Australian Centre for International Agricultural Research (under PN9449) and the World Bank for financial assistance. Will Trade Liberalization Harm the Environment? The Case of Indonesia to 2020

ESTIMATING ENVIRONMENTAL EFFECTS OF TRADE AGREEMENTS WITH GLOBAL CGE MODELS: A GTAP APPLICATION TO INDONESIA Anna Strutt and Kym Anderson Provided globally optimal environmental and other policies are in place, mostfavoured -nation (MFN) trade liberalizations will always improve global economic welfare. But since the proviso is not met in practice, empirical studies of the environmental and resource depletion effects of such reforms are needed to determine whether trade reform is still worthwhile. This paper provides a methodology for doing that, using a modified version of a multi-country economy-wide model. Attention focuses on environmental effects in just Indonesia, a large newly industrializing country that is rich in natural resources and committed to taking part in major multilateral and regional trade liberalizations over the next two decades. A modified version of the global CGE model known as GTAP is used to project the world economy to 2010 and 2020 without and with thos...

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China, GMOs, and world trade in agricultural and textile products China has always strived for self-sufficiency in farm products, particularly staple foods. Its rapid industrialization following its opening up to global markets during the past two decades has been making that more difficult, and its accession to the WTO may add to that difficulty. New agricultural biotechnologies could ease that situation. However, the adoption and spread of some of those biotechnologies in agriculture have raised concerns, particularly over the environmental and food safety effects of genetically modified organisms (GMOs). This paper focuses on possible implications of the GMO controversy for China, since it is prospectively not only a major producer and consumer of GM farm products but also a potential exporter of some of them. It explores the potential economic effects of China not adopting versus adopting GMOs when some of its trading partners adopt that technology. The effects are shown to depend to a considerable extent on the trade policy stance taken in high-income countries opposed to GMOs and/or to liberalization of Chinas trade in textiles and apparel. Key words: GMOs, trade policy, import ban, China, WTO JEL codes: C68, D58, F13, O3, Q17, Q18 Contact author: Shunli Yao Centre for International Economic Studies University of Adelaide Adelaide, SA 5005 Australia Phone +61 8 8303 4927 Fax +61 8 8223 1460 shunli.yao@adelaide.edu.au China, GMOs, and world trade in agricultural and textile products Kym Anderson and Shunli Yao University of Adelaide 1.

delaide.edu.au/cies/ ISSN 1445-3746 series, electronic publication 3 CIES DISCUSSION PAPER 0113 Economy-wide dimensions of trade policy and reform Kym Anderson CEPR, and School of Economics and Centre for International Economic Studies University of Adelaide Australia 5005 Phone (+61 8) 8303 4712 Fax (+61 8) 8223 1460 kym.anderson@adelaide.edu.au April 2001 Copyright 2001 Kym Anderson ___________________________________________________________________ Forthcoming in a Handbook on Developing Countries and the Next Round of WTO Negotiations, to be published by the World Bank in April 2001 Economy-wide dimensions of trade policy and reform Kym Anderson Every developing country has an interest in trade policy reform. This is true even for the most open of economies because, while their own government may not be distorting incentives, the government policies of many othe

This paper seeks to address two questions raised by these concerns. First, to what extent are the agricultural policy reforms embodied in the URAA consistent with meeting domestic policy objectives such as providing adequate degrees of food security, environmental protection and viability of rural areas (the `synergies' part of the paper's sub-title)? And second, if and where the URAA reforms are countering those goals, what domestic policy actions and/or WTO rules changes are appropriate (the `trade-offs' part of the sub-title)? In the process of addressing these questions, the paper examines the claim that agriculture deserves more price support and import protection than other sectors because of the nonmarketed externalities/public goods it produces jointly in the process of producing marketable food and fibre. Do these unrewarded positive externalities exceed the negative externalities from farming by more than the net positive externalities produced by other sectors? If so, to what extent if any are those farmer-produced externalities under-supplied? And where there is under-provision, what are the most efficient ways to boost their production to the socially optimal levels? The first section of the paper addresses `non-trade concerns' in general, before attention is turned to each of the three specific concerns mentioned above. The paper finishes with a summary of its conclusions. Throughout, the agricultural reforms being referred to include not just import liberalization but also cutbacks in export subsidies and in various forms of domestic support as in the URAA which, collectively, are lowering government support for farm production in protective OECD countries

Economists tend to exalt the virtues of free international trade, while politicians are more skeptical. This paper suggests that this is the case because politicians mainly worry about the income distribution effects of trade liberalization, while economists focus on efficiency. Using textbook economic analyses we show that compensating the income distribution effects of free trade may be more complicated and hazardous than is often assumed, at least from a comparative static point of view. Hence politicians may favor trade liberalization only when distributional effects are ignored. By using a multitude of analytical tools and approaches, our paper also makes a useful teaching case for undergraduate students to test and gear their thinking about trade policy issues.

... This paper seeks to address two questions raised by these concerns. First, to what extent are the agricultural policy reforms embodied in the URAA consistent with meeting domestic policy objectives such as providing adequate degrees of food security, environmental protection and viability of rural areas (the `synergies' part of the paper's sub-title)? And second, if and where the URAA reforms are countering those goals, what domestic policy actions and/or WTO rules changes are appropriate (the `trade-offs' part of the sub-title)? In the process of addressing these questions, the paper examines the claim that agriculture deserves more price support and import protection than other sectors because of the nonmarketed externalities/public goods it produces jointly in the process of producing marketable food and fibre. Do these unrewarded positive externalities exceed the negative externalities from farming by more than the net positive externalities produced by other sectors? If so, to what extent if any are those farmer-produced externalities under-supplied? And where there is under-provision, what are the most efficient ways to boost their production to the socially optimal levels? The first section of the paper addresses `non-trade concerns' in general, before attention is turned to each of the three specific concerns mentioned above. The paper finishes with a summary of its conclusions. Throughout, the agricultural reforms being referred to include not just import liberalization but also cutbacks in export subsidies and in various forms of domestic support as in the URAA which, collectively, are lowering government support for farm production in protective OECD countries

The Centre was established in 1989 by the Economics Department of the University of Adelaide to strengthen teaching and research in the field of international economics and closely related disciplines. Its specific objectives are: to promote individual and group research by scholars within and outside the University of Adelaide to strengthen undergraduate and post-graduate education in this field to provide shorter training programs in Australia and elsewhere to conduct seminars, workshops and conferences for academics and for the wider community to publish and promote research results to provide specialised consulting services to improve public understanding of international economic issues, especially among policy makers and shapers Both theoretical and empirical, policy-oriented studies are emphasised, with a particular focus on developments within, or of relevance to, the Asia-Pacific region. The Centre’s Director is Professor Kym Anderson (Email

of international economics and closely related disciplines. Its specific objectives are: to promote individual and group research by scholars within and outside the Adelaide University to strengthen undergraduate and post-graduate education in this field to provide shorter training programs in Australia and elsewhere to conduct seminars, workshops and conferences for academics and for the wider community to publish and promote research results to provide specialised consulting services to improve public understanding of international economic issues, especially among policy makers and shapers Both theoretical and empirical, policy-oriented studies are emphasised, with a particular focus on developments within, or of relevance to, the Asia-Pacific region. The Centre’s