How Would Food Markets Be Affected by Liberalizing Trade in Processed Foods?

Abstract

This paper discusses some of the implications of liberalizing trade in processed foods in the context of the upcoming WTO trade negotiations. Simulated impacts suggest that a 30 percent reduction in farm and food tariffs would benefit U.S. farming in terms of output, net exports and income. The U.S. processed food sector would decline, but net exports of processed foods would increase. A 30 percent reduction in farm tariffs coupled with tariff de-escalation in farm-processed foods trade would strengthen further the U.S. farm economy as well as net exports of processed foods. The U.S. processed foods sector would gain the most when a 30 percent reduction in farm tariffs is coupled with elimination of tariff escalation in farm-processed foods trade.

JEL Classification: D58, F17, Q17