International Trade Policy Analysis at the Trade Relations Unit
What is the impact of free trade agreements on Swiss agriculture? How can Switzerland define at best its negotiating position? The FOAG, in collaboration with the Agroscope Socioeconomics Research group of the Institute for Sustainability Sciences (ISS), utilizes economic simulation models that allow analyzing a wide range of scenarios.
The International Trade Policy Unit (ITPU) of the Federal Office for Agriculture (FOAG) uses quantitative tools assessing multi- and regional trade agreements in order to support international trade negotiations. Currently two models are installed and regularly used: the Tariff Reduction Impact Model for Agriculture (TRIMAG) and the market module of the Common Agricultural Policy Regionalized Impact (CAPRI) model.
The TRIMAG model has been developed by the ITPU. Its database includes domestic and international prices, tariffs and trade flows at the highest possible level of disaggregation (the tariff line, i.e. “8 digits” in the Harmonized System).
TRIMAG can be used:
- as a support for the selection of sensitive tariff lines in the WTO negotiations. Following the application of tariff reduction formulas, and by taking into account all possible combinations of standard and sensitive tariff cuts, TRIMAG optimizes the domestic agricultural value added of production subject to a maximum number of sensitive tariff lines;
- as a tariff aggregation tool from the 8 digits level to the one required by computable equilibrium models (notably, CAPRI). Aggregated tariffs are computed by considering the substitutability effects in consumption between the tariff lines corresponding to the same aggregate product;
- as a support for the detailed analysis of negotiating positions in international trade negotiations.
CAPRI is a partial equilibrium model developed through a number of research projects coordinated by the University of Bonn:
- The market module is constituted by a spatial, global multi-commodity comparative static model for the agricultural sector. It covers about 50 primary and secondary agricultural products for 77 countries depicting trade between 40 trade blocks. Switzerland is included as a separate trade block in the CAPRI market module since 2011. International trade policies are represented for all the trade regional blocks; for Switzerland, aggregated tariffs are provided by the TRIMAG model. The CAPRI market module is able to provide for Switzerland results on imports, exports, production, producer and consumer prices as well as on welfare.
The joint use of TRIMAG and CAPRI allows combining a high level of precision in applying tariff reduction formulas (as needed by policy makers in trade negotiations) with the opportunity of assessing the impact of trade liberalization on aggregated agricultural markets.
Last modification 11.06.2021