Agricultural Export Subsidies and Domestic Support Reform Under the WTO System: What Does It Mean for Welfare in West Africa?

Authors


  • The authors acknowledge and extend sincere thanks and appreciations to the anonymous referee of The World Economy for the insightful comments, criticisms and suggestions that helped improve the content and structure of this paper.

Abstract

This paper analyses the potential welfare impacts West Africa tends to encounter from liberalising agricultural export subsidies and domestic support in developed and developing countries according to the reform proposals of the Doha Development Agenda. We base our analysis on the July framework scenario which considers a tiered formula that adopts a Harbinson Approach plus sensitive and special product provisions. The results indicate that while the world prices of the major exportable commodities of the region will fall, those of their imports will rise. Subsequently, consumers of nearly all of the commodities analysed encounter potential welfare losses, while almost all producers of these commodities experience potential welfare gains. Consumers are expected to encounter an aggregate loss of about $591.93 million, while a net producer surplus of about $423.78 million is expected to be generated. However, because the gains by producers are insufficient to compensate consumers’ losses, the fifteen West African nations considered in the analysis are expected to experience a net welfare loss of about $168.16 million. On the contrary, large developing countries such as Brazil, India and China as well as developed nations like the EU and Japan are expected to enjoy net welfare gains. The net losses accrued to the region imply more poverty and heightened food insecurity as all West African countries faced severe hunger situation in 2010. However, even though these findings conform to other research results indicating net food importing countries will become losers from agricultural trade reform, while net food exporters experience welfare gains, concerns of data quality and reliability that are usually associated with macrolevel analysis render these results more indicative than definitive.

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