1. Quantitative assessment of EU-Mediterranean trade liberalization using the CAPRI modelling system
Lucie Weissleder
Institute for Food and Resource Economics
University of Bonn, Germany

2. Outline of the presentation
The CAPRI Model
Simulation Scenarios
Partial liberalisation
Full liberalisation
Selected results
Conclusions
First quick review of the CAPRI model
Explain our scenario definition wich we made according to the deliverables
Show results and explain
End with Conclusion

3. The CAPRI model CAPRI: Changes in the CAPRI model for the project
Developed by the Institute for Food and Resource Economics, University of Bonn and Partners
Main features:
Agricultural sector model
Regionalised optimisation modules for EU25
World-wide trade model
Changes in the CAPRI model for the project
Short Repetition
So that everyone is reminded of what we done

4. Mediterranean products
Supply and market model now features additionally as endogenous products:
Tomatoes
Apples, pears and peaches
Citrus fruits
Table grapes
Other fruits
Potatoes
Other vegetables
Olive oil
Wine
In total some 40 products
EU Entry Price System
We introduced the Med. products in the model

5. Split up „Med country block“
Own behavioral equations in trade model for:
Morocco
Tunesia
Algeria
Egypt
Turkey
Israel
Morocco and Turkey as individual countries (new), Tunesia, Algeria, Egypt and Israel aggregated in a remaining “Med” block

6. The CAPRI model: Policy
World-wide:
Tariffs and TRQs
For the EU
Minimum Entry Price -> NEW
Problem: seasonality
Export subsidies
Intervention purchases
Direct payments

7. Two Scenarios have been defined
Simulation Scenarios
Two Scenarios have been defined
Partial EU-MED liberalisation
Full EU-MED liberalisation

8. Simulation Scenario: Partial EU-MED
Morocco EU
TRQ (tons)
Tariff Reduction
Reduction of Trigger price
Tomatoes
Citrus fruits
Turkey
-50%
Potatoes
-50% (of ad valorem)
Table Grapes
Apples
Citus fruits
Morocco: TOMA TRQ alt: in 2006
Morocco: CITR TRQ alt:
Turkey: POTA: NO minimum entry price system, für potatoes also ein simpler preferential Zoll. Turkey hat im Basisjahr keine TRQ. Es handelt sich hier in diesem Fall um Frühkartoffeln, auf die von April bis Mai ein ad valorem Zoll (9.6%) erhoben wird. Dieser wird reduziert.

9. Simulation Scenario: Partial EU-MED
Other Mediterreanean EU
TRQ (tons)
Tariff Reduction
Reduction of trigger price
Israel
Tomatoes
Egypt and Israel
Potatoes
Egypt
Oranges
Other vegetables
Other fruit

10. Simulation Scenarios: Partial EU-MED
Turkey
TRQ (tons)
Tariff Reduction
Beef
+4 100
100%
Skimmed milk powder
+1 000
Butter
+700
Cheese
+1000
Wheat
Potatoes
+6 000
Apples, Pears, Peaches
+3500
Rye
Barley
Rice
Soya Oil
Sunflower Oil
Rape seed Oil
Sugar

11. Results Trade flows Prices Partial liberalisation Full liberalisation
EU imports
EU exports
Full liberalisation
Prices
Go through the results by first…

12. Partial EU-Med liberalisation

13. Partial Liberalisation: EU imports
Main changes in the group „vegetables and permanent crops“ because of the definition of the scenario total EU import change
Broken down to the three countries it becomes clear that mainly Morocco benefits from this scenario

14. EU imports of veg. &perm. crops from Turkey
Decrease because of the scenario definition Moroccan tomatoes and citrus fruits substituate because of the higher preferences and therefore more competitive

15. EU imports of veg. &perm. crops from Morocco
Expansion of the TRQs

16. EU imports of veg. &perm. crops from other MED
Citrus substitues with citrus from Morocco imports from the Mercosur countries according to the scenario definition
Tomatoes substituted from Morocco tomatoes

17. Partial liberalisation: EU Exports
Changes in Vegetables because of the scenario definition (50% up on TRQs) total EU export changes

18. Full EU-Med liberalisation

19. Full liberalisation: EU Imports
Changes in the EU cereal imports occur because the general competitiveness of the Mediterranean countries increases disproportionately due to the preferential market access compared to the rest of the EU’s trading partners.

