Scholarly Works, Global Issues Initiative

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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.
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.
Linking Risk and Economic Assessments in the Analysis of Plant Pest Regulations: The Case of U.S. Imports of Argentine Lemons
Thornsbury, Suzanne; Romano, Eduardo (Virginia Tech. Global Issues Initiative, 2007-12)
This study evaluates consideration to allow shipments of Argentine fresh lemons into the United States. Besides providing analysis of an on-going and still disputed systems approach, this case was viewed as a relevant test for feasibility of a prototype analytical tool that links economic and risk assessment for SPS measures. Political economy and empirical assessment shows that despite some apparent similarities among systems approach policies, the idiosyncratic nature of SPS issues limits application of a common quantitative method for such policies. Assessment within context of the lemon case reveals important lessons with respect to economic analysis. Scientific debate is likely to be more contentious and sustained in cases where the political stakes are greater, thus a priori economic evaluation is likely to be the most limited in those cases where it could prove the most valuable. Results highlight transitions in the political reality of WTO SPS agreement applications. Movement away from specificity in risk assessment limits common understanding and further assessment of regulatory policies. The dynamics of the lemon case shifted attention to credibility of domestic, as well as foreign, institutions. Confidence between regulatory agencies is important, but does not compensate for public trust.
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.
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.
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.
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.
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.
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.
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.
Economic Impact Analysis of the Reduction in Sugar Tariffs Under the ASEAN Trade in Goods Agreement: The Case of the Philippine Sugar Sector
Cororaton, Caesar B. (Virginia Tech. Global Issues Initiative, 2013-09)
The objective of this paper is to examine the potential effects on the Philippine economy as the government fulfills its sugar commitment. The paper utilizes three simulation models in the analysis: The GTAP model; a Philippine CGE model; and a Philippine poverty and income distribution microsimulation model. The GTAP model is used to analyze the trading interactions between the Philippines and the rest of the ASEAN member countries and the rest of the world. The Philippine CGE model, which provides details of the economy including several household groups, is used to analyze the effects on the local sugar and the sugar-using downstream industries and the rest of the production sector, while the poverty microsimulation model which utilizes data from the national household survey is used to analyze the effects on poverty and income distribution in the Philippines.
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.
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.
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.
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.
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.
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.
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.

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