Scholarly Works, Global Issues Initiative

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The Pending 2008 U.S. Farm Bill in Perspective
Orden, David R. (Virginia Tech, 2008-01)
This paper examines the issues facing U.S. farm policy in 2007 and beyond in an historical context. Reforms of the main commodity programs along a cash-out and decoupling path peaked when prices were high in 1995-96. Recent buyouts, driven largely by declining production levels and revenues, have also ended supply-control quota programs for peanuts and tobacco. Then, in a setback to reduced subsidies, countercyclical payments were re-institutionalized for the main commodities in 2002, although farmers retained substantial planting flexibility. The radical option of a broader buyout of the commodity programs is an idea whose time has not arrived. Instead, farm groups sought to retain their traditional programs in 2007, despite another commodity price boom. Under budget pressure, direct payments that represent the most decoupled instrument of support of farm incomes came under scrutiny in the domestic debate but were defended by subsidy recipients. In addition, agriculture now has a new policy tool and strengthened political clout through energy policy, and through this policy avenue substantial new power to influence agricultural prices.
Farm Policy Reform in the United States: Past Progress and Future Evolution
Orden, David R. (Virginia Tech, 2007-10-29)
This chapter examines the issues facing U.S. farm policy in 2007 and beyond in an historical context. Reforms of the main commodity programs along a cash-out and decoupling path peaked when prices were high in 1995-96. Recent buyouts, driven largely by declining production levels and revenues, have also ended supply-control quota programs for peanuts and tobacco. Then, in a setback to reduced subsidies, countercyclical payments were re-institutionalized for the main commodities in 2002, although farmers retained substantial planting flexibility. The radical option of a broader buyout of the commodity programs is an idea whose time has not arrived. Instead, farm groups sought to retain their traditional programs in 2007, despite another commodity price boom. Under budget pressure, direct payments that represent the most decoupled instrument of support of farm incomes came under scrutiny in the domestic debate but were defended by subsidy recipients.
The Challenge Of Increasing Global Trade: How To Address Linkages And Barriers
Orden, David R.; Peterson, Everett B. (Virginia Tech, 2008-02-22)
Two specific cases of trade regulation are examined in this presentation. In the case of avocados from Mexico, the U.S. market has been opened following more than a decade of related rule making. Substantial imports now occur. In a second case, China has expressed interest in exporting fresh apples to the United States. There is not a related regulatory process underway, but China received approval to export fresh apples to Canada in 2004.
Philippine Agricultural and Food Policies: Implications on Poverty and Income Distribution
Cororaton, Caesar B.; Corong, Erwin L. (Virginia Tech, 2008-12)
The objective of this presentation was to examine how trade policy affects food prices and poverty in the Philippines.
APHIS Workshop on Avocado Model
Cororaton, Caesar B. (Virginia Tech, 2009-06-16)
The goals of the workshop are: (a) to discuss and learn how to code the Mexican avocado model of Peterson and Orden (2008) and (b) to run the model under various model parameters and scenarios.
Potential Fresh Apple Imports from China: A Preliminary Case Study
Orden, David R.; Peterson, Everett B. (Virginia Tech, 2010-02-26)
This presentation considers the benefits of and possible obstacles to fresh apple imports from China.
A Modeling Framework for Evaluating Economic Impacts of APHIS Import Regulations
Orden, David R.; Peterson, Everett B.; Cororaton, Caesar (Virginia Tech, 2012-09-27)
This presentation covers economics in regulatory decision making, a model framework, and a case study of the American beef market.
Cost and Benefit Analysis of Possible Philippine Participation in the Trans-Pacific Partnership Agreement
Cororaton, Caesar B.; Orden, David R. (Virginia Tech, 2014-09-04)
The objective of this presentation was to quantify the effects of the Trans-Pacific Partnership (TPP) on trade, especially in terms of Philippine participation.
Potential Effects of Regional Comprehensive Economic Partnership (RCEP) on the Philippine Economy
Cororaton, Caesar B. (Virginia Tech, 2015-12-01)
This presentation estimates the potential effects of the reduction in RCEP tariffs and non-tariff barriers (NTBs) in the Phillipines.
