Renwick, A., Revoredo-Giha, C., Toma, L., Philippidis, G.
The purpose of the project has been to assess the effect of the European Union (EU) export refunds on developing countries since the 2003 reform of the Common Agricultural Policy (CAP). This is because it is widely argued that export refunds are highly trade distortive instruments and have a detrimental effect on developing countries. Furthermore, there is a general research gap on the impacts of the post-2003 CAP on developing countries, including the effect of export refunds.
The structure of this report is as follows: it starts with a literature review aiming to point out the main effects of exports refunds on developing countries and the reasons behind the discrepancies in terms of measurements. This is followed by a quantitative general equilibrium analysis performed with the Global Trade Analysis Project (GTAP) model, which is used to assess the impact of the EU’s agricultural export trade policy. As part of this analysis, a series of carefully designed scenarios are implemented to examine the impacts on world prices, market prices and quantities in third country markets. The next section presents several case studies focused on the effect of imports on domestic developing economies. Whilst the choice of the case studies (countries and commodities) was based on the results obtained from the GTAP model, their purpose is to go beyond the GTAP results and analyse the industrial organisation of two commodities, wheat and dairy, within each country to understand how the domestic economy interacts with imports. The final section presents conclusions and recommendations.