[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ias/cpaper/20-wp609.html
   My bibliography  Save this paper

The Trade and Welfare Impacts of the U.S. Retaliatory Tariff on EU Olive Oil

Author

Listed:
  • A. Malek Hammami
  • John C. Beghin
Abstract
We investigate the welfare and trade impacts of U.S. retaliatory tariffs from the Airbus WTO dispute on EU olive oil, using a calibrated multi-market partial-equilibrium displacement model. The model accounts for four differentiated types of retail olive oil in the U.S. market. U.S. retailer-blenders source olive oil in eight foreign markets and domestically and for two qualities of oil (virgin, other), and in two shipping container types (non-bulk, bulk). We consider two main scenarios: A 100% tariff on all EU olive oils as initially announced by the USTR, and the actual and final 25% tariff on non-bulk Spanish olive oil. The first scenario leads to significant loss of welfare for U.S. consumers of $924 million, much reduced EU olive oil exports to the United States ($354 million), and increased imports from non-EU sources ($90 million). The second scenario has much more muted effects, with mitigated welfare losses for U.S. consumers ($55 million), strong decreases of Spanish olive oil exports shipped in smaller containers, much larger exports of bulk Spanish olive oil and other olive oils. Aggregate EU exports to the United States are slightly lower given the substantial trade diversion induced by the targeted tariff. We discuss the political economy of the contrasting initial announcement and limited implemented retaliation.

Suggested Citation

  • A. Malek Hammami & John C. Beghin, 2020. "The Trade and Welfare Impacts of the U.S. Retaliatory Tariff on EU Olive Oil," Center for Agricultural and Rural Development (CARD) Publications 20-wp609, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:20-wp609
    as

