Project Number: WVA00404
CRIS Number: 0179451
Multi-State Project: S-287
IMPACTS OF TRADE AGREEMENTS AND ECONOMIC POLICIES ON SOUTHERN AGRICULTURE
Investigators: Colyer, D., Labys, W., Fletcher, J.
Performing Department: Resource Management -- 8485
Start Date: 10/01/1998
Termination Date: 09/30/2003
Reporting period: 01/01/2001 to 12/31/2001
Progress Report:
Work was continued on analyzing trade and the environment including the impacts on the environment of U.S.-Mexico agricultural trade under NAFTA, as well as trade under WTO, FTAA and other trade agreements. Spatial econometric analysis was used to evaluate the effects of trade liberalization on environmental conditions and policies. The effects of enhanced environmental laws and regulations on domestic policies including subsidies were analyzed. In addition, modeling work was undertaken regarding China and the US economy. Research has continued in several areas linking commodities and trade. First, the time series analysis of trade and prices has continued in two directions. One project has involved examining the convergence of international and US agricultural and other commodity prices that are separated by space. Another project continues with the examination of cycles and nonlinearities in commodity price behavior. Second, work on the impact of business cycles on agricultural market adjustments also has advanced. The impact analysis has been on the US and other world wine industries. Findings include mixed results with respect to the effect of trade liberalization, but negative impacts appear minor. Strictness of environmental regulations seems related to the strictness of a country's trading partners and more open trading regimes seem to be associated with stricter environmental controls. Thus, there is little support for halting trade liberalization to prevent greater environmental damages. With respect to NAFTA, Mexico has its improved laws and enforcement procedures with positive impacts on the environment. The scale effects appear to be negative due to increased production, but the structure and technology have produced both positive and negative effects. The type of trade agreement seems related to the degree of environmental rigor with Customs Unions being more effective in promoting environmental improvements than free trade agreements. With respect to agriculture, there seems to be a tendency to try to offset the costs of increased environmental regulations with subsidies of various types which reduce unfavorable econmonic impacts on the sector. Results concerning international agricultural commodity price convergence do not confirm a gradual synchronization of prices since before WWII. Successive shocks to these prices including production instabilities and business cycle swings appear to be responsible for this finding. Findings regarding the existence of agricultural price cycles emphasize the stochastic character of cyclical movements. The structural time series approach identified periodicities in agricultural prices. Other results suggest that agricultural prices continue to be production unstable and international business cycles play an important role from a demand perspective.
Publications:
Cohen, B.C., Labys, W.C. and Eliste, P. 2001. An econometric time series analysis of CO2 concentrations and emissions. International Journal of Environment and Pollution 15:371-385.
Colyer, D. 2001. Poultry industry positions on new farm legislation. in Parr Rosson and Aaron Hobbs, Eds. Summary of Testimony on 2001-02 Farm Legislation. CNAS 2001-3, Center for North American Studies, Texas A&m University, August.
Colyer, D. 2001. Impacts of NAFTA on U.S.-Mexico Agricultural Trade. Agricultural and Resource Economics Review (Abstract) 30:217.
Eliste, P.and Frederiksson, P.G. 2001. Environmental regulations, transfers and trade: theory and evidence. MS# 9027, World Bank and Department of Economics, Southern Methodist University.
Huang, H. and Labys, W.C. 2001. Environment and trade: theories and methods. Research Paper 2001-1, Regional Research Institute, West Virginia University.
Kouassi, E.,Labys, W.C. and Aka, F. 2001. Forecasting the index of industrial production: a nonlinear seasonal time series approach. Research Paper 2001-2, Regional Research Institute, West Virginia University.
Kyrtsou, C., Labys, W.C., and Terraza, M. 2001. Heterogeneity and chaotic dynamics in commodity markets. Research Paper 2001-6, Regional Research Institute, West Virginia University.
Labys, W.C. 2001. Business cycles and wine market impacts. WP No. 21, Center for International Economic Studies, Adelaide University.
Zhou, Q., Colyer, D., and Phipps, T. 2001. Reconciling trade and the environment: a cost sharing approach. Agricultural and Resource Economics Review (Abstract) 30:217.
Impact:
Findings of relatively benign environmental impacts from trade in agricultural commodities supports efforts to promote freer trade in agricultural products in the recently initiated negotiating round under the WTO.