commodity markets are analyzed, utilizing quantitative model simulations and qualitative assessments. Although pieced together from various negotiating proposals, these modalities do not necessarily represent the position of any particular country or group of countries. Scenario 1, which is roughly similar to Uruguay Round cuts, assumes more limited reforms than Scenario 2 which embodies a mixture of proposals involving deeper cuts.

5. It should be noted that these scenarios include only those parameters that are readily amenable to quantitative analysis with a simulation model. In reality, commitments in the negotiations are likely to cover a broader range of issues not captured in these scenarios, including rules on administration of tariff-rate quotas (TRQs), state trading enterprises (STEs), non-direct forms of export subsidies, food aid and so on. In the assessments for particular commodities, an attempt has been made to take these other elements into account, where these are likely to be important. Another caveat is that the scenarios do not include special and differential treatment for developing countries, i.e. differential cuts or reductions are not applied to developing countries. This is essentially for technical reasons related to the model and so this analysis would be undertaken in further versions of the paper.

6. The assessment was undertaken by FAO commodity specialists on the basis of various analyses, notably experience gained over the past six years with the implementation of the Agreement on Agriculture, other analysis in the literature and model-based simulation results.

7. The simulation model utilized is the UNCTAD-FAO Agricultural Trade Policy Simulation Model or ATPSM, updated to its current form only recently. The base period of the model is 1996-98 for production, imports, exports etc. while tariffs and other policy parameters are for the end of the Uruguay Round implementation period (2000 for developed and 2004 for developing countries). In the simulations, the model uses reduced bound tariffs or initial applied rates, whichever are lower. The model produces a wide range of outputs, from impacts of policy reforms on world prices and volumes of trade and production to welfare measurements. The assessment in this paper is focused mainly on commodity market price effects and trade at the global level, rather than the effects on individual countries.1

Table 1: Assumed parameters for alternative modalities or scenarios for the purpose of simulation runs

Reform areas

Scenario 1

Scenario 2

Market access

    • m.f.n. tariff reduction

    • TRQ volume

    • In-quota tariff rate

Domestic support

    • AMS level

Export subsidies

    • Volume

36 percent all tariff lines

Expand by 20 percent

No change

20 percent cut

21 percent cut

Swiss formula, with parameter = 251/

Expand by 50 percent

Zero tariff

80 percent cut

Eliminate

Source: Assumed parameters.

1/ The Swiss formula for tariff cuts with the parameter value of 25 is defined as follows: Tf = (25*T0)/(25+T0), where Tf and T0 are final and initial tariffs, and 25 is the parameter assumed.

III. COMMODITY-SPECIFIC ASSESSMENTS

8. This section presents assessments of the likely impacts of the reform measures under the two scenarios for major individual commodity markets. For reasons of space, the characterization of the current situation as regards levels of distortions, in terms of support and protection, is largely omitted.2

Rice

9. Reforms under Scenario 1 are unlikely to bring about major changes in the levels, structure and geographical distribution of production, consumption or trade. The ATPSM results show world rice prices to increase by 1.3 percent only and trade by 5.1 percent (Table 1), which although consistent with this assessment is considered to be somewhat underestimated - other model-based results have shown somewhat larger impact. For 30 or so countries that collectively account for 75 percent of all rice imports, applied tariffs are relatively low and so the effective tariff reduction behind the simulation is much lower than 36 percent (Table 2)3. As for the impact of other policies, a 20 percent cut in amber box assistance alone would have marginal production-depressing effects, and in only 2 or 3 countries. Similarly, a 21 percent cut in export subsidies would only impact on the EU.

10. Much more significant effects are foreseen under Scenario 2. The model results show world price to increase by 3.7 percent and trade by 15 percent. All policy reforms contribute to the change, dominated by sharp tariff cuts. The impact would be considerable in several high-cost producing countries, both developed and developing. Domestic support disciplines would also bite significantly in this scenario, even more so if blue box-type support were also restrained. Finally, the total elimination of direct export subsidies would impact mainly the EU as an exporter.

11. Although not modelled, how the STEs regulate trade in real life is critical for the assessment because about 40 percent of world rice imports and exports, in volume terms, are estimated to be regulated in one way or other by the STEs or effected under government-to-government transactions. Also not modelled but important is the influence of other forms of possible export subsidization, notably export credit and food aid. Finally, on a matter of general interest, although tariff escalation is much less relevant for rice than it is for other commodities, the Scenario 2 type reforms could trigger a shift in EU imports from husked to milled rice, with negative consequences for domestic milling industries in the EU but positive ones in exporting countries. Countries in Central America and in parts of South America, which import rice mainly in the form of paddy for further processing, would incur a similar risk.

Wheat and coarse grains

12. The overall impact of reforms under Scenario 1 would be fairly modest. The ATPSM results show world prices of wheat to increase by 4.2 percent while those of other grains by about 1 percent only. Trade impacts are assessed to be 3.5 percent for wheat and barley and much smaller for other grains.4 This result is also consistent with the fact that applied tariffs are generally low for grains; as a result, the simulation effectively amounted to much lower cuts in operative tariffs. The impact would be lower if importing countries were to apply the full amount of the reduced bound rates rather than the lower applied tariffs.

13. For Scenario 2, the impact on the world wheat price would be marked (14 percent rise), while impacts are much smaller for other grains. Trade impact would also be significant for wheat (13 percent growth) and about 6 percent for maize and barley. All policy reforms simulated contribute to the change, with the dominant role played by the sharp reduction in tariffs.5 In this simulation, the effective average tariff reduction for two thirds of the world imports amounted to 68 percent for wheat and 78 percent for maize. The relatively small impact on coarse grain markets is consistent with the fact that most importing countries apply much lower applied rates, e.g. nearly 50 percent of maize imports are made at rates below one percent. This also means that even the sharp reduction of tariffs under Scenario 2 would not change the results much.

14. There is some evidence that over the past 5-6 years the continuation of sizeable domestic support to grain producers in a number of major exporting countries has helped to sustain production despite declining world prices. Ex ante assessments could go wrong if the same thing continues. By contrast, global trade has been little affected by direct export subsidies, but the grain markets are affected by other policy measures such as food aid, export credits and STEs. Thirdly, uncertainties concerning the SPS standards, particularly in connection with trade in maize containing GMOs, have impacted on market access, and unless the issue is resolved, this will be the case in the future too.

Oilseeds, oils and meals

15. Further market reform under Scenario 1 is expected to have only a limited impact on the market. The ATPSM results show world prices to increase by 3.2 percent for vegetable oils and 4.2 percent for oilseeds, with trade expansion of 1 percent and 6 percent respectively. The larger impact on the oilseeds sector compared with oils is due to higher tariff cuts on oilseeds (Table 2). As some of the large importers like India, Pakistan and Indonesia would still have bound rates much higher than currently applied rates, the impact would be less than assessed here if the applied rates in the future were raised. While direct export subsidies have little role in these markets, some reduction in domestic subsidies would have an effect.

16. Under Scenario 2, the ATPSM results show world price rises of 8 percent for vegetable oils and 10 percent for oilseeds, and trade expansion of 3 percent and 18 percent respectively. The larger impact on oilseeds is for the same reason as above, as modelled, although this aspect needs further analysis. Significantly reduced domestic subsidies in countries with relatively high cost of production, together with higher world prices, would stimulate output in areas with a comparative advantage in production, notably South America but also elsewhere like Australia and some countries in Africa. Import requirements would also decline in several other developing countries as domestic production is stimulated. Overall, these shifts in trade should be to the advantage of exporting developing countries, and trade between developing countries should also increase.

17. Some additional observations include:

Dairy products

18. The world dairy market is acknowledged to be among the most protected and supported markets in agriculture. Modest reform under Scenario 1 would only have limited effects. The ATPSM model results show world prices to increase by between 5 and 10 percent for milk powder, butter and cheese, which although higher relative to other commodities is not considered significant given the current level of distortions. Trade expansion is also modest. These results follow to a large extent from the fact that the effective tariff reduction, as modelled, is even lower than the 36 percent cut in the bound rate (Table 2) because a majority of the countries that account collectively for 75 percent of world imports are developing countries where applied tariffs are much lower. This approach also leaves intact most of the tariff peaks.

