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BATModel (2020-2024) - Better Agri-food Trade Modelling for Policy Analysis

Overview:

Economy-wide assessments of multilateral and regional trade agreements often fall short of capturing the complexity of trade policy design and negotiations related to agri-food markets and supply chains. “New generation” trade agreements are not limited to changes in tariffs and tariff rate quotas, but also include provisions on sanitary and phytosanitary (SPS) measures (part of what are called non-tariff measures, NTMs), geographical indications (GIs), public procurement and capital flows.

The overall goal of BATModel is to improve existing trade modelling tools and approaches, equipped for the analysis of 21st -century trade issues with a focus on agriculture and food to support policy analysis. The current needs of the users are to better account for previously neglected or insufficiently covered issues such as NTMs, GIs, zero trade flows and quality differentiation (as explicitly mentioned in the text of the call), as well as GVCs and distributional and sustainability impacts of trade liberalisation and trade policy. BATModel will address these shortcomings by building upon advances in international trade theory and global value chain frameworks. As a major contribution, BATModel will bridge the gap between the established simulation models, based on the aggregate agent paradigm, and the micro evidence revealed by models that account for heterogeneity in firms, territories, producers and consumers. The enhancements enabled by BATModel will be operationally implemented through interchangeable and well-documented open-source modules. A test case of an existing free trade agreement and different case studies will be performed to assess the capability of the new modules to improve model-based assessment of agri-food trade. Ultimately, this will provide a new generation of modular trade modelling tools to support the European Commission (EC) in designing and assessing trade-related policies and international agreements.

Scientific objectives

  • To extend and improve existing trade simulation models for the analysis of agri-food trade policies by building upon and progressing beyond the state-of-the-art using relevant theory and econometric based evidence.
  • To improve the representation of important agri-food trade features such as emerging trade flows, quality differentiation and global value chain issues in trade simulation models.
  • To design and provide a new toolbox of modules to analyse trade policy measures such as NTMs and GIs consistently, reflecting their growing importance in international trade negotiations.
  • To ensure that the model improvements achieved in BATModel can be used in a modular way in multiple well established trade models by creating the BATModel Modular Platform for Agri-food Trade Modelling to support policy-makers and other stakeholders in international trade negotiations, especially in the context of “new generation” trade agreements during and after the project’s lifetime.
  • To thoroughly test the improved and extended models in policy-relevant applications to deliver operational modular modelling tools to scholars and practitioners for quantitative policy analyses. The end-users will be involved in the co-creation and testing phases of the models, in an iterative process.

Economic, societal and political objectives

  • To better address societal concerns with regard to employment, working conditions, health and income distribution, as well as preferences through new and improved economic modelling approaches that ensure the provision of relevant, i.e., salient, understandable, measurable and reliable results for all stakeholders (the private sector, NGOs and the general public).
  • To develop methodologies and related indicators to assess the (positive and negative) impacts of international agri-food trade policies on societal challenges, including income inequality, labour displacement, nutritional and environmental impacts across regional scales along with the Sustainable Development Goals (SDGs).
  • To share and discuss the approaches and findings of the project with research communities, to involve policymakers, the private sector, NGOs and the general public in a process of co-design of case studies and share results in a easily usable manner with via the BATModel Dissemination and Stakeholder Platform. It will be open to other platforms and policy-makers and will provide learning materials.

Project coordinator

Karine Latouche,
Institut national de recherche pour l'agriculture l'alimentation et l'environnement (INRAE), France

Project partners

  • Institut national de recherche pour l'agriculture l'alimentation et l'environnement (INRAE)
  • Stichting Wageningen Research (WR)
  • Rheinische Friedrich-Wilhelms-Universität Bonn (UBO)
  • Università degli Studi di Milano (UMIL)
  • Sveriges Lantbruksuniversitet (SLU)
  • Joint Research Centre - European Commission (JRC)
  • Technische Universität München (TUM)
  • Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
  • Centro de Investigación y Tecnología Agroalimentaria de Aragón (CITA)
  • Universität Bern (UBERN)
  • Magyar Tudományos Akadémia Közgazdaság- és Regionális Tudományi Kutatóközpont (MTA KRTK)
  • Università degli Studi Roma Tre (UNIROMA3)
  • Centrum Analiz Społeczno-Ekonomicznych - Fundacja Naukowa (CASE)
  • INRA Transfert S.A. (IT)

Contribution:

ILR contributes to BATModel based by introducing different approaches to improve existing trade modeling tools, especially CGEBox, and advances the software implementation of trade simulation models.

ILR leads and contributes to the WP7 “Modeling platform”, and WP3 “Markets, quality and competition” in BATModel. Our team also contributes to WP2 “Emerging trade flows”.

WP7 will advance the software implementation of trade simulation models based on modularization to foster the application of the methodological advances in BATModel, and beyond the models contributed by the BATModel consortium.

WP3 analyses the impact of product quality differentiation on trade in the agri-food sector and identify the role of intermediate input markets in both quality differentiation and trade. The specific objectives of the WP are

  • To introduce both horizontal and vertical quality differentiation in trade simulation models of agri-food products.
  • To understand demand and supply-side determinants of product differentiation of agri-food exports and empirically quantify their impact on trade.
  • To understand and empirically quantify the relationships between intermediate input markets, product quality, and export behavior.
  • To provide a numerical prototype model that links theoretical and empirical advances on product quality differentiation in this work package to provide guidance for implementation in existing applied simulation models.

Staff at ILR working on the project

Economic and Agricultural Policy group:

Yaghoob Jafari, WP3 leader and contributor
Helena Engemann, Contributor in WP3
Thomas Heckelei, Contributor in WP3

Economic Modeling of Agricultural Systems group:

Wolfgang Britz, WP7 leader and contributor
Economic Modeling of Agricultural Systems group contributes in WP2

Last updated: Monday, November 23, 2020