Why Are There Different Results for FTA Impact Assessments on Agriculture? Analytical Review for the Partial Equilibrium Model Approaches

Abstract

In order to establish uniform criteria with a standardized model forobjective review and inter-pretation of the results, this paper evaluates thestrengths and weaknesses of current methodologies for FTA impact analysisand addresses the problems in interpretation of the estimated values fromprevious studies. This paper reviews previous works, assessing the impacts ofFTA from the perspective of the models and key variables used in theanalytical model, criteria and periods for the damage assessment, and thedifference between net damage cost and cumulative damage cost. A numberof inconsistences are found in previous studies to explain the importance ofpromoting FTA. Although the research objective may vary for differentcountries, consistent application was not found in prior studies for the majorvariables used in their economic models, including measurement standards,effectiveness factors, and the ripple effect estimation period. The inconsistentresults from these studies fail to explain as well as persuade the nationalassembly and stakeholders of the consequences of FTA on the agriculturalsector. The frequent criticisms from non-agricultural sectors are that thenegative effect of FTA on the agricultural sector is overestimated, whereasfrom the agricultural sector, the effect is underestimated.