How multifunctionality can translate into non-trade concerns in the WTO: on price transmission and competition between constituencies

Multifunctionality in agriculture has become a catchword. This paper focuses on public arrangements to finance this service provision by agriculture as dependent on trade negotiations. Multifunctionality implies a reallocation of resources from food production to amenity provision and has various impacts on the trade position of a country. A major idea is to integrate the concept of competition between constituencies to control public finance into a trade model, as linked to multifunctionality. A major focus is on price transmission as decided in trade negotiations and shaping interests in multifunctionality. The paper gives hints how to specify the objective functions of farmers, citizens and a government in different institutional set-ups. Different institutional set-ups are discussed with respect to bargaining on taxes and amenity provisions. Suggestions are given on how to solve bargaining models and to look for implications of trade arrangements for bargaining positions.