F&V Trade Model to Assess Euro-Med Agreements. An Application to the Fresh Tomato Market

The complexity derived from the bilateral trade liberalisation process in theMediterranean region is difficult to represent in a trade model, not only because of therange of instruments still constraining trade but also because of the special nature of themost important traded goods (product differentiation and seasonality).Tariff-rate quotas (TRQ's) and the entry price system are clearly defined on a monthlybasis for the fruits and vegetables trade flows towards the European Union (EU). Thispoint makes efforts to model such a trade in yearly basis not representative of reality.We propose a static partial equilibrium model tailored to model trade impacts ofspecific policy instruments which considers imports from different sources as imperfectsubstitutes, following the non-linear Armington type model.Different policy scenarios have been run using the model, considering changes inTRQ's and Entry Price regimes, its tariffication and preference erosion.The results of model runs show that, as regards to EU producers, bilateral tradeliberalisation with extension of TRQs would be the least dramatic scenario. By contrast,the phasing out of the entry price system would have serious consequences on EUproducers. The model has also given detailed information on Morocco's interests in thenegotiation, although it could easily include a larger number of suppliers. Moroccoappears to be interested in multilateral liberalisation as well as in bilateral liberalisation.In fact, multilateral liberalisation will not cause a great deal of preference erosionagainst Moroccan exporters, unless tariff reductions only affect MFN suppliers.