Economic Impacts of International Trade Agreements on the World Frozen Concentrate Orange Juice Market
Date of Award
Doctor of Philosophy (PhD)
Kandice H. Kahl
The international FCOJ market is an important source of income for many countries around the world. The international trading environment is continuously changing as the forces of free trade grow and are embraced both regionally and globally. The specific economic effects due to present and proposed international trade agreements on prices, quantities, trade flows and welfare in the international FCOJ market are analyzed in this study. Four trading scenarios are considered. These include removing all tariffs for imports into the European Community, the Free Trade Area of the Americas, the lifting of the U.S. embargo on Cuba, and world free trade, respectively. The results from these scenarios are compared to a Baseline Model that incorporates present and scheduled tariffs changes.
A spatial-equilibrium, quadratic-programming model is used to assess the impact of the four trade scenarios on the international FCOJ market. The model includes four demand regions, accounting for 91 % of world FCOJ imports in 1994, and six supply regions, accounting for 97.5% of world exports in 1994. The four demand regions include the United States, the European Community, Canada and Japan. The six supply regions include Brazil, the United States, Central America, Mexico, the Mediterranean and Cuba. Brazil, the United States and Central America are included endogenously in the model, while Mexico, the Mediterranean and Cuba are included exogenously. This study is the first that models Central America endogenously and the Mediterranean and Cuba exogenously in a world FCOJ model. The significant reduction in the number of trees and FCOJ output caused by major diseases in Brazil in 1998 is also explicitly incorporated in the model.
The results of Scenario 1 indicate the United States, Brazilian, Mexican and Cuban producers gain revenues. Central American and Mediterranean producers, who already had free access, lose. Consumers in the European Community gain, while consumers in the United States, Canada and Japan lose. World welfare increases by US$ l 6.40 million under Scenario 1. Scenario 2 benefits all producing regions, but consumer surplus falls in the United States, the European Community and Japan, and rises in Canada. World welfare falls by a small US$ I. IO million under Scenario 2. Scenario 3 leads to very small changes in prices and quantities, resulting in a minute fall in world welfare ofUS$0.08 million. Finally, Scenario 4 results in increased revenues to all producing regions, except Central America and the Mediterranean who already had free access to their export markets under the Baseline Model. Consumer surplus increases in the European Community and Japanese markets and falls in the United States and Canadian markets, under Scenario 4. World welfare increases by US$46.86 million under Scenario 4. These results show that regional trade arrangements do not unambiguously lead to increases in world welfare.
Zabaneh, Louis, "Economic Impacts of International Trade Agreements on the World Frozen Concentrate Orange Juice Market" (1999). All Dissertations. 3251.