SOUTHERN JOURNAL OF AGRICULTURAL ECONOMICS
JULY 1992
FREE TRADE IMPACTS ON U.S. AND SOUTHERN
AGRICULTURE: DISCUSSION
Gary F. Fairchild
Prior to receiving the foregoing paper, “Free Trade
Impacts on U.S. and Southern Agriculture,” by Bur-
fisher, House, and Langley, I assumed that I would
be discussing either: (1) an econometrically-based
empirical analysis of potential impacts for specific
commodities important to southern agriculture de-
signed to stimulate discussion and further analyses;
or (2) a broad-based conceptual paper dealing with
critical issues, concerns, outcomes, and potential
response scenarios for producers and the profession.
Based on my expectations for this specific topic and
my broader expectations for an SAEA invited paper
session, I did not think I would be discussing a
survey of previous research utilizing partial and gen-
eral static equilibrium and models. I was wrong.
I am more concerned about what the authors did not
say than what they actually did say. Perhaps sins of
omission are less serious than sins of commission.
But before I dig too deep a hole for myself, let me
anchor a rope to the nearest tree by noting what I like
best about the paper.
The authors are to be commended for accepting the
enormous and difficult task of assessing the potential
impact of a possible U.S.-Mexico free trade agree-
ment on a diverse southern agriculture. The authors
provide a concise description of U.S.-Mexican agri-
cultural trade and recent trends in bilateral trade
barriers in agriculture. Their major effort, however,
is their review of nine partial and general equilibrium
and multi-sector macroeconomic models which ad-
dress the effects of a Free Trade Agreement (FTA)
on U.S. agriculture. This is the heart of their paper.
MODEL SELECTION
The authors ask a reasonable question, “Is there a
consensus on the effects of an FlA on U.S. agricul-
ture?” They correctly note that “the studies reviewed
differed significantly in model structure, sectoral
composition, assumptions about trade barriers and
elasticities, and the variables that were reported in
results.” Given the disparate nature of the models
surveyed, it is amazing that the authors could then
reach “certain general conclusions,” let alone “fairly
robust” conclusions. Their efforts do provide some
interesting insights into the types of modeling util-
ized in these studies, as well as the range of potential
price and revenue impacts estimated for U.S. grains
and livestock.
While the authors are to be complimented on
their review of literature pertaining to a U.S.-Mexico
FTA, they limit their “analysis” to sharing the results
of previous research and fail to extend beyond the
models surveyed. What conclusions can be drawn
from a survey of previous research, alone? Why
have the authors not selected, or developed, one
model upon which to focus their paper? Is there a
lack of confidence in any one model specification?
Is there a data problem?
I admit to lacking qualifications to discuss partial
and general static equilibrium models and multi-sec-
tor macroeconomic models. However my economic
intuition requires me to express concerns with re-
spect to the usefulness of such models. This is not to
suggest that these models have no application. I
understand that on a national level, several of the
grain models and perhaps the livestock models per-
form quite reasonably. Also, papers based on these
models make for great bedtime reading and are guar-
anteed not to keep you up all night.
Specifically, I am concerned about the static nature
of the models surveyed. In the dynamic world of
international trade, changes in barriers and agree-
ments which cause shifts in competitive positions
result in actions and reactions in prices, production,
and policies. Analyses used for many commodity
situations need to be swift, flexible, and able to
capture changes in relevant parameters—something
like the Schwartzkoff model made famous by Opera-
tion Desert Storm, which fits because the survey of
models presented does exhibit some characteristics
of a desert.
It is not obvious that these large-scale static models
are always best suited for analysis of dynamic situ-
ations. Alternative approaches focusing on produc-
tion and marketing costs, supply (import) response,
and basic supply-demand relationships may provide
Gary F. Fairchild is Professor and Extension Economist in the Food and Resource Economics Department at the University of Florida
at Gainsville. The author benefitted from the comments of John Holt, Tim Thylor, Tom Spreen, and Jim Seale, but acknowledges sole
responsibility for the content of the discussion.
Copyright 1992, Southern Agricultural Economics Association.
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