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

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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 well as GVCs and distributional and sustainability impacts of trade liberalization and trade policy. BATModel will address these shortcoming by building upon advances in international trade theory and global value chain framework. 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 customers. 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 tool to support the European Commission 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 improvements achieved in BATModel can be used in a modular way in multiple well established trade models by creating BAT 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 tool to scholars and practitioners for quantitate policy analysis. 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 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 the Sustainable Development Goals (SDGs).
  • To share and discuss the approaches and findings of the project with research communities, to involve policy makers, 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 BAT Dissemination and Stakeholder Platform. It will be open to other platforms and policy-makers and will provide learning materials.

Partners:

  • Karine Latouche, INRA, France (coordinator)
  • Stichting Wageningen Research, Rheinische Friedrich-Wilhelms-Universitat Bonn, Universita Degli Studi di Milano, Sveriges Lantbruksuniversitet, Jrc -Joint Research Centre, Technische Universitaet Muenchen, Centre D'etudes Prospectives et D'informations Internationales, Centro de Investigacion y Tecnologia Agroalimentaria de Aragon, Universitaet Bern, Magyar Tudomanyos Akademia Kozgazdasag- es Regionalis Tudomanyi Kutatokozpont, Universita Degli Studi Roma Tre, Centre for European Policy Studies, CASE: Centrum Analiz Spoleczno-Ekonomicznych, fundacja naukowa, Inra Transfert s.a.

Contribution of ILR

ILR contributes to BATModel based on its expertise in trade analysis with Computable General Equilibrium models, especially CGEBox. Besides methodological improvements focusing on vertical and horizontal product differentiation and modeling emerging trade flows, ILR will advance the software implementation of trade simualtion models based on modularization to foster the application of the methdological advances in BATModel beyond the models contributed by the BATModel consortium.

Staff working at ILR on the project

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Economic and Agricultural Policy group:

Yaghoob Jafari is the work package leader of WP3 on "Markets, quality and competiation"

Economic Modeling of Agricultural Systems group:

    Wolfgang Britz

    Wolfgang Britz is the work package leader of WP7 "Modeling platform". His group contributes further to WP2 "Emerging trade flows".

Contribution to WP 2 "Emerging trade flows"

As first steps, a Armington specification with commitment terms was implemented and tested in CGEBox. In parallel, an implementation of a Spatial Equilibrium based solution for selected market was coded and tested in CGEBox. It assumes homogenous products and thus deviates from the usual Armington assumption.

Contribution to WP 7 "Modeling platform"

WP7 will develop the operational backbone in the form of well-documented and tested, modular and open access software modules which implement the advances in from other work packages. WP 7 will also ensure that these new modules are implemented in at least two existing simulation models in BATModel (CAPRI, CGEBox, MAGNET, MIRAGE) and are scrutinized in a large-scale policy relevant test case.

As a first step in WP7, the CETA trade agreement between the EU and Canada was chosen as the test case. The necessary data, such as changes in tariffs at the individual tariff line and in Tariff Rate Quotas are in the process of being compiled. At the end of the first year, the four different models will analyse CETA using the current state-of-the-art, i.e. without the improvements foreseen in BATModel.

A first publication on CETA based on analysis with CGEBox is available as: Jafari, Y., Himics, M., Britz, W., Beckman, J. (2021): It is all in the details: A bilateral approach for modelling trade agreements at the tariff line, Canadian Journal of Agricultural Economics, in: Online available 8th March 2021, Link.

In order to prepare for the modular implementation, WP7 develops currently coding guidelines in GAMS and GEMPACK.

Publications related to the project

Jafari, Y., Himics, M., Britz, W., Beckman, J. (2021): It is all in the details: A bilateral approach for modelling trade agreements at the tariff line, Canadian Journal of Agricultural Economics, in: Online available 8th March 2021, Link.

Ho, M., Britz, W., Delzeit, R., Leblanc, F., Roson, R., Schuenemann, F., Weitzel, M. (2020): Modelling Consumption and Constructing Long-Term Baselines in Final Demand, Journal of Global Economic Analysis 5(1): 63-80, Link.

Jafari, Y., Britz, W. (2020): Brexit: an economy-wide impact assessment on trade, immigration, and foreign direct investment, Empirica 47(1): 17-52, Link.

Jafari, Y., Britz, W., Dudu, H., Roson, R., Sartori, M. (2020): Can Food Waste Reduction in Europe Help to Increase Food Availability and Reduce Pressure on Natural Resources Globally?, German Journal of Agricultural Economics 69(2): 143-168, Link.

Britz, W., Roson, R. (2019): G-RDEM: A GTAP-Based Recursive Dynamic CGE Model for Long-Term Baseline Generation and Analysis, Journal of Global Economic Analysis 4(1): 50-96, Link.

Jafari, Y., Britz, W., Beckman, J. (2019): The impacts to food consumers of a Transatlantic Trade and Investment Partnership, Bio-based and Appplied Economics 7(2): 139-160, Link.

Britz, W., van der Mensbrugghe, D. . (2018): CGEBox: A Flexible, Modular and Extendable Framework for CGE Analysis in GAMS, Journal of Global Economic Analysis 3(2): 106-176, Link.

Jafari, Y., Britz, W. (2018): Modelling heterogeneous firms and non-tariff measures in free trade agreements using Computable General Equilibrium, Economic Modelling 73: 279-294, Link.

Britz, W., van der Mensbrugghe, D. . (2016): Reducing unwanted consequences of aggregation in large-scale economic models - A systematic empirical evaluation with the GTAP model, Economic Modelling 59: 462-473, Link.

Himics, M., Britz, W. (2016): Flexible and welfare-consistent tariff aggregation over exporter regions, Economic Modelling 53: 375-387, Link.



Last updated: Friday, March 19, 2021