Agricultural Economics and Development

Agricultural Economics and Development

The Effects of Trade Liberalization on Agricultural Sector of Eurasian Economic Union and Iran: Multi-Regional Computable General Equilibrium Approach

Document Type : Original Article

Authors
M. Nejati 1
M. Bahmani 2
S. A. Jalaee Esfandabadi 3
1 Associate Professor, Department of Economics, Shahid Bahonar University of Kerman, Kerman, Iran
2 Assistant Professor, Department of Economics, Shahid Bahonar University of Kerman, Kerman, Iran
3 Professor, Department of Economics, Shahid Bahonar University of Kerman, Kerman, Iran
10.30490/aead.2021.351973.1270
Abstract
Agriculture, as one of the most important economic sectors which is directly related to food security and public health, plays an important role in the development of countries. Thus, evaluating the effects of trade liberalization in the agricultural sector is of particular importance. Therefore, this study aimed at analyzing the effects of import tariff reduction in the agricultural sector of Iran and the Eurasian Economic Union on welfare, trade balance and production based on the model of the Global Trade Analysis Project (GTAP) and version 10 of its database, in three scenarios (20 percent, 60 percent and 100 percent reductions of tariff rates) with GEMPACK software package. The study results showed that with the trade liberalization of the agricultural sector, significant welfare changes would occur in Iran and Russia; Armenia would experience negative welfare; also, the highest welfare would belong to Iran. In addition, decomposing the effects of shocks on welfare showed that the most positive impact on Iran's welfare was related to the third shock (reduction of tariffs on agricultural products imported from Russia to Iran) and fifth shock (reduction of tariffs on agricultural products imported from Kazakhstan to Iran); the most positive impact on Russia's welfare was related to the third shock; also, the reduction of tariffs in the agricultural sector had negative effects on trade balance and production of this sector, and the highest effects of tariffs reduction in the agricultural sector were reflected on the trade balance of industrial sector.
Keywords
trade liberalization
Eurasian Economic Union
Global Trade Analysis Project (GTAP) model
tariff in the agriculture sector
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