19. Reforms under Scenario 2 would have significant effects. In this case, the ATPSM results show world prices to increase in the range of 14 to 26 percent for various dairy products, and trade expansion would also be much higher. All policy reforms would bite on current practices. The largest impact stems from the sharp drops in bound rates, to the range of 12 to 13 percent on average, and all markets would adjust significantly, both those with tariff peaks as well as developing countries.

20. While the potential for expansion in markets where current access barriers are high is great, the potential to produce for export in major exporting countries is limited. For example, New Zealand and Australia together only account for 20 percent of the production of the EU and around 30 percent of US production. This explains in part the strong response of world prices of some products. Also, most dairy products involve a substantial amount of value-added, including branding and protection of region of origin/name (especially cheeses), so it is not clear to what extent products from low-cost producing countries would be able to compete. It could, however, be expected that with strong rises in world prices, dairy products would be diverted to higher-income countries in the northern hemisphere.

21. There are also some doubts about the extent to which production would fall substantially in the currently highly protected countries in the short-term. In the longer-term, however, the anticipated changes would provide strong incentives for output growth, and exports, from low-cost producing countries to increase, leading to lower output in higher-cost producing countries. Finally, the sharp reduction of the amber box support would put significant pressure for reforms of the domestic dairy industries in highly protected countries.

Meat

22. Like dairy products, meat markets are considered to be highly distorted on account of support and protection, largely in developed countries. Production and trade policies in several of these countries use a large range of instruments, which include high tariffs, TRQs, special agricultural safeguards, and domestic and export subsidies. The OECD average percentage PSEs are about 50 and 30 percent for sheepmeat and beef and about 16 percent for pigmeat and poultry.

23. The ATPSM results for Scenario 1 show relatively small impacts on world prices of various meats, in the range of 2 to 5 percent, with larger effect on world exports (between 4-10 percent rise). The impact is expected to be much more pronounced under Scenario 2, with world prices rising by between 5 and 9 percent and world exports in the range of 9 to 22 percent. In view of the widely acknowledged high levels of distortions of these markets, and based on other model-based studies, the ATPSM results appear to have underestimated the impact, especially in Scenario 1.6 One key source of the disagreement is the difficulty involved in modelling meat markets, as a range of tariffs and other trade barriers make it very hard to uncover the real level of protection to the sectors.

24. The stronger impacts under Scenario 2 are more in line with expectations and with other model-based assessments.7 As in the USDA study, tariff reductions play dominant role followed by the removal of domestic subsidies and then export subsidies. The scope for subsidized exports is considerable particularly for beef, with volume limits in 2000 amounting to 1.2 million tonnes, or 19 percent of world trade. The results are consistent in that in both scenarios the price impacts are stronger for beef and sheepmeat, consistent with the level of initial distortions.

25. There is an element of uncertainty over the impact on domestic production depending on the extent to which subsidies other than market price support are disciplined, while some marked shifts in the source and destination are foreseen on trade. Most of the excess supply generated as a result of the reform will be in low-cost meat exporting countries, such as Oceania and North and South America, while many high-cost exporting countries will reduce output and exports.

Sugar

26. Given the high level of distortions currently, modest reform under Scenario 1 would only have marginal effects. According to the ATPSM results, the world price would increase by 3.2 percent only, and world exports by 4 percent. As modelled, the operative import tariff falls by 24 percent only, assuming the continuation of some applied rates lower than reduced bound rates.8 More importantly, many of the current sources of distortions, including tariff peaks and TRQ-constrained trade would continue with these reform measures. One notable effect could be continued reduction in subsidized exports, mostly on white sugar from the EU. In some other markets, other effects would more than offset assessed impacts, e.g. Mexico may reduce exports to the rest of the world as its exports expand to the US market under NAFTA access provisions. Similarly, lower-cost sugar producers such as Brazil and South Africa would most likely capture a greater percentage of the high-quality raw and/or white sugar “free” market. Preferential sugar agreements would also most likely continue to provide substantial quota-rent to quota holding countries, and preclude growth in market share for more competitive sugar producing nations.

