Trade modelling has a long-standing tradition but some issues are notoriously difficult to assess and include in the existing simulation models. Proposals will develop appropriate methodologies to include some of these issues in existing trade models. These issues include (non-exhaustive):
- Non-tariff measures (NTM): The project will work on a methodology to assess the welfare effects of NTM (both positive and negative) and to include them in trade simulation models. This should go further than the standard gravity model approach which has strong downsides as discussed in the literature;
- Geographical Indications (GIs): The project will work on a methodology to assess the welfare effect of GIs and the resulting trade impacts of different schemes under trade negotiations;
- Zero trade flows: Current trade models have problems creating trade flows that did not exist before due to tariff or NTM reasons. This project will work on a methodology to overcome this bias;
- Quality differentiation: current trade models typically assume homogeneous goods. However, agri-food trade is becoming increasingly heterogeneous. The project should aim to broaden the commodity scope by including horizontal and vertical product differentiation trade models.
Proposals for both sub-topics should ensure that the approach proposed will be compatible with and improve the tools used at the European Commission. Proposals should include a task to cluster with other projects financed under the topic and with the modelling platform SUPREMA established under SFS-49-2017.
The Commission considers that proposals requesting a contribution from the EU of up to EUR 4 million for A and 5 million for B would allow this specific challenge to be addressed appropriately. Nonetheless, this does not preclude submission and selection of proposals requesting other amounts.
- In the short term: improvement of the capacity to model policies dealing with agriculture and related natural resources, food and international trade;
- In the medium to long term: improvement of policy design, impact assessments and monitoring.
Illustration Photo: An exhibition entitled “Geographical Indications – Identities of Territories” was held on the sidelines of the Assemblies of WIPO Member States, which met from October 2-11, 2017. It presented the Italian geographical indications system through the most representative appellations of origin and geographical indications, their territories and representatives of producers, agro-food and wine. WIPO co-organized the event with the Government of Italy. (credits: WIPO / Violaine Martin / Flickr Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0))