| Approximately one-third of world processing tomato production occurs in the European Union (EU). Like many other regions, the EU applies an ad valorem import tariff to all processed tomato products. However, unlike other regions, the EU applies export subsidies to specific processed tomato products, and directly supports the production of processing tomatoes. Furthermore, the domestic support applied to processing tomatoes in the EU changed in 2001. This dissertation is the first study to quantitatively examine the effects of policy, and the effects of switching EU domestic support regimes, in the processing tomato industry.; Two simulation models are developed and used to assess the effects of reducing border measures and domestic support applied to the processing tomato industry. First, a multi-market simulation model is used to examine policy reductions, and results are reported for variables throughout the processing tomato complex. Second, a fixed factor proportions simulation model is used to compare the effects of the EU domestic support regime applied prior to 2001 with the regime that commenced in 2001. Standard simulation models are extended to include market idiosyncrasies commonly found in processed fruit and vegetable industries.; Simulation results show that reducing EU export subsidies would not lead to significant changes in the EU or elsewhere, because the EU export subsidy is small and applied to a small share of processed tomato products. Reducing import tariffs in all nations would increase shares of production and consumption of the processed tomato products that are produced (and exported) by the EU and United States, and decrease shares of products that are produced (and exported) by the rest-of-the-world region. Lowering import tariffs would increase production in the EU and United States, and as a result, increase the EU taxpayer cost associated with the domestic support. Reducing EU payments to tomato growers would decrease welfare for EU producers and increase welfare for EU taxpayers, but would not significantly change production or welfare in other regions. Finally, the shift in EU domestic support programs in 2001 stimulated additional EU production, and increased overall trade distortions of the policy. |
