Distribution of Domestic Policy Benefits and the Willingness to Support Trade Liberalization

Agricultural trade liberalization for developed countries may mean eliminatioo of existing domestic support programmes. The difficulty of achieving freer trade is directly related to the distribution of the pain of adjustment in domestic agricultural ecooomies. A cost functioo is estimated for post-World War II US agriculture to examine the functional distribution of agricultural income in a consistent way, disentangling the separate effects of tecbnological and policy influences on factor shares. Insight is thereby gained into the probable effects of removal of government support for agriculture. The analysis implies that landowners have the most to lose from removal of domestic support programmes as a prelude to trade liberalization. Application of this framework to the experience of other nations would provide a basis for the comparison of the sil.e of prospective domestic losses affecting a country's willingness to negotiate trade liberalizing measures