Simulation Models

International Trade Policy Analysis within the International 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 Competitiveness and System Evaluation Research Division, utilizes economic simulation models that allow analyzing a wide range of scenarios.

The International Trade Relations unit (ITR) of the Federal Office for Agriculture (FOAG) uses quantitative tools assessing multi- and regional trade agreements in order to support international trade negotiations. Currently, FOAG is working with the market module of the CAPRI model ("Common Agricultural Policy Regionalized Impact Model"), developed in collaboration with Agroscope's Competitiveness and Systems Research Division and the international CAPRI network.

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 65 primary and secondary agricultural products for about 80 countries depicting trade between 44 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 tariff aggregate model. The CAPRI market module is able to provide for Switzerland results on imports, exports, production, producer and consumer prices as well as on certain environmental indicators.

The combination of the tariff aggregate model developed by FOAG and CAPRI results in high precision in the application of tariff reduction formulas (as required by policymakers in international negotiations) with the ability to assess the impact of trade liberalization on agricultural markets at the aggregate level.