Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Bergen, Department of Economics

No 03/09: How Effective are WTO Disciplines on Domestic Support and Market Access for Agriculture?

David Blandford (), Ivar Gaasland (), Roberto Garcia () and Erling Vårdal ()
Additional contact information
David Blandford: The Pennsylvania State University, University Park, PA, U.S.A., Postal: 112D Armsby Building, The Pennsylvania State University, College of Agricultural Sciences, University Park, , PA 16802, ,
Ivar Gaasland: Institute for Research in Economics and Business Administration,, Postal: Institute for Research in Economics and Business Administration (SNF), Breiviksveien 40, 5045 Bergen, Norway,
Roberto Garcia: Norwegian University of Life Sciences, Postal: Norwegian University of Life Sciences (UMB), P.O. Box 5003, NO-1432 Aas, Norway,
Erling Vårdal: University of Bergen, Postal: Department of Economics, Fosswinckelsgt. 14, 5007 Bergen, Norway

Abstract: A new round of trade negotiations under the World Trade Organization (WTO) was launched in 2001. One of the major aims of the Doha Development Round is to reduce agricultural protection and impose greater discipline on domestic agricultural subsidies, particularly those that are the most trade distorting. In this paper we examine whether the proposed WTO modalities for agriculture will actually achieve this aim in Norway, which ranks among the top providers of government assistance for agriculture. Norway has a complex system of farm subsidies buttressed by substantial import protection. The extent to which its agricultural support policies will have to be changed in response to new WTO disciplines provides an important indication of how successful these are likely to be. We find that Norway will probably be able to sustain its current agricultural activity and production levels while staying within the new WTO rules. Following recent practice in some other WTO members, Norway will be able to reduce its notified support without making real changes in some of its programs. However, there will have to be a shift from market price support, which is paid for by consumers through higher food prices, to budgetary support paid by taxpayers and that could generate internal pressures for policy reform.

Keywords: WTO; Doha-round; domestic support; market access; partial equilibrium model

JEL-codes: C69; F53; Q17; Q18

36 pages, March 31, 2009

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