David Vanzetti and Ramesh Sharma (2002), 'Modelling the impact of trade liberalisation on developing countries with ATPSM. Invited paper at International Agricultural Trade Research Consortium summer symposium on "The Developing Countries, Agricultural Trade and the WTO", Whistler Valley, British Columbia, Canada, 16-17 June 2002 (forthcoming)

Summary

The Agricultural Trade Policy Simulation Model (ATPSM) is a static, multi-commodity, multi-region, partial equilibrium trade model that accounts for the distribution of quota rents. ATPSM features a high level of agricultural commodity (36) and country (161) disaggregation. The model is used here to show the impacts on prices, welfare and trade flows of complete agricultural liberalisation in: (i) developed countries; (ii) developing countries; and (iii) all countries.

Simulations suggest most liberalising countries experience a welfare gain, but these gains are relatively few and there is little to be had from liberalising tropical products. Many non-liberalising countries experience a welfare loss from the rise in world prices and the loss of quota rents, but developing countries enjoy increased exports in all commodity groups. These results highlight the need for a better understanding of tariff rate quota administration and the allocation of quota rents.