27. Reforms under Scenario 2 would have significant effects. In this case, the ATPSM results show the world price to increase by 8 percent and world exports by 7 percent.9 The average bound tariff of some 30 countries that together account for 75 percent of the world import falls to 15 percent (Table 2). This would have significant impacts on the location of production and trade. In general, low-cost suppliers in Latin America are expected to make significant gains in export volumes into other markets, especially those where the sector is currently highly protected. Production in high-cost countries (mostly beet sugar producing areas, but also higher cost cane producers) would shrink, leading eventually to the rationalization of their sugar beet industries.

28. Some other anticipated effects include possible shifts in import volumes to higher percentage of white sugar, provided quality concerns of the US and European food manufacturers are addressed. Significant shifts are also foreseen in the current origins and varieties of sugar imported. Recent experiences have also shown that many of these effects could be offset by exchange rate fluctuations, particularly of Brazil which accounts for a significant portion of the world trade.

Bananas

29. Three markets (the United States, the EC and Japan) account for more than two thirds of world banana imports in volume. The United States applies no duties or quantitative restrictions on imports. Japan is gradually lowering its bound tariff as per the Uruguay Round reduction schedule; however, practically all banana imports take place at the lower preferential rate. The EC has two tariff-quotas for bananas - one of 750 000 tonnes reserved for ACP suppliers with zero duties and the other of 2 653 000 tonnes with the tariff of €75 per tonne for non-ACP countries. Additional imports attract a prohibitive tariff. The EC has announced a tariff-only import system in 2006.

30. Therefore, significant changes in the world banana market following trade liberalisation should come from relaxed trade preferences and lower tariffs in the EC and Japan. World banana prices, production and exports would be higher and trade flows would look different. Some ACP countries currently exporting bananas would probably not be competitive and their exports would be lower.

31. The same would be applicable to EU domestic banana production, which now receives subsidies equivalent to approximately 50 percent of the total price received by growers. Dollar-area banana exporters (all in Latin America) would receive on average slightly higher prices for their produce (between 2 and 3 percent depending on the liberalization scenario) and their aggregate production and exports would be significantly higher, although the gains would not be evenly distributed among them.

Cocoa, coffee and tea

32. The world markets for cocoa, coffee and tea are among the least distorted from support and protection policies. These products do not receive domestic and export subsidies in the major producing and exporting countries, although there are periodic attempts to influence world prices through export restraints or quality enhancement programmes. Import tariffs are generally very low in developed countries while developing countries impose some duties - at least, the bound rates are higher. What is prominent about these products is that they face significant tariff escalation in some major import markets, i.e. tariffs increase as the degree of processing rises.

33. The ATPSM results (Table 2) show only slight impacts on world prices and trade, which is consistent with this characterization of policies in the base period. As operative tariffs used for the simulations are similar for both Scenario 1 and Scenario 2, there are no notable differences in the results, i.e. the results are invariant to the choice of the modalities. The model results also do not show higher exports of processed products. This was because there was little reduction in tariff escalation, even under Scenario 2 with the Swiss-25 formula. Some such effects, however, were noted in additional simulations involving complete elimination of tariff escalation.

Citrus and tropical fruits

34. Trade in citrus fruits is subject to higher protection relative to other fruits. Moreover, tariff schedules for citrus products are often complex in some major markets, where tariffs on narrowly defined products vary according to season, entry price and level of processing. Tariff escalation is widespread and marked. Fruits also receive domestic and export subsidies in some countries. Lastly, because of the nature of the product, trade in citrus fruits is much affected by SPS measures.