The United States WTO Complaint on China’s Agricultural Domestic Support: Preliminary Observations
Brink, Lars; Orden, David R. (Virginia Tech, 2017-01-26)
This note provides some preliminary observations on the complaint initiated in September 2016 by the United States about China’s agricultural domestic support under the rules for dispute settlement of the World Trade Organization (WTO). The United States alleges that certain support for wheat, corn and rice exceeded China’s commitments under the Agreement on Agriculture in the years 2012-2015. The WTO established a Panel for this dispute on 25 January 2017. The note examines elements that may factor into a WTO Dispute Settlement Body ruling on this case, particularly the interpretation of “applied administered price” and “quantity of production eligible to receive the applied administered price”, key terms that determine market price support under the Agreement. China’s accession documents and annual support notifications, available only through 2010, report the eligible production as the quantities procured by state-authorized grain enterprises or less. The United States apparently is asserting that a larger production quantity, possibly total production, be counted and that China’s announced support prices are applied administered prices. The findings of a Panel or the Appellate Body on these definitional issues may involve the hierarchy between Agreement language that support be calculated “taking into account the constituent data and methodology” of a member and “in accordance with” the specific provisions of the Agreement. For rice, an issue is whether the administered price needs to be adjusted up from an unmilled to milled basis for comparability with the reference price of milled rice, which would increase calculated market price support. Since the United States has not made public its support calculations, the note estimates the market price support that might be calculated under the Agreement using total production. These estimates indicate support in excess of China’s limits on certain product-specific support, which is 8.5 percent of the value of production, for wheat and corn in all four years. Support for rice is excessive only if the administered price is adjusted to a milled basis. The excesses calculated under these assumptions sum to about USD 67 billion for 2015, a substantial amount compared to support within limits that would sum to about USD 19 billion. Market price support measured under the Agreement differs from economic measurements of market price support, such as by OECD. For 2012-2015, OECD measures economic market price support in China for wheat, corn and rice in the range of 14 to 39 percent of each product’s value of production. The coincidence of this situation with the possibility that China’s support under the Agreement exceeded its limits raises the prospect that, in this and possibly other cases, the WTO rules on domestic support may have an effect on reining in certain economic support. To meet its WTO commitments a country would in these circumstances need to limit the amount of economic support, or at least resort to different policy instruments than applied administered prices.
Assessing the Potential Economic and Poverty Effects of the National Greening Program
Cororaton, Caesar B.; Arlene Inocencio; Tiongco, Marites; Manalang, Anna Bella (Virginia Tech, 2015-11-10)
This presentation assesses the potential economic and poverty effects of the National Greening Program in the Phillipines in 2012-2050.
Political Economy Of The 2014 Farm Bill
Orden, David R.; Zulauf, Carl (Oxford University Press, 2015-06-11)
This article assesses the political economy of the 2014 U.S. farm bill, with a focus on the farm support safety net. The farm bill secured substantial bipartisan majorities in a politically contentious Congress. Planned outlays are predominately for nutrition assistance programs directed toward a traditional nonfarm constituency in the farm bill coalition, while annual fixed direct payments to farmers are eliminated but replaced with enhanced downside risk protection against low prices or revenue. The new support programs may prove more or less costly than the foregone fixed payments, with farmers offered a choice between a price countercyclical program with increased reference prices and a revised moving-average revenue guarantee program. The role of insurance is enhanced, notably by replacing past support programs with a new upland cotton revenue insurance program and dairy milk-to-feed margin protection program. Open policy issues that are highlighted include the costs and distortionary effects of moving-average revenue benchmarks versus fixed reference prices, the overall level of insurance premium subsidies, the potential for overlap between commodity and insurance programs, and lastly, food, environmental, and biofuels concerns that reflect the diverse portfolio of products demanded from agriculture. In an international context, we conclude that the 2014 farm safety net likely would not have been enacted had multilateral agreement been reached on the 2008 Doha Round World Trade Organization negotiating documents. Conversely, the 2014 farm bill makes achieving those limits more difficult. Research is discussed that can elucidate the ongoing political economy of U.S. farm policy and help shape future program design.
