Agriculture Reference
In-Depth Information
Policy implications and conclusion
The smulaton results reported above show that agrcultural sectors wll be
adversely affected by the WTO accession: agricultural output falls, grain and
total food self-sufficiency rates decline, and rural-urban income inequality
worsens. Although the magntudes of the mpacts are smaller than wdely
anticipated, the results may still give concern to policymakers. This section
dscusses polcy optons to tackle these adverse mpacts.
A drect response to the mpact may be to provde support to agrcultural
sectors and farmers. Support can be provided in many forms, with some
conformng the WTO rules and others not. Chapter 6 (ths volume) consders
a scenaro where the level of tarff cut on agrcultural commodtes s halved
because of various forms of new barriers such as labelling requirements,
reporting procedures, and so on. The simulation of this scenario using
CERD ndcates that although such a polcy may provde some cushonng
of agricultural sectors and help to ease the worsening trend of rural-urban
income inequality, the overall welfare gain from WTO accession is smaller—
the equvalent varaton s 6 per cent less than that of the full tarff cut of
the WTO accesson commtments.
Here, support in the form of a production subsidy is considered. It is
assumed that the government subsdses farmers at a level that would keep
Table 7.11
Changes n household ncome and welfare after WTO
accesson (per cent)
Indcators
Eastern
Central
Western
Real wages
Agricultural labour
0.042
-0.103
0.148
Non agricultural labour
2.528
0.675
1.163
Real ncome
Rural household
1.196
0.539
0.681
Urban household
1.772
0.742
1.174
Utlty
Rural household
0.972
0.520
0.615
Urban household
1.502
0.834
1.003
Source:
Author's CERD smulaton
