Revisited framework of agricultural domestic support for CGE modelling: The case of the European Union

Abstract

A comprehensive database on domestic support is key for any meaningful agri-food policy computable general equilibrium (CGE) analysis. In the GTAP database – the main data source used for global CGE analysis – domestic support levels are calculated from the OECD Producer Support Estimate (PSE). The GTAP database version 9, released in 2015, includes a new representation for the European Union (EU) which combines the strengths of two datasets, i.e. the PSE and the Clearance Audit Trail System (CATS) database from the European Commission. This paper compares the version 9 approach with an alternative one that makes the representation of EU expenditures more transparent and inclusive. It clearly highlights that this later includes more payments than the traditional methodology. Indeed an accurate classification shall embrace domestic support going beyond the PSE, being defined as General Services Support Estimate (GSSE) or Consumer Support Estimate (CSE) by the OECD. Accordingly any change in the accounting convention for the EU domestic support can only have a comparative significance if other countries also follow.