Modular agri-food trade modelling platform expands depth, breadth and resolution

With improved analysis of critical agri-food trade issues and hidden costs of globalisation, European policy makers will be better positioned to negotiate policies that are good for countries, companies and inhabitants.

Food and Natural Resources

The implications of global trade policies are quite complex. Modern agri-food trade agreements increasingly consider factors such as consumer concerns about food quality and safety, environmental implications and impact on jobs, and poverty and increasing socioeconomic inequalities. The EU-funded BATModel(opens in new window) project has delivered a holistic modular platform to improve the modelling of agri-food trade policies in the simulations used by the European Commission (EC). The modules incorporate new characteristics of food trade flows and policy tools or improve the handling of existing ones to provide new and more detailed insights into impacts.

Non-tariff measures, geographical indications and more

BATModel set out to better account for certain trade factors, enabling improved analysis and negotiation of agri-food trade policies by the EC and other stakeholders. For example, BATModel improved handling of protected geographical indications (GIs) that link a product’s qualities, characteristics or reputation to a certain geographic region (e.g. Roquefort, Comté or Parmigiano Reggiano). They are essential components of the quality and rural development strategy of the EC. “Empirical analyses showed the positive impact of GI protection(opens in new window) at the regional level for the home countries and at the firm level – GI exporting firms sell more products and have better access to destination markets,” says Karine Latouche of INRAE(opens in new window), project coordinator. BATModel also developed more detailed models to better account for the heterogeneity of non-tariff measures such as quotas, price controls and health and environmental regulations. Zero trade flows, quality differentiation and global value chains were other important areas addressed.

Hidden costs of globalisation

The comprehensive BATModel platform captures more agri-food product details and accounts for different scales including global, EU, and Member States and regions. It provides insight into who will lose and gain not only ‘horizontally’ (across sectors) but ‘vertically’ by measuring the vertical distribution of impacts of trade policies along the global value chains. “The distribution of these impacts includes well-being implications of trade policies that go beyond standard welfare effects: we focus on the so-called hidden costs of globalisation, such as labour market issues, income and wage effects, and environmental and health effects,” explains Latouche.

Labour and health impacts of trade policies

For example, using NUTS(opens in new window) level 2 data from 1995-2019, BATModel studied the impact of trade shocks from import competition and export expansion on EU15 agri-food-sector labour market dynamics. Agri-food jobs reacted negatively to import competition and positively to export expansion. Furthermore, about twice as many food jobs were lost due to import competition as were gained due to export expansion. Agriculture jobs were negligibly affected, potentially reflecting data quality challenges associated with, for example, extra-EU workers. Among health impacts that can be analysed, BATModel found that, in Italy, a 10 % increase in food imports increased obesity by 2.3 %. Further analyses linked this to import of ‘unhealthy’ foods, mainly alcoholic beverages and processed and salty foods. BATModel outcomes and policy briefs(opens in new window) are generating tremendous interest among policy makers. In-depth discussions generated enthusiasm at events including the project’s three-day summer school at the Joint Research Centre attended by representatives from the EC’s Directorate Generals and a policy event in Brussels. Latouche concludes: “BATModel’s innovation-driven collaboration between European teams working on established simulation models and those working econometrically on micro-evidence concerning agent and firm heterogeneity trade models has supported the creation of a new community of trade modellers.” This will strengthen Europe’s ability to negotiate global agri-food trade policies with outstanding benefits for its countries, businesses and inhabitants.

Keywords

BATModel, trade policies, agri-food trade, export expansion, globalisation, import competition, geographical indications, labour market, value chains, non-tariff measures