Agricultural Trade Facilitation in Asia: Prioritising the Invisible Infrastructure

Abstract

In the backdrop of the growing agricultural and food trade across Asia, this paper argues that the installed food safety and associated infrastructure could be seen as only necessary conditions whereas the sufficient conditions would be to make an enabling policy environment which would reduce the overall transaction costs of trade. Imports also assume equal importance and the arrival of duty-free raw materials for further processing and value addition enables more employment generation, higher income for stakeholders, and forward movement in the value chain. As tariffs do not account for a substantial influence on the course of trade and prices of many farm commodities, the attention has to turn towards the enabling policy regime specific to commodities and thereby the development of infrastructure which would encourage value addition and re-exports. Trade facilitation and infrastructure are often taken in the general sense at the policy level and only partly address the specific issues related to the reduction of risks and transaction costs in the context of agricultural trade, i.e. the invisible infrastructure such as easy documentation, customs procedures, regulatory regimes and mutual recognition. Different commodities have different requirements in terms of costs, time and reliability of logistics and trade facilitating policies are to be formulated taking into consideration a wider set of factors and indicators in the context of agricultural trade. JEL Codes: F13, F14, F18, Q17, Q18.