English abstract
Upon accession to the WTO, Oman made certain commitments to liberalize its trading policy in the agriculture sector as well as in the economy as whole. Those commitments are expected to expand after the implementation of the WTO built-in agenda, which is concerned with multilateral negotiations to liberalize trade in agriculture. Moreover, the WTO is negotiating further multilateral trade liberalization covering world trade in all the goods.
This study assesses the trade and welfare impacts of agricultural trade liberalization within the context of both unilateral and WTO multilateral trade liberalization. The analysis focuses on the agricultural sector specific effects as well as on the economy-wide effects, which are reflected in the exchange rate, balance of payment and economic welfare changes. The assessment of those effects on the agricultural sector in Oman is undertaken using a partial equilibrium model derived from the World Trade Simulation Model. The model is based on GAMS (General Algebraic Modeling System) to solve for the equilibrium prices and values of trades. The import and export trade data was obtained from the UN Commodity Trade Statistic Database (Comtrade) using the Standard International Trade Product Classification, Revision 3 (SITC,Rev.3) while the import tariff rate was compiled from the UN Conference on Trade and development (UNCTAD-TRAINS) database.
The study concludes that under all the trade liberalization policy options simulated in this research, the economic gains for Oman in terms of trade and economic welfare will improve. However, multilateral trade liberalization covering all the goods offers the greatest benefit to the economy. Also, the study finds that changes in economic welfare in Oman are much higher under a liberalization process covering all sectors rather than liberalization covering only the agriculture sector. Moreover, examining the effects of trade liberalization on domestic prices for import of individual agricultural product reveals that the price of basic foodstuffs will increase.
