Agricultural trade and trade barriers: One part milk, two parts tomatoes

This collection of three empirical studies discusses the cause and effect of barriers to agricultural trade. The first essay focuses on the political economy of trade barriers. Using data from the Canadian dairy industry, four hypotheses on the determinants of rent-seeking expenditure and the role of free riding are tested. First, provinces do not cooperate with each other when lobbying the federal government for trade protection. Second, some provinces are found to free ride on the rent-seeking expenditure of the larger (more influential) provinces. Third, the cost of rent seeking increases when the federal government is forced to make a decision regarding the future of the protectionist policies. Fourth, institutional changes under the 1994 GATT raised the rent-seeking cost of maintaining protectionist policies.; The second paper examines unintended consequences of trade barriers. Trade barriers can cause trade to be diverted to other countries and into other products. This essay studies the effect of the voluntary export restraint (VER) on Mexican tomato exports entering the United States. The spillover effects of the VER were found to be significant---representing nearly one fifth of the direct effects of the trade barrier (or over one-half if paste is included). When the VER was binding, Mexico exported more tomatoes to Canada and increased its exports of paste to the United States. The VER also caused the United States to reduce its exports to Canada while Canada increased its exports to the United States, which may have helped induce U.S. producers to pursue an anti-dumping complaint against Canadian tomato imports.; The third essay studies the effect of the VER on regional trade within the United States. In the case of the VER on Mexican tomato exports, Mexico is observed to decrease its exports to markets where local production was in season, while it actually increased its exports to other U.S. markets. The VER also increases domestic two-way trade. Florida reduced its shipments to most markets except California, while California increased its shipments to traditionally-Floridian markets in the Eastern United States.