20. EU imports of veg. & perm. crops from Turkey
Scenario defintion makes them more competitive against other trading partners of the EU

21. EU imports of veg. & perm. crops from Morocco
Scenario defintion makes them more competitive against other trading partners of the EU

22. EU imports of veg. & perm. crops from other MED
In baseline tons in scenario tons (tomatoes)

23. Full liberalisation: EU Exports
Cereals EU gets very competitive

24. absolute values (€/t) and percentage deviation to baseline
Results: EU Prices
Partial EU-Med liberalisation
Full EU-Med Liberalisation
absolute values (€/t) and percentage deviation to baseline
Cereals
105,49
109,77
0,0%
4,1%
Oilseeds
211,27
212,34
0,5%
Vegetables and Permanent crops
673,55
673,99
-0,1%
Meat
1701,31
1706,67
0,3%
Compared to the baseline results
Partial: not much
Full: cereals go up

25. Conclusions Partial EU-MED liberalisation EU Imports: EU exports
Cereals ± 0%
Morocco: +1%
Other countries unaffected
Vegetables and permanent Crops +2.5%
Morocco: +20%
Turkey %
Other mediterranean ± 0%
Other product groups mainly unchanged
EU exports
Only very minor changes
EU prices
Unchanged
Short summary of the results
Only small effects on EU markets, but notable changes for individual countries from the mediterranean area

26. Conclusions Full EU-MED liberalisation EU imports Cereals: +11%
Turkey +145%
Other mediterranean +100%
Morocco +30%
Vegetables and permanent crops +19%
Other mediterranean +300%
Turkey +60%
Morocco +60%

27. Conclusions EU exports EU prices Cereals +20% Cereals +4.1%
Turkey: +500%
Other mediterranean: + 98%
Morocco: +70%
EU prices
Cereals +4.1%
Other products only small changes
Significant increase of trade for cereals and vegetables and permanent crops

28. Quantitative assessment of EU-Mediterranean trade liberalization using the CAPRI modelling system
Lucie Weissleder
Institute for Food and Resource Economics
University of Bonn, Germany

29. Appendix – Additional Slides
Partial EU-Med liberalisation combined with the WTO G20 proposal

30. Simulation Scenario: Partial EU-MED + WTO G20
Developed Countries
Developing Countries
Thersholds
Thersholds (in AVEs)
Linear Cuts
0≤20
45%
0≤30
25%
>20≤50
55%
>30≤80
30%
>50≤75
65%
>80≤130
35%
>75
75%
>130
40%
The specific and ad valorem in- and out-quota tariffs of TRQs will also be cut according to the applied formula. The quantity of the applied multilateral TRQs will not be expanded.
Export subsidies will be eliminated. The LDC countries are exempted from tariff cuts.
Export subsidies will be eliminated
LDC countries are exempted from tariff cuts

31. Results EU imports EU exports Price changes Overview
Specific countries
EU exports
Price changes

32. EU imports

33. Partial + WTO G20: EU Imports
Changes total EU imports

34. EU imports of veg. & perm. crops from Turkey
Very inconsistent picture for all three countries
Tomatoes reduction of the preferential situation

35. EU imports of veg. & perm. crops from Morocco

36. EU imports of veg. & perm. crops from other MED

37. EU exports

38. Partial + WTO G20: EU Exports

39. Conclusions
Inconsistent changes in the imports from Turkey, Morocco and the Med. block
Changes depend on the competitiveness of the individual countries
Preferential situation decreases visibly
The exports of the EU increase in general with a few exceptions