Modeling Agricultural Trade Liberalization. A Review.

The paper reviews the models used in the past 10 years or so to analyze the expected effects of liberalizing agricultural trade. The main aim of the paper it to provide the reader with an overview of models which have been used to assess, first, during the Uruguay Round, the implications of alternative hypothetical trade liberalization scenarios, then, the Agreement itself, and, more recently, the implications of further steps in liberalizing agricultural markets as a result of the on going WTO negotiations. The conclusion reached is that the efforts to model agricultural trade and trade policies, taken as a whole, are not fully satisfactory. Although several models offer accurate representations of international agricultural markets and trade policies, many others, including several developed and used by governments and relevant multilateral institutions, are structurally incapable of providing reliable answers to some of the policy questions they are asked to address. The final part of the paper identifies priorities for actions to be taken for improving modeling of trade policies and WTO commitments.