    Download full text from publisher

    File URL: https://www.card.iastate.edu/products/publications/pdf/20wp609.pdf
    File Function: Full Text
    Download Restriction: no
    File URL: https://www.card.iastate.edu/products/publications/synopsis/?p=1311
    File Function: Online Synopsis
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Luisa Menapace & Gregory Colson & Carola Grebitus & Maria Facendola, 2011. "Consumers' preferences for geographical origin labels: evidence from the Canadian olive oil market," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 38(2), pages 193-212, June.
    2. Scarpa Riccardo & Del Giudice Teresa, 2004. "Market Segmentation via Mixed Logit: Extra-Virgin Olive Oil in Urban Italy," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 2(1), pages 1-20, August.
    3. Zhen Miao & John C. Beghin & Helen H. Jensen, 2012. "Taxing Sweets: Sweetener Input Tax Or Final Consumption Tax?," Contemporary Economic Policy, Western Economic Association International, vol. 30(3), pages 344-361, July.
    4. Daniel A. Sumner & Michael K. Wohlgenant, 1985. "Effects of an Increase in the Federal Excise Tax on Cigarettes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(2), pages 235-242.
    5. Robert C. Feenstra, 1997. "The Effects of US Trade Protection and Promotion Policies," NBER Books, National Bureau of Economic Research, Inc, number feen97-1.
    6. Bo Xiong & Daniel Sumner & William Matthews, 2014. "A new market for an old food: the U.S. demand for olive oil," Agricultural Economics, International Association of Agricultural Economists, vol. 45(S1), pages 107-118, November.
    7. Ronen, Eyal, 2017. "The Trade-Enhancing Effect Of Non-Tariff Measures On Virgin Olive Oil," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 5(3), July.
    8. Celal Tasdogan & Efthimia Tsakiridou & Konstantinos Mattas, 2005. "Country Market Power in EU Olive Oil Trade," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 3(2), pages 211-219.
    9. Mylène Kherallah & John Beghin, 1998. "U.S. Trade Threats: Rhetoric or War?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 15-29.
    10. Feenstra, Robert C. (ed.), 1997. "The Effects of U.S. Trade Protection and Promotion Policies," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226239514, September.
    11. Huang, Kuo S., 1993. "Measuring the Effects of U.S. Meat Trade on Consumers' Welfare," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 25(1), pages 217-227, July.
    12. Karipidis, Philippos I. & Tsakiridou, Efthimia & Tabakis, Nikolaos M. & Mattas, Konstadinos, 2005. "Hedonic Analysis of Retail Egg Prices," Journal of Food Distribution Research, Food Distribution Research Society, vol. 36(3), pages 1-6, November.
    13. Robert C. Feenstra, 1997. "Introduction to "The Effects of U.S. Trade Protection and Promotion Policies"," NBER Chapters, in: The Effects of US Trade Protection and Promotion Policies, pages 1-7, National Bureau of Economic Research, Inc.
    14. Richard K. Perrin & Grant M. Scobie, 1981. "Market Intervention Policies for Increasing the Consumption of Nutrients by Low Income Households," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(1), pages 73-82.
    15. Anna Carbone & Luca Cacchiarelli & Valentina Sabbatini, 2018. "Exploring quality and its value in the Italian olive oil market: a panel data analysis," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-15, December.
    16. Tsang, Eric W. K., 2014. "Old and New," Management and Organization Review, Cambridge University Press, vol. 10(03), pages 390-390, November.
    17. Lusk, Jayson L. & Roosen, Jutta & Shogren, Jason (ed.), 2011. "The Oxford Handbook of the Economics of Food Consumption and Policy," OUP Catalogue, Oxford University Press, number 9780199569441.
    18. Azzam, Azzeddine M. & Rettab, Belaid, 2012. "A welfare measure of consumer vulnerability to rising prices of food imports in the UAE," Food Policy, Elsevier, vol. 37(5), pages 554-560.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hammami, AbdelMalek & Beghin, John C., 2021. "The determinants of U.S. olive oil imports," 2021 Annual Meeting, August 1-3, Austin, Texas 312880, Agricultural and Applied Economics Association.
    2. Louise Curran & Carlos Carrasco-Farré, 2024. "Leveraging natural language processing techniques to explore the potential impact of the EU’s Carbon Border Adjustment Mechanism (CBAM)," Journal of International Business Policy, Palgrave Macmillan, vol. 7(2), pages 181-202, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luigi Roselli & Domenico Carlucci & Bernardo Corrado Gennaro, 2016. "What Is the Value of Extrinsic Olive Oil Cues in Emerging Markets? Empirical Evidence from the U.S. E‐Commerce Retail Market," Agribusiness, John Wiley & Sons, Ltd., vol. 32(3), pages 329-342, July.
    2. Ballco, Petjon & Gracia, Azucena, 2020. "Do market prices correspond with consumer demands? Combining market valuation and consumer utility for extra virgin olive oil quality attributes in a traditional producing country," Journal of Retailing and Consumer Services, Elsevier, vol. 53(C).
    3. Bown, Chad P., 2004. "Trade disputes and the implementation of protection under the GATT: an empirical assessment," Journal of International Economics, Elsevier, vol. 62(2), pages 263-294, March.
    4. Hammami, AbdelMalek & Beghin, John C., 2021. "The determinants of U.S. olive oil imports," 2021 Annual Meeting, August 1-3, Austin, Texas 312880, Agricultural and Applied Economics Association.
    5. Breinlich, Holger & Leromain, Elsa & Novy, Dennis & Sampson, Thomas, 2020. "Voting with their money: Brexit and outward investment by UK firms," European Economic Review, Elsevier, vol. 124(C).
    6. Hylke Vandenbussche & Maurizio Zanardi, 2008. "What explains the proliferation of antidumping laws? [‘Antidumping Laws in the US; Use and Welfare Consequences’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 23(53), pages 94-138.
    7. Hasanat Shah, Syed & Ahmad Nawaz, Hakro, 2006. "Economic rationale, trade impact and extent of antidumping – case study of Pakistan," MPRA Paper 35817, University Library of Munich, Germany, revised 2007.
    8. Paul Brenton, 2014. "Anti-dumping policies in the EU and trade diversion," World Scientific Book Chapters, in: INTERNATIONAL TRADE, DISTRIBUTION AND DEVELOPMENT Empirical Studies of Trade Policies, chapter 4, pages 67-81, World Scientific Publishing Co. Pte. Ltd..
    9. Konings, Jozef & Vandenbussche, Hylke, 2008. "Heterogeneous responses of firms to trade protection," Journal of International Economics, Elsevier, vol. 76(2), pages 371-383, December.
    10. Bruce A. Blonigen, 2019. "In Search of Substitution Between Foreign Production and Exports," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 9, pages 293-323, World Scientific Publishing Co. Pte. Ltd..
    11. Ito, Keiko & Fukao, Kyoji, 2005. "Foreign direct investment and trade in Japan: An empirical analysis based on the Establishment and Enterprise Census for 1996," Journal of the Japanese and International Economies, Elsevier, vol. 19(3), pages 414-455, September.
    12. Lorenzo Trimarchi, 2020. "Trade Policy and the China Syndrome," Working Papers ECARES 2020-15, ULB -- Universite Libre de Bruxelles.
    13. Joseph, Siny & Lavoie, Nathalie, 2008. "Effectiveness of COOL in the U.S. Seafood Industry," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6260, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. James Tanoos, 2012. "Industry-Based Foreign Direct Investment Around State Gubernatorial Elections: Evidence From The United States," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 6(5), pages 1-18.
    15. Jozef Konings & Hylke Vandenbussche & Linda Springael, 2001. "Import Diversion under European Antidumping Policy," Journal of Industry, Competition and Trade, Springer, vol. 1(3), pages 283-299, September.
    16. Nobuaki Yamashita, 2010. "International Fragmentation of Production," Books, Edward Elgar Publishing, number 13615.
    17. Malhotra Nisha & Rus Horatiu & Kassam Shinan, 2008. "Antidumping Duties in the Agriculture Sector: Trade Restricting or Trade Deflecting?," Global Economy Journal, De Gruyter, vol. 8(2), pages 1-19, June.
    18. Co, Catherine Y., 2001. "Trade, foreign direct investment and industry performance," International Journal of Industrial Organization, Elsevier, vol. 19(1-2), pages 163-183, January.
    19. Nishitateno, Shuhei, 2013. "Global production sharing and the FDI–trade nexus: New evidence from the Japanese automobile industry," Journal of the Japanese and International Economies, Elsevier, vol. 27(C), pages 64-80.
    20. Russell Hillberry & Phillip McCalman, 2016. "Import dynamics and demands for protection," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(3), pages 1125-1152, August.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ias:cpaper:20-wp609. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/caiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.