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U.S. Export Subsidies in Wheat: Strategic Trade Policy or An Expensive Beggar-My-Neighbor tactic?

Author

Listed:
  • Anania, Giovanni
  • Bohman, Mary
  • Carter, Colin A.

Abstract

This paper examines the domestic and international impacts of the United States' Export Enhancement Program (EEP) in the wheat market. EEP uses targeted in-kind subsidies to expand U.S. exports and was specifically designed to compete with subsidized exports from the European Community (EC). Theoretically, we argue that the EEP program cannot be a welfare improving trade policy for the U.S., even when considering strategic trade theory. We then model EEP as an in-kind, constrained targeted export subsidy and determine its price, quantity and budgetary effects. Our empirical results show that no exporting country gains from EEP and that the intended loser, the EC, is only slightly harmed. We find only a small increase in U.S. wheat exports due to the export subsidies. EEP is an expensive program - based on our estimates, the cost of additional wheat exports under EEP reached $469 per metric ton in 1988.

Suggested Citation

  • Anania, Giovanni & Bohman, Mary & Carter, Colin A., 1991. "U.S. Export Subsidies in Wheat: Strategic Trade Policy or An Expensive Beggar-My-Neighbor tactic?," Working Papers 51148, International Agricultural Trade Research Consortium.
    • Handle: RePEc:ags:iatrwp:51148
    DOI: 10.22004/ag.econ.51148
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    Citations

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    Cited by:

    1. Pinelopi Koujianou Goldberg & Michael M. Knetter, 1997. "Causes and Consequences of the Export Enhancement Program for Wheat," NBER Chapters, in: The Effects of US Trade Protection and Promotion Policies, pages 273-296, National Bureau of Economic Research, Inc.
    2. Dahl, Bruce L. & Johnson, D. Demcey & Wilson, William W. & Gustafson, Cole R., 1995. "Credit Guarantee Programs in International Grain Markets: Background and Issues," Agricultural Economics Reports 23331, North Dakota State University, Department of Agribusiness and Applied Economics.
    3. Reimer, Jeffrey J. & Steigert, Kyle W., 2006. "Imperfect Competition and Strategic Trade Theory: What Have We Learned?," Working Papers 201528, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    4. Hyberg, Bengt & Smith, Mark & Skully, David & Davison, Cecil, 1995. "Export credit guarantees: The commodity credit corporation and US agricultural export policy," Food Policy, Elsevier, vol. 20(1), pages 27-39, February.
    5. Young, Linda M. & Abbott, Philip C. & Leetmaa, Susan E., 2001. "Export Competition: Issues And Options In The Agricultural Negotiations," Commissioned Papers 14624, International Agricultural Trade Research Consortium.
    6. Sheldon, Ian M. & Pick, Daniel H. & McCorriston, Steve, 2001. "Export Subsidies And Profit-Shifting In Vertical Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(1), pages 1-17, July.
    7. Ahmadi-Esfahani, Fredoun Z., 1994. "Wheat Marketing and Trade: Further Issues for Research - a Comment on Ryan," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 62(01), pages 1-7, April.
    8. Klein, Kurt K. & Storey, Gary, 1998. "Structural Developments In The Canadian Grains And Oilseeds Sector," Proceedings of the 4th Agricultural and Food Policy Systems Information Workshop 1998: Economic Harmonization in the Canadian\U.S.\Mexican Grain-Livestock Subsector; 16758, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
    9. Reimer Jeffrey J & Stiegert Kyle, 2006. "Imperfect Competition and Strategic Trade Theory: Evidence for International Food and Agricultural Markets," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 4(1), pages 1-27, September.
    10. Jaouad, Mohamed, 1994. "An agricultural policy and trade model for Morocco," ISU General Staff Papers 1994010108000011483, Iowa State University, Department of Economics.
    11. Wilson, William W. & Yang, Seung-Ryong, 1994. "Impacts of Wheat Export Strategies on Market Shares," Agricultural Economics Reports 23387, North Dakota State University, Department of Agribusiness and Applied Economics.
    12. Reimer, Jeffrey J. & Stiegert, Kyle W., 2006. "Evidence on Imperfect Competition and Strategic Trade Theory," Staff Paper Series 498, University of Wisconsin, Agricultural and Applied Economics.
    13. Diersen, Matthew A. & Wilson, William W. & Dahl, Bruce L. & Satyanarayana, Vidyashankara, 1997. "Additionality Of Credit Guarantees For U.S. Wheat Exports," Agricultural Economics Reports 23425, North Dakota State University, Department of Agribusiness and Applied Economics.
    14. Peterson, Jeffrey M. & Minten, Bart & de Gorter, Harry, 1999. "Economic Costs Of The U.S. Wheat Export Enhancement Program: Manna From Heaven Or From Taxpayers?," Working Papers 14578, International Agricultural Trade Research Consortium.
    15. Satyanarayana, Vidyashankara & Johnson, D. Demcey, 1998. "Credit Guarantee Programs And U.S. Market Share In Selected Wheat Import Markets," Agricultural Economics Reports 23284, North Dakota State University, Department of Agribusiness and Applied Economics.
    16. Ryan, Timothy J., 1994. "Marketing Australia's Wheat Crop: The Way Ahead," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 62(01), pages 1-15, April.

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    International Relations/Trade;

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