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EU subsidies for wine and their impact on Argentina

Publication date: 
Monday 2 December 2013
Author: 
Ana Laura Zamorano, Gabriel Michelena and Ivana Doporto Miguez

Throughout history, the Common Agricultural Policy (CAP) has been subject to many reforms. Despite the fact that these changes entailed the implementation of less production- and trade-distorting instruments, the amounts of money granted to producers are still considerable and they have an impact on the agricultural producers of other countries which do not benefit from such an aid and have to compete in foreign markets on unequal conditions.

In this article we analyse the protectionist measures of the CAP imposed to the wine sector and we particularly look into the last reform of the Common Market Organization (CMO) for wine in 2008. We also study the impact that the phasing out of the EU subsidies for wine has on Argentine production and exports as well as on the production and exports of Argentina's main competitors. The results forecast a favourable scenario for wine-producing countries, excluding the EU. Specifically, Argentine exports of wine would grow by 10.22%, which is equal to USD 81.7 million, and Argentine production of wine would do so by 1.24%, whereas the international price of wine would increase by 0.8%. The United States and Argentina would be the countries that most benefit from the phasing out of subsidies.  

Numeration: 
5
Type: