The impact of agricultural subsidies on global welfare

The provision of subsidies by the United States, European Union and Japan has been a contentious issue in the Doha round of World Trade Organization trade negotiations. In this paper, the impact of domestic and export subsidies on welfare distribution in both exporting and importing countries is examined. Theoretical analysis shows that both domestic and export subsidies distort trade flows of agricultural goods from exporting countries to importing countries. Evidence also demonstrates that both domestic and export subsidies result in net welfare losses for the countries providing the subsidies