An economic analysis of the effects on the world dairy sector of extendingUruguay Round Agreement to 2005

A spatial equilibrium model of the world dairy sector is used to simulate t he regional impacts of extending the 1995 Uruguay Round Agreement on Agricu lture (URAA) dairy commitments to 2005. In particular; the import quota, wi thin- and over-quota import tariff and export subsidy components of the URA A dairy commitments are analyzed both separately and jointly. This analysis provides insight into the tradeoffs among the various components of the UR AA dairy trade liberalization. Extending the URAA to 2005 more than doubles the producer and consumer welf are impacts of the GAIT 2000 relative to the BASE scenario for most regions . Aggregate producer and consumer welfare changes are estimated to be in th e $2-5 billion range. Results suggest that western Europe remains heavily p rotected even after the URAA extension to 2005, and its dairy producers wil l lose the most with further, post-URAA dairy trade liberalization. In cont rast, dairy producers in low-cost exporting regions (New Zealand, Australia and South America/South) will gain the most. Impacts of GAIT 2005 on Japan , the U.S. and Canada are found to be relatively small.