190 CHAPTER 8


3 percent of GDP. Complete liberalization would reduce the producer price of wheat by about 17 percent and production by about 2 percent. The effects of subsidy removal on the welfare of Syrian households would be regressive: high-income households would gain, while lower-income households would lose. The size of the effects would be quite small, however: less than 1 per- cent of the base income of all but the richest income group. These results need to be interpreted with three factors in mind. First, the impact on farmers (particularly wheat farmers) will be larger than the impact on the poorer deciles. This is because each decile includes both farmers and nonfarmers, thus diluting the adverse impact of the reforms on wheat farm- ers. Second, the distributional impact will vary among farmers; it will be the most adverse among farmers for whom wheat sales are a large share of household income. The impact of lower wheat prices will be positive on urban households (particularly the poor) and rural households that are net buyers of wheat. More information on the share of income from wheat and other crops would be needed to explore the distributional impact among farmers. Third, the impact of liberalization on the poor will depend partly on complemen- tary policies. For example, a recent study suggests that if the wheat market reform were implemented through a reduction in energy subsidies, the com- bined effect would be more pro-poor than wheat subsidy removal alone.


Agriculture, Trade, and Poverty in Morocco


The Kingdom of Morocco is a lower-middle-income country with a population of about 30 million, more than half of which lives in urban areas. The agricul- tural sector accounts for about 16 percent of GDP. Like most other countries in the region, Morocco is a net agricultural importer, and its main agricultural import is wheat. After Turkey’s, Morocco’s agricultural exports are the larg- est among the exports of MENA countries. Fruits and vegetables, which typi- cally account for 20–30 percent of the agricultural exports of MENA countries, represent almost three-quarters of the agricultural exports of Morocco. Since the mid-1980s, Morocco has carried out a series of economic reforms to allow the market to play a larger role in production and consumption deci- sions, including price liberalization, a reduced role for state enterprises, and the promotion of private investment. Morocco has signed an EMP agreement with the E.U. whereby tariffs on manufactured goods will be reduced over time. Morocco also signed an FTA with the United States that entails gradual reduction in both industrial and agricultural protection. Nonetheless, the level of agricultural protection remains relatively high.


Our analysis uses two versions of a global CGE model called MIRAGE, a static version and a dynamic version. The static version of the model is used to simulate the impact of alternative types of trade liberalization. It appears


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