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Abstract
The United States and the European Union have embarked on ambitious negotiations
to create a comprehensive free trade agreement known as the Transatlantic Trade and Investment
Partnership (TTIP). Agricultural markets receive relatively high levels of support and protection
in both regions, and therefore are sensitive to the discussions surrounding the TTIP. Wine is the
highest valued agricultural product traded between the United States and the EU, and any
reduction in trade barriers resulting from the TTIP has the capacity to generate additional trade in
this sector. We carefully develop parameters to characterize the effects of tariffs and domestic
regulations that affect production and consumption of wine in these two regions. Results show
that reductions in tariffs would have relatively small effects in these wine markets, whereas
reductions in EU domestic policies that affect wine grape production would have much larger
trade and welfare implications.