Agricultural Policy as a Social Engineering Tool

reduce direct production costs and spur domestic production at the expense of imports.
Export subsidies facilitate an expansionary trade policy by allowing exporters to sell
goods in a foreign market cheaper than it costs on the domestic market. Countries, which
pursue this trade policy path, are often accused of dumping. In that regard countries
whose domestic industries are harmed often make generous use of antidumping and
countervailing measures in an attempt to protect their domestic industries. Antidumping
duties offset what is deemed to be unfair pricing by foreign exporters, while
countervailing duties “level the playing field” between a foreign government-subsidized
exporter and a domestic producer (Bowen and Crowley, 2003). The use of such
measures often has a chilling effect on trade with preliminary duties applied in most
cases.

Export expansion need not result in the imposition of new or more stringent tariffs
or quotas. In some cases an importing country may enter into trading accommodations
such as orderly marketing agreements with exporting countries or “voluntary” export
restrictions that require export countries to voluntarily restrict their level of exports
within a certain time period. These accommodations distort worldwide trade flows and
may adversely affect the welfare of other exporting countries. Other measures such as
embargoes deprive exporters in the embargoing country the opportunity to sell products
in the embargoed country and clearly hinder trade flows.

In the case of agriculture, while the measures discussed above may, in some
cases, enhance farm income in the countries pursuing such policies in the short run, they
often lead to suboptimal solutions for the domestic and wider global economy in the long
run. These solutions hold economic implications for the protected industries and the

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