ABSTRACT

This chapter shows that liberalization of domestic farm policies in the USSR would require much more than realigning farm prices with world market prices at a sustainable exchange rate. Trade liberalization for agricultural products is concerned as much with reducing governmental interventions in domestic markets as it is in eliminating overt trade barriers and subsidies at the border. In the case of agriculture, trade barriers are primarily the consequence of governmental interventions in the domestic markets for farm products. There might be an indirect effect if there is an approximate formula that determines what the USSR pays for Cuban sugar which reflects the world market price. Farm inputs would be freely imported and marketing institutions would be competitive rather than state monopsonies or monopolies. The combined effects of higher world market prices plus the elimination of export subsidies by the European Community and the United States could increase the import bill by about $2 billion.