Regulation and Protectionism under GATT: Case Studies in North American Agriculture

By Andrew Schmitz; Garth Coffin et al. | Go to book overview

peanut butter imports, thereby preserving domestic grower rents. Finally, if GATT's ultimate effect on the foreign demand for US peanuts is considerable, then US growers may eventually view GATT as a boon.


Notes
1.
USDA is the primary source for most of the material in this section. ( January, 1994; March, 1994).
2.
Much of the material in this section is adapted from Rucker and Thurman ( 1990), which contains a more detailed analysis of the effects of the peanut program.
3.
Growers are also allowed to sell their additional peanuts into the domestic crush market, but because the price received in this market is lower than other alternatives, this option is not economically relevant.
4.
This support price applies only to sales of peanuts by the growers' association and not to contract additional sales by growers. Peanuts sold by the growers' association to processors for domestic crush cannot be exported by those processors.
5.
See Rucker and Thurman ( 1990) for details on past and current rules for distributing these profits.
6.
Detailed discussions of the justifications for these assumptions can be found in Rucker and Thurman ( 1990).
7.
Given world prices and assuming foreign peanuts are of sufficient quality, it is clear that raw peanuts will be imported up to the minimum access levels at least.
8.
Under normal circumstances, the domestic support price serves as not only a floor to the US price but as a ceiling as well. This results from the buy back provision of the peanut program described in section II above. The circumstances under which the US price can rise above the support price are those in which the US crop is so short that the sum of quota peanuts and additionals bought back is insufficient to meet domestic edible demand at the support price. This is what happened in 1980 and 1990.
9.
The ITC investigation began in January, 1994. The initial hearings were postponed pursuant to requests from the National Peanut Growers Group. In late June, 1994, the investigation was suspended indefinitely at the request of the President. At this time, the side agreement to GATT concerning peanutbutter had already been negotiated.
10.
This agreement also limits imports of peanut butter from other sources as follows: Argentina, 8.03 million pounds; less developed countries, 1.65 million pounds (increasing to 3.52 million pounds after six years); and other countries, .55 million pounds.
11.
This impact of GATT on aggregate US income is consistent with the assumptions made in the analysis by the USDA ( March, 1994, Appendix I).
12.
Note that treasury costs will not decrease as a result of GATT in 1999 and 2000. This is because the buy back provisions of the peanut program take effect when the net effect of GATT is an increase in the domestic demand for peanuts (from the initial situation shown in Figure 11.3).
13.
Again, after 1999 the buy back provisions of the peanut program would take effect. As demonstrated in Rucker and Thurman ( 1990), the increases in

-178-

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Regulation and Protectionism under GATT: Case Studies in North American Agriculture
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Acknowledgments vii
  • About the Editors and Contributors ix
  • Section One - Overview of the Effects of Gatt 1
  • 1 - Itroduction: Trade and Regulations in Transition 3
  • References 18
  • 2 - Post-Gatt Assessment of the World Marketplace 20
  • Notes 35
  • 3 - Consequences of Tariffication 37
  • References 50
  • 4 - Supply Management Under Minimum Import Access Requirements 51
  • Notes 62
  • References 62
  • 5 - Imports into Canada: Why Have They Remained Low? 64
  • Notes 76
  • References 77
  • Section Two - Case Studies of Gatt's Effects 79
  • 6 - Regulation -- the Us Dairy Industry 81
  • References 94
  • 7 - Cost Competitiveness in the Canadian and Us Dairy Industries 96
  • Notes 115
  • References 116
  • 8 - Supply Management and Vertical Coordination: the Role of Cooperatives 118
  • Notes 126
  • References 127
  • 9 - Value-Added Economic Potential 128
  • Notes 145
  • References 146
  • 10 - Tobacco Supply Management: Examples from the United States and Australia 147
  • References 158
  • 11 - Gatt and the Us Peanut Market 160
  • Notes 178
  • References 179
  • 12 - The Us Sugar Industry: the Free Trade Debate 180
  • Notes 199
  • References 201
  • Section Three - Regulation and Supply Management 203
  • 13 - Supply Management Canadian Style 205
  • Notes 221
  • References 223
  • 14 - Power Relationships in the Political Process 226
  • Notes 241
  • References 244
  • 15 - Provincialism: Problems for the Regulators and the Regulated 245
  • References 267
  • 16 - Provmcial Versus Centralized Pricing: Protectionism and Institutional Design 269
  • References 283
  • 17 - Venturing into the Political Market 284
  • Notes 296
  • 18 - Vertical and Horizontal Coordination 299
  • Notes 312
  • References 313
  • 19 - Will the Supply Management Cartel Stand? 314
  • Notes 330
  • References 330
  • About the Book 332
  • Index 333
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