35. In view of these distortions, trade liberalization as well as simplification of import regimes should have notable impact on global markets of citrus fruits. Although the ATPSM results show fairly small impact on the world price (but somewhat larger impact on trade), other analyses show larger impacts. For example, the USDA study (Diao et al 2001) shows the world price (for an aggregated category for fruits and vegetables) to rise by 8 percent under full liberalization, 63 percent of this contributed by the removal of global tariffs and 37 percent by the elimination of export subsidies. Some other analysts felt that although the ATPSM impact would seem to be on the lower side, citrus prices are unlikely to rise by more than 5 percent even under full reform as demand growth is expected to remain low. Recent years have witnessed an increase in trade disruptions, or even outright bans, for phytosanitary reasons. These disruptions, if these persist, would partially offset the assessed positive effects on world trade from further reform.

36. The developing countries account for about 98 percent of the world production of fresh tropical fruits, while developed countries absorb 80 percent of the world import. Projections show demand prospects for fresh tropical fruits over the next decade to be favourable. While tariffs in most major import markets are fairly low, the main uncertainty to trade comes from SPS/TBT side, as recent experiences have shown. Not surprisingly, several major exporting countries have taken measures to improve production and export quality and food safety. They are also actively pursuing consultations with importing partners to relax non-tariff barriers, mostly in the SPS/TBT area. Further tariff reduction would help, notably in developing country markets, but resolving SPS/TBT related issues in both developed and developing import markets is critical for trade expansion.

Agricultural raw materials

37. Among major agricultural raw materials, only cotton is covered by the AoA – those not covered include rubber, jute and hard fibres and products, and hides and skins and leather. Raw cotton is traded largely unrestricted, while cotton textiles and clothing (under the Agreement on Textiles and Clothing) face high tariffs and other barriers in many developed and some developing countries. A few countries also have TRQs on cotton as well as trade distorting domestic subsidies and subsidized export assistance scheme. Some countries regulate or restrict the export of raw materials in the interest of domestic processing industries.

38. Import tariffs on most raw materials are, on the whole, quite low and so tariff reductions under Scenario 1 would have little impact on global markets. For cotton, as well as other products, the impact of reforms under Scenario 2 would not be marked either because tariffs are already much lower. The results for cotton, predictably, show a shift in production away from the higher-cost subsidizing areas to non-subsidizing countries. This would not affect much the total trade but there would be some shift in sourcing, away from the former to the latter areas. The liberalization of the textiles and clothing sectors, however, would dominate these assessed small, direct impacts on the cotton sector.

39. For virtually all these commodity sectors, what is of even greater significance in terms of the choice of modalities is the reduction of tariff escalation, which is sizeable for several product groups. Since the bulk of the processed products do not fall under the AoA, market access modalities for non-agricultural products are more relevant for this group of commodities.

IV. CONCLUDING REMARKS

40. This paper presented a preliminary assessment on how alternative modalities for further reform of trade in agriculture might impact on the main agricultural commodity markets at the global level. The assessment was undertaken by FAO commodity specialists on the basis of various analyses, notably experience gained over the past six years with the implementation of the Agreement on Agriculture, other analysis in the literature and model-based simulation results.

41. For the latter, the UNCTAD-FAO ATPSM model was used to simulate the effects of two hypothetical modalities or scenarios constructed for this purpose, in order to provide a guide for the nature of the impact. Scenario 1 is similar to the Uruguay Round package with somewhat higher tariff cuts on average while Scenario 2 embodies a mix of proposals involving deeper cuts in all areas. While these scenarios include only those parameters that are readily amenable to quantitative analysis, assessments also take into account other elements of the modalities that are not easily quantifiable. The focus has been on commodity markets at the global level and not on the quantitative analysis of gains and losses to individual countries.

42. The main observations can be summarized as follows.

Table 2: ATPSM model results: impact of two reform scenarios on world market prices and world exports

Source: ATPSM simulation results

Scenarios 1 and 2 as described in Table 1.

Table 3: Weighted average tariff rates for the base period and simulations

References

Diao, X et al. (2001), The Road Ahead: Agricultural Policy Reform in the WTO – Summary Report, ERS/USDA, Washington, D.C. Available at http://www.ers.usda.gov/publications/aer797/

FAO (2002), Agricultural Commodities: Profiles and Relevant WTO Negotiating Issues, Background document for the Consultation on Agricultural Commodity Price Problems, 25-26 March 2002, Commodities and Trade Division, FAO, Rome.