Preliminary Report: Potential Economic Effects of the Reduction in Agricultural and Nonagricultural Trade Barriers in the Transatlantic Trade and Investment Partnership
Cororaton, Caesar B.; Orden, David R. (Virginia Tech. Global Issues Initiative, 2016-10)
The objective of this paper is to provide an assessment of the potential economic effects in the U.S. and EU28 of reducing the trade barriers between the two economies¹. A global computable general equilibrium (CGE) model is used to determine over the period 2015-2024 the immediate, medium-term and long-run effects on the bilateral trade between the U.S. and EU28, and the related effects on the rest of global trade. Aggregate trade creation and trade diversion effects are calculated, as well as the sectoral production, trade and consumption effects and impacts on factor prices and welfare in both economies.
Potential Economic Effects on the Philippines of the Trans-Pacific Partnership (TPP)
Cororaton, Caesar B.; Orden, David R. (Virginia Tech. Global Issues Initiative, 2015-02)
The TPP is a potential economic block in Asia Pacific. If the negotiations are successful, the TPP can have important implications for the Philippines whether it decides to join or not because countries in TPP are important markets for Philippine exports and sources of imports, investments, and technology. The paper simulates a reduction in trade barriers within the TPP using a global CGE model. The results indicate trade creation within the TPP and trade diversion from the non-TPP. Philippine non-participation will generate small negative effects on the economy, but the economic opportunity cost of non-participation is larger. If the inflows of investments into the country improve with participation, the welfare gain is higher. While higher investments lead to real exchange rate appreciation, the majority of Philippine sectors benefit from the scale production effect of larger capital inflows.
Some Notes on the Economic Environment Affecting the Debate on the Agricultural Act of 2014
Novoa, Miguel Albert; Cororaton, Caesar B.; Orden, David R. (Virginia Tech. Global Issues Initiative, 2014-10)
The recent U.S. farm bill was passed by Congress and signed into law by President Barack Obama on February 7, 2014 as the Agricultural Act of 2014. Traditionally, farm bills are passed every five years, but the recent bill, which authorizes nutrition and agricultural programs for 2014- 2018, is two years late since the 2012 expiration of the 2008 bill (the Food, Conservation, and Energy Act of 2008). The 2014 bill authorizes a projected $956 billion in spending over the next ten years. The purpose of these Notes is to provide background information about the economic setting in the general economy and agriculture in the years leading up to the Agricultural Act of 2014 and to recap some of the key congressional debates and decisions about fiscal policy and a new farm bill during fiscal years 2018-2014.
The Importance of Technical Barriers to Agri-Food Trade: Evidence from the TBT Specific Trade Concerns Raised at the WTO
Cororaton, Caesar B.; Orden, David R. (Virginia Tech. Global Issues Initiative, 2019-06-15)
This Working Paper distinguishes between 212 specific trade concerns (STCs) related to regulatory measures affecting trade of agri-food products and 336 concerning other products. These STCs were discussed at the WTO during 1995-2017 with respect to members’ rights and obligations under the Agreement on Technical Barriers to Trade. The paper has three broad components. First, we document an increase not decline in the relative importance of STCs concerning agri-food products in a recent (2006-2017) compared to early (1995-2005) sub-period. Second, we assess the frequencies and correlations among objectives of members whose regulatory measures STCs have been directed toward and the issues raised by members with concerns about those measures. We find a number of broad similarities between the STCs concerning agri-food and other product but also some important differences. Third, our analysis addresses participation of 73 members in these STCs, distinguishing at an aggregated level between developed and developing members and disaggregating into eight groups based on WTO self-designation and World Bank income criteria. Developed members raising STCs directed toward developing members dominates participation concerning both agri-food and other products, followed by developing members raising STCs directed toward developed members. Disaggregation into the eight groups provides additional insights.
