Modelling Euro-Mediterranean Agricultural Trade

This paper examines the methodological problems to define a modelling approach to assess the impact of full or limited bilateral liberalisation of agricultural trade flows in the Euro-Mediterranean region. The bilateral trade liberalisation process in the region is framed by complexity, in policy instruments and in the characteristics of the products, in particular fruits and vegetables. Advantages and disadvantages of the general equilibrium and partial equilibrium approaches to simulate trade policy impacts are assessed. Caveats of existing models are related to the representation of specific policy instruments (tariffs, entry prices and other non-tariff measures) and on the seasonal nature of horticultural trade, which is of major importance in the Euro-Mediterranean Free Trade Are. The paper provides an illustration of how an imperfect substitute product model could be helpful to describe the trade effects of bilateral price changes, for given seasons.