Xinshen Diao, Agapi Somwaru and Terry Roe The objective was to provide the “ big picture ”

1. A Global Analysis Of Agricultural Reform In WTO Member Countries Xinshen Diao, Agapi Somwaru and Terry Roe The objective was to provide the “big picture”

2. Computable General Equilibrium (CGE) Model Global Static and Dynamic (DYNAGEM)

3. Main Attributes of a Computable General Equilibrium (CGE): Basic Specification (Circular Flow) Final Goods: Supply Goods & Services Demand Final Goods: Expenditure Intermediate Revenue Goods: Intermediate Supply Goods: Revenue Households Firms Rents Income Supply Demand Factors

4. Main Attributes of a Full CGE Model: Additional Institutions Other countries/ Rest of the World Government Transfers Govt & Business Purchases Imports Taxes Exports Subsidies Basic CGE Model Structure Private Investment Savings from ROW Savings (Net Capital Inflow) Govt. Savings (Budget Deficit) Capital Account

5. DYNAGEM ATTRIBUTES: Intertemporal Structure CURRENT INCOME The elliptical box represents exogenous variables, the rectangular box represents Consumers' Intertemporal Decisions endogenous variables. The dashed line is for revenue flows and solid line is for commodity flows. SAVINGS CONSUMPTION World Capital Market FOREIGN ASSETS/DEBT World Commodity Market Domestic Commodity Market IMPORTS OUTPUT INTERESTS DIVIDENDS & EXPORTS Firms' Intertemporal Decisions ENDOWMENT INCOME CURRENT PROFIT PRODUCTION INVESTMENT LABOR, LAND CAPITAL

6. More Features • Simulates policy changes in counterfactual or “what if” comparisons • Easily modified and flexible in the number of sectors and commodities • Requires PC with high computational capacities • Written in GAMS • The model was developed in 1997 and published in the Journal of Economic Integration (2001), the Journal of Policy Modeling (2000), the International Economic Journal (1999) • Based on the 1997 global economy (GTAP database version 5) • For more information, contact: Xinshen Diao, IFPRI, or Agapi Somwaru, ERS

7. Australia and New Zealand Japan and Korea United States Canada European Union European Free Trade Area China Other Asian countries Mexico Latin America South African countries Rest of the World Paddy and processed rice, wheat Other grains (including corn) Vegetables, fruits and nuts Oilseeds, vegetable oil Sugar cane, sugar beets, processed sugar Plant-based fibers and other crops Livestock and livestock products Beverages, tobacco, other processed food products Non-agricultural products Services Commodity and Country Coveragefor the WTO study

8. Road Map of the Analysis • Static Model • Elimination of import barriers throughout the world • Elimination of export subsidies throughout the world • Elimination of domestic supportthroughout the world • Combining all of the above • Dynamic Model • Elimination of all trade distortions without TFP growth • Elimination of all trade distortions with TFP growth of developing countries • (0.02 annually only for the first 10 years of trade reform)

9. Major Findings

10. Ag. Policy Distortions Cause World Prices to be 12% Lower Than They Otherwise Would be

12. Estimated annual gain in purchasing power =$56 billion

14. In sum • Eliminating global ag. policy distortions would: • raise world welfare $56 billion annually • raise world agricultural prices 12 percent • Roles of policies in reducing world prices: • Tariffs (52%) • Domestic subsidies (31%) • Export subsidies (13%) • Developing countries can benefit from further WTO reforms