Review of the FDA Food Safety Modernization Act (FSMA): What it means, where it is headed, and why it matters
Belden, Cory; Orden, David R. (Virginia Tech. Global Issues Initiative, 2011-09)
Between November 30 2010 and January 4 2011, the Food Drug and Administration (FDA) Food Safety Modernization Act (FSMA), or HR 2751, was passed through the US governing bodies, representing the first large-scale change in US food safety law since the 1930s. For three years, federal food safety law was discussed in over two dozen congressional hearings (Johnson, 2010a). The text has undergone multiple revisions and collaborative efforts: legislation concerning fresh fruit and vegetable produce alone received over 700 comments from hundreds of stakeholders (Gorny, 2011). Though the US food safety regime is one of the best in the world, there were telling signs of needed change. US consumers now spend 1 trillion USD on food per year (Johnson, 2010b). Increases in food safety concerns like food borne illness have gained global visibility and have lead to negative trade consequences (the recent fatal E. Coli outbreak in Germany exemplifying this quite clearly). Industry and public support for the Act was strong from the onset, yet some policymakers, private sector stakeholders, and small producers remain concerned about implementation, costs, equal opportunity, and market and price effects. This paper firstly gives reasons for the changes in food safety law and regulations in the US. A second section frames how food safety regulations are created—reviewing the challenges associated with science-based evidence, multi-actor expectations, and consumer knowledge. The paper discusses the current US regulations and how they will change in the coming years. Finally, the concerns raised about the implementation and regulatory design are reviewed, concluding with a short note on how these legislative changes may influence the data collected for the EU-NTM project.
Using the Trans-log Expenditure Function to Endogenize New Market Access in Partial Equilibrium Models
Peterson, Everett B. (Virginia Tech. Global Issues Initiative, 2011-08)
While Constant Elasticity of Substitution (CES) utility functions are a common choice in empirical partial and general equilibrium models because they are parsimonious in the number of model parameters, they are not well suited for cases where the consumption of a given could equal zero. This is because the uncompensated demand functions derived from a CES utility function will equal zero only if the price of that good is equal to infinity or the shift parameter in the utility function for that good is equal to zero (e.g., consumers do not wish to consume that good). In order to allow for the possibility of zero consumption, a preference structure must allow for the underlying “demand curve” to intersect the price axis. This will be important when assessing the effect of new market access for a particular good. In that case, initial consumption is equal to zero because of the existing policy. After a change in policy, the good may or may not be sold in a particular region or season if its price is less than the consumers’ reservation price for that good. The purpose of this draft is to develop a preference structure that allows for zero consumption and how it could be implemented to assess the impact of new market access.
A Review of Literature on the Economics of Invasive Species
Cororaton, Caesar B.; Orden, David R.; Peterson, Everett B. (Virginia Tech. Global Issues Initiative, 2009-09)
There is increased demand within the regulatory processes of the United States Department of Agriculture (USDA) for a higher level of analysis that integrates pest risks with economic considerations. This paper reviews the literature of methodological developments and empirical analyses over the past decade that potentially enhance such studies. Policy-oriented economic benefit-cost analysis that integrates risk assessment and related mitigation and control costs has to incorporate three components into an inter-disciplinary framework. The first component is based purely on risk science, such as probabilities of pest risk of infestations or transmission, or procedures for control of pest outbreaks. The second component inherently involves a mixture of pest risk science and economic considerations, such as an assessment of the effectiveness of specific mitigation or pest control measures and their likely economic cost. The third component is based purely on economics in that it involves the construction of the economic model in which the specific and net effects of alternative policy decisions are evaluated, taking information from the first two components into account.
Technical Barriers Affecting Agricultural Exports from China: The Case of Fresh Apples
Orden, David R.; Gao, Lili; Xue, Xiang; Peterson, Everett B.; Thornsbury, Suzanne (Virginia Tech. Global Issues Initiative, 2007-12)
This report addresses technical barriers that limit the agricultural trade of China in the case of phytosanitary barriers to fresh apple exports. Apple production in China has increased substantially in recent years and now accounts for nearly half of the total global output. Correspondingly, in many of its discussions with trade partners about agricultural technical barriers, China has highlighted apples and pears as products for which it has sought market access. China‘s apple exports have skyrocketed as markets have been opened. In the 2004/05, China exported 850,000 metric tons of fresh apples, a nearly five-time increase in the export volume over five years. A large proportion of the increase in Chinese apple exports have gone to the Pacific Rim markets, such as Hong Kong and the Philippines.

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