EU agricultural domestic support in GTAP. A proposal for an alternative approach

The engagement of JRC IPTS in the GTAP contributing team to the EU domestic support has opened up the opportunity to use the CATS database when compiling EU domestic support payments by member state, which are subsequently calibrated into the GTAP database. To maintain consistency, the GTAP version 9 includes EU domestic support which follows the approach adopted in the previous releases (Jensen, 2009, 2010). The difference is for pillar 1 support for which the CATS data are used (in previous GTAP database releases, pillar 1 support was based on EAGF financial reports). All together EU domestic support amounts to 66,530 million euros in 2011 (i.e. pillar 1 expenditures from CATS, pillar 2 and national expenditures from Producer Support Estimate (PSE) by OECD). In addition, minor improvements to the allocation of payments have been proposed for the version 9 release. On the other hand previous research at JRC IPTS (Boulanger and Philippidis, 2014, 2015) showed that when comparing with the CATS database, the GTAP database was incomplete, particularly in its representation of CAP rural development payments, or so called pillar 2 payments. This paper compares the EU domestic support approach adopted in the GTAP database version 9 with an alternative one in order to make the representation of CAP expenditures more transparent and comprehensive. Such an alternative allocation includes more payments than the traditional method employed (e.g. the proposed classification includes support currently defined as General Services Support Estimate (GSSE) by the OECD). Finally, introducing this new accounting convention for the EU domestic support in the GTAP database would lead to data discrepancies with other non-EU countries and/or regions, jeopardising robust comparative analysis