Freeman, F, J. Melanie, I. Roberts, D. Vanzetti, A. Tielu and B. Beutre (2000), The Impact of Agricultural Trade liberalization on Developing Countries, Australian Bureau of Agricultural and Resource Economics (ABARE), Canberra, Australia.

Gibson, P, J. Wainio, D. Whitley and M. Bohman (2001), Profiles of Tariffs in Global Agricultural Markets, Agricultural Economic Report No. 76, ERS/USDA, Washington, D.C. Available at http://www.ers.usda.gov/briefing/wto/tariffsmktac.htm

OECD (2001), The Uruguay Round Agreement on Agriculture: An Evaluation of its Implementation in OECD Countries, OECD, Paris.

OECD (2002a), Agricultural Policies in OECD Countries: Monitoring and Evaluation 2002, OECD, Paris.

OECD (2002b), Alternative Liberalisation Scenarios and their Impacts on Quota Rents and Tariff Revenues in Selected OECD Agricultural Markets, Document COM/AGR/TD/WP(2002)23/REV2, October 2002, OECD, Paris.

Sharma, Ramesh, Panos Konandreas and Jim Greenfield (1996), “An overview of assessments of the impact of the Uruguay Round on agricultural prices and incomes”, Food Policy, 21(4/5).

USDA (2002), WTO: Commodity Market Issues in the WTO, ERS/USDA, Available on-line at http://www.ers.usda.gov/briefing/wto/commodities.htm

Vanzetti, David and Ramesh Sharma (2002), Impact of Agricultural Trade Liberalization on Developing Countries: Results of the ATPSM Partial Equilibrium Model, Paper presented at the International Agricultural Trade Research Consortium (IATRC) summer symposium on The Developing Countries, Agricultural Trade and the WTO, 16-17 June 2002, Whistler Valley, Canada.

Wohlgenant, Michael, (1999), Effects of Trade Liberalization on the World Sugar Market, FAO, Rome.

1 For such applications of the model, see Vanzetti and Sharma (2002).

2 The following references provide background information: on commodity profiles (FAO 2002, USDA 2002); on agricultural tariffs (Gibson et al 2000); and on WTO-related policies for OECD countries (OECD 2001 and OECD 2002a). Recent model-based assessments of the WTO reform process are the ABARE study (Freeman et al. 2000), the USDA study (Diao et al 2001) and the OECD study (OECD 2002b).

3 As said in para 7, the operative tariffs, i.e. the tariffs actually used in the ATPSM simulation runs, are the lower of the reduced bound rates and initial applied rates.

4 The USDA analysis (Diao et al. 2001) shows wheat and other grain prices to rise by 3.4 and 1.4 percent respectively, while the impact was assessed to be smaller than this in the OECD study (OECD 2002b).

5 It is interesting to note that the USDA study not only finds world wheat price to rise by 18 percent under full policy reform (15 percent for other grains) but also that OECD domestic subsidy removal played the dominant role (contributing to 67 percent of the total change).

6 This also seems to be the case when these results are compared with model-based assessments undertaken around 1995 to assess the impact of the Uruguay Round, which involved similar extent of liberalization as in Scenario 1 here (see Sharma et al. 1996).

7 The 2001 USDA analysis estimates the impact of full liberalisation on world livestock product prices (including dairy) at 22 percent, and 12 percent when only tariffs are removed. An unpublished preliminary FAPRI analysis show impacts to the tune of 12, 5, and 11 percent price increases for beef, pork and poultry.

8 Many analysts, however, believe that the impact on world prices should be higher, e.g. 6.4 percent with the continuation of the Uruguay Round reforms in an earlier FAO study (Wohlgenant 1999). The USDA study estimates 11 percent price impact under global tariff removal and 16 percent under full policy reform.

9 In the Wohlgenant study, complete global liberalization was shown to lead to a rise of 30 percent in world market price.