Changing contributions of different agricultural policy instruments to global reductions in trade and welfare

Trade negotiators and policy advisors are keen to know the relative contribution ofdifferent farm policy instruments to international trade and economic welfare.Nominal rates of assistance or producer support estimates are incomplete indicators,especially when (especially in developing countries) some commodities are taxed andothers are subsidized in which case positive contributions can offset negativecontributions. This paper develops and estimates a new set of more-satisfactoryindicators to examine the relative contribution of different farm policy instruments toreductions in agricultural trade and welfare, drawing on recent literature on traderestrictiveness indexes and a recently compiled database on distortions to agriculturalprices for 75 developing and high-income countries over the period 1960 to 2004.Results confirm earlier findings that border taxes are the dominant instrumentaffecting global trade and welfare, but they also suggest declines in export taxescontributed nearly as much as cuts in import protection to global welfare gains fromagricultural policy reforms since the 1980s.