A trade model to evaluate the impact of trade liberalisation on EU [European Union] tomato imports

Abstract

The complexity of the Euro-Mediterranean trade liberalisation is difficult to represent in trade models because of the range of instruments still constraining trade as well as the special characteristics of the major traded fruits and vegetables (product differentiation and seasonality). This paper proposes a trade model to assess the impact of trade liberalisation in the fresh tomato market, taking into account trade measures that are defined on a seasonal basis, such as tariff-rate quotas and entry prices. Simulations are carried out in monthly periods. The model considers imports from different sources as imperfect substitutes, following a non-linear Armington-type approach. Different policy scenarios have been run, considering various types of changes in the trade policy for tomatoes, changes that would arise from a new multilateral trade agreement. Model results indicate that, as far as EU producers are concerned, considering tomatoes as a sensitive product would be the less dramatic scenario. By contrast, entry price elimination would have noteworthy consequences on EU producers.