Journal Article

Third-Country Effects and Second-Best Grain Trade Policies: Export Subsidies and Bilateral Liberalization

Julian M. Alston, Colin A. Carter, Daniel A. Sumner and Richard Gray

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 79, issue 4, pages 1300-1310
Published in print November 1997 | ISSN: 0002-9092
Published online November 1997 | e-ISSN: 1467-8276 | DOI: http://dx.doi.org/10.2307/1244286
Third-Country Effects and Second-Best Grain Trade Policies: Export Subsidies and Bilateral Liberalization

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An incumbent export subsidy will affect the size and distribution of gains from bilateral trade liberalization but, in theory, may still permit increased trade volume and mutual benefits from freer trade. These points are illustrated using the case of Canada-U.S. durum wheat trade, which grew rapidly following the 1989 Canadian-U.S. Free Trade Agreement (CUSTA). An empirical analysis suggests that, given its Export Enhancement Program (EEP), the United States lost from freer trade in durum. Conversely, freer trade in durum means greater gains to the United States from eliminating EEP.

Keywords: export subsidies; trade liberalization; trading bloc; wheat; F130; Q170; Q180

Journal Article.  0 words. 

Subjects: International Trade ; Agricultural Economics

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