Gervais, Jean-Philippe; Larue, Bruno; Lapan, Harvey E.

Canadian Journal of Agricultural Economics Vol. 56 no. 4 (December 2008): 429-444.

Multilateral negotiations on agriculture in the WTO are making very little progress as developed economies are reluctant to bind trade-distorting domestic support and import tariffs at levels acceptable to developing countries. This paper presents the basic Bagwell-Staiger framework as it relates to agricultural trade negotiations. In its basic version, market access commitments are sufficient to achieve efficient trade agreements. We show that vertical linkages between agricultural goods and processed food commodities may prevent countries to reach an efficient trade agreement. We argue that the features of agricultural supply chains hinder the argument that total discretion over domestic policies is appropriate.

JEL Classification: C20

Keywords: domestic support, market access, agri-food trade negotiations, vertical linkages, uncertainty