welfare impact of a free trade agreement between SACU and Mercosur

Authors:
Sandrey, Ron
Jensen, Hans Grinsted
Vink, Nick
Type: Journal Article
Year of publication: 2011
Source: USDA
Collected from: AGRIS
Subject:
agricultural products
products
agriculture
trade
farmers
Description:A free trade agreement (FTA) between SACU and Mercosur would be significant globally, as it would be a truly “south-south” relationship between three of the developing world's emerging agricultural powers, namely Argentina, Brazil and South Africa. In this article, the GTAP database and the associated general equilibrium model is used to assess the potential welfare and trade gains from such an agreement. The results show that there are comfortable welfare gains for South Africa derived from a better use of land, labour and capital (enhanced allocative efficiency); increased net investment increasing the amount of capital employed in the economy; and a small contribution from increased labour employment. These gains are negated somewhat by terms of trade that go against South Africa. However, an FTA with Mercosur is not good for the South African agriculture sector. Imports of agricultural products increase dramatically, mostly in terms of increased imports of secondary (processed) agricultural products. Export gains are modest, but are largely from trade creation rather than trade diversion. Furthermore, there are marginal reductions in the prices of all agricultural products, which benefits consumers but harm producers. Overall, the FTA is bad news for South Africa's commercial farmers. Whether small-scale and emerging farmers benefit depends on whether they are food deficit or food surplus producers.
 

Related Resources

Innovation implementation strategies for consumer driven fruit supply chains

Provider: 
Subject: 
products
agricultural products
socioeconomic development
rural development
agricultural development
economics
agricultural economics
trade
agriculture
agricultural practices

Risk Analysis for Off-season Greenhouse Tomato Production

Provider: 
Subject: 
products
agricultural products
plant products
socioeconomic development
agricultural development
economics
agricultural economics
agriculture
agricultural practices

An economic analysis of soilless culture in gerbera production

Provider: 
Subject: 
products
agricultural products
plant products
agriculture
agricultural practices

general framework for the quantification and valuation of ecosystem services of tree-based intercropping systems

Provider: 
Subject: 
agricultural products
products
agriculture
farmers
Collected from: 

Understanding how farmers last over the long term: a typology of trajectories of change in farming systems. A French case-study

Provider: 
Subject: 
agricultural products
products
farms
agriculture
farmers
farming systems
Collected from: 

Information and its management for differentiation of agricultural products: The example of specialty coffee

Provider: 
Subject: 
products
farmers
agricultural products
Collected from: 

AGRERI Library

Innovation implementation strategies for consumer driven fruit supply chains

Provider: 
Subject: 
products
agricultural products
socioeconomic development
rural development
agricultural development
economics
agricultural economics
trade
agriculture
agricultural practices

Risk Analysis for Off-season Greenhouse Tomato Production

Provider: 
Subject: 
products
agricultural products
plant products
socioeconomic development
agricultural development
economics
agricultural economics
agriculture
agricultural practices

An economic analysis of soilless culture in gerbera production

Provider: 
Subject: 
products
agricultural products
plant products
agriculture
agricultural practices

External Library

general framework for the quantification and valuation of ecosystem services of tree-based intercropping systems

Provider: 
Subject: 
agricultural products
products
agriculture
farmers
Collected from: 

Understanding how farmers last over the long term: a typology of trajectories of change in farming systems. A French case-study

Provider: 
Subject: 
agricultural products
products
farms
agriculture
farmers
farming systems
Collected from: 

Information and its management for differentiation of agricultural products: The example of specialty coffee

Provider: 
Subject: 
products
farmers
agricultural products
Collected from: