Question

Switzerland, a country with a special status outside the EU, banned the imports of agricultural products linked with the usage of specific pesticides and implemented restrictive policies for crops derived from agricultural productions that use any kind of chemical and natural product, which is not related to the protection of the environment, food safety or health. a) Explain the factors that have brought Switzerland to implement such restrictions, commenting on this trade policy approach. (10 points) b) Now suppose that Switzerland gives its agricultural industry an unfair advantage through underpriced loans and other export subsidies. These policies have disadvantaged the neighboring European countries and contributed to the excess supply of Swiss agricultural products in the EU. 1) Explain the economic consequences of the Swiss export subsidy for the domestic price in Switzerland, for Swiss consumers, for Swiss producers, for the Swiss government, and for the Swiss economy overall, as well as for the number of goods exported, consumed, and produced, considering also the possibility to include graphical evidence of your statements. (6 points) 2) What is the possible reaction from the side of WTO and/or EU? (9 points)

Answer 1

Switzerland a country with a special status outside the EU, banned the imports of agricultural products linked with the usage of specific pesticides and implemented restrictive policies for crops derived from agricultural productions that use any kind of chemical and natural product, which is not related to the protection of the environment, food safety or health. a) Explain the factors that have brought Switzerland to implement such restrictions, commenting on this trade policy approach. (10 points) b) Now suppose that Switzerland gives its agricultural industry an unfair advantage through underpriced loans and other export subsidies. These policies have disadvantaged the neighboring European countries and contributed to the excess supply of Swiss agricultural products in the EU. 1) Explain the economic consequences of the Swiss export subsidy for the domestic price in Switzerland, for Swiss consumers, for Swiss producers, for the Swiss government, and for the Swiss economy overall, as well as for the number of goods exported, consumed, and produced, considering also the possibility to include graphical evidence of your statements. (6 points) 2) What is the possible reaction from the side of WTO and/or EU? (9 points)

Answer: to restrict the import of pesticides and completely ban of it. Countries young citizens also take part in the favor of ban of pesticides. Switzerland is one of the largest producer of pesticides syngenta. Here banning totally will also effect Switzerland because Switzerland import food from other countries. Although price will rise and this will cause instability in the economy. As we all know that pesticides in excess amount harm health. Switzerland tried to completely banning of pesticides to protect human health, plants, damage biodiversity. Also to protect the soil fertility .

Answer: subsidy is the payment from government to producer for each unit produced. Subsidies increase the supply and reduce the cost of production. Due to this consumers surplus increase . Producer surplus also increases. But there will be loss of total welfare because total cost here is more than total benefit.

Diagram is given below

Answer: Switzerland responded to question on its export subsidies. It is questioned on the basis of chocolate law that is subsidies for dairy and wheat producer. Here in Switzerland it is one of the most important product that is produce in Switzerland. Switzerland said that it is because it's currency appreciate. They have good budget for subsidies. US, Ukraine, new Zealand show interest in scraping export subsidies. WTO also show interest in abolishing of export subsidies of Switzerland as early as possible.

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