Economywide Effects of a Multilateral Trade Liberalization in Agriculture by Industrialized Market Economies on Canada, Japan, and the European Communities

Klaus Frohberg
March 1988  [88-WP 40]

This paper analyzes the economywide impacts of a multilateral trade liberalization in agriculture by industrialized market economies on Canada, Japan, and the European Market. The analysis takes changes in world market prices and in the price structures of the three countries from results obtained by SWOPSIM. It compares simulations of the free-trade scenarios with baseline results obtained over the period 1986-2000 for each of the countries.

Two types of responses are reported: the immediate response and those over the long run. Results from the analyses indicate that agriculture contracts in Japan and the EC and expands in Canada when agricultural trade is no longer protected. Gains from such policies are sufficiently large to compensate farmers in both the EC and Japan. Adjustments in factor markets are strong in all three countries analyzed.

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