Net Importing Countries Research Articles

Sit down at the ball game: How trade barriers make the world less food secure

This paper analyses the impacts of trade policy responses to rising world food prices by carrying out a series of stylised experiments in the wheat market using a world trade model, GTAP. The sequence of events that is modelled comprises a negative wheat supply shock and subsequent implementation of an export tax by a major net exporter and a reduction in import tariffs by a small importer. The effects of trade policy responses are contrasted with those of full liberalisation of the wheat market. At the core are the (opposite) effects on producers and consumers, as well as the terms of-trade and trade tax revenue effects. Food security is shown to depend crucially on changes in prices but also in incomes that are associated with changes in factor returns. The results reveal that major net exporters are generally better off when implementing export taxes for food security purposes. Large exporting countries export price instability causing world food prices to rise further. Net importing countries lose out and have limited leeway to reduce tariffs or subsidise imports. Liberalising wheat trade mitigates rising prices and contributes to food security, but to the detriment of production in Africa and Asia, making them more dependent on and vulnerable to changes in the world market. Concerted action at the WTO forum is required, notably clarifying and sharpening the rules regarding export measures.

Sit Down at the Ballgame: How Trade Barriers Make the World Less Food Secure

This paper analyses the impacts of trade policy responses to rising world food prices by carrying out a series of stylised experiments in the wheat market using a world trade model, GTAP. The sequence of events that is modelled comprises a negative wheat supply shock and subsequent implementation of an export tax by a major net exporter and a reduction in import tariffs by a small importer. The effects of trade policy responses are contrasted with those of full liberalisation of the wheat market. At the core are the (opposite) effects on producers and consumers, as well as the terms-of-trade and trade tax revenue effects. Food security is shown to depend crucially on changes in prices but also in incomes that are associated with changes in factor returns. The results reveal that major net exporters are generally better off when implementing export taxes for food security purposes. Large exporting countries export price instability causing world food prices to rise further. Net importing countries lose out and have limited leeway to reduce tariffs or subsidise imports. Liberalising wheat trade mitigates rising prices and contributes to food security, but to the detriment of production in Africa and Asia, making them more dependent on and vulnerable to changes in the world market. Concerted action at the WTO forum is required, notably clarifying and sharpening the rules regarding export measures.

Rice Price Volatility: A Dilemma for Public Policies in Asia and Europe?

In 2008 the world’s attention was focused on the global food crisis and, as consequence, on the global food security. By mid-2009, commodity prices have dropped sensitively, nevertheless most of them still remain at or above past trend levels. Fluctuations in prices are not rare in agricultural markets where volatility is a common characteristic. Among cereals rice has a strategic importance. It is source of nutrition for more than a half of the world population and of income for about two million of farmers. Even if it is produced and consumed everywhere, production and consumption are concentrated in Asia. Because of its strategic importance, rice is and has been subject to a host of policy interventions that have made it feature among the most distorted of all agricultural commodities. Export policies have typically been applied by net exporting countries and one of the most commonly applied policy measures, adopted by net importing countries, is the removal or reduction of import duties and taxes on food commodities. Various forms of producer support measures were introduced, including input subsidies, output price support and an easing of cropland set-aside requirements. Policies to support consumers and vulnerable groups have included: direct consumer subsidies, tax reductions, distribution from public stocks, price subsidies, public-sector salary increases and social safety net programmes. Selftargeting food-for-work programmes have been put in place by some countries. Although the EU rice trade represents only 0.4 per cent of world trade a common organisation market (COM) for rice was set-up. It is a complex system aiming at maintaining European rice production destined for domestic and external markets. This paper aims to expand the above statements. The objective is to review and compare the policies adopted in Asia and in the EU and assess their impact form the point of sustainability (in a broad sense) with the ultimate aim to advance some interpretations and suggestions in the short and long run, having in mind the variables that affect the supply, the demand and the trade. As a background, the paper first outlines the characteristics of the rice market. Through a regression analysis that could help to understand how the rice price changes. It also considers the policies adopted in Asia and in the EU, highlighting their results on prices from an economic and social point of view. This paper concludes with a number of issues to be borne in mind when interpreting the volatility or rice prices (according to the regression analysis results), the expected policy impact and distortions, and, finally, the “relatively” new strategy: move from food security to selfsufficient food security, one of the long terms goals of the Treaty of Rome (to secure availability of supplies).

Price stabilization, international trade and national cereal stocks: world price shocks and policy response in South Asia

The sharp rise in international cereal prices in 2007 and 2008 had a profound impact on food security at national levels for net importing countries, sharply raising the cost of imports. Domestic trade policies and government market interventions in a set of South Asian countries have been critical, however, in determining the effects of the international price shocks on domestic markets. While these price shocks are a sober reminder that reliance on international markets will not guarantee price stability, it is important that governments do not over-react to recent events and adopt policies that ultimately result in large costs in terms of slower economic growth and less poverty reduction. Instead, national policies should involve some combination of (1) national stocks to prevent very large price increases, (2) reliance on international trade to limit the need for government interventions in most years, (3) promotion of domestic production through investments in irrigation, research and extension that is economically efficient when evaluated at medium-term border prices, and (4) targeted (ideally cash-based) safety net programs to address the food security needs of poor households. The appropriate design and implementation of these broad food policy guidelines will necessarily vary according to individual country conditions; the need to avoid government interventions that ultimately have very high costs is universal.

The Doha Round of the World Trade Organization and Agricultural Markets Liberalization: Impacts on Developing Economies

We investigate the impacts of multilateral removal of all border taxes and farm programs and their distortions on developing economies, using a world agriculture partial equilibrium model. We quantify changes in prices, trade flows, and production locations. Border measures and farm programs both affect world trade, but trade barriers have the largest impact. Following removal, trade expansion is substantial for most commodities, especially dairy, meats, and vegetable oils. Net agricultural and food exporters emerge with expanded exports; net importing countries with limited distortions before liberalization are penalized by higher world prices and reduced imports. We draw implications for current

Changing trade patterns and the intra-industry trade index: A note

I n his critique of my recent paper, Robert Shelburne identifies the potential for drawing incorrect inferences about the employment impacts of trade liberalization when comparing intra-industry trade (IIT) indices at different time periods. 1 Specifically, he highlights the potential for the Grubel-Lloyd IIT index to increase as a consequence of narrowing trade imbalances across industries in a bilateral context. That is, increased exports by net importing countries along with increased imports by net exporting countries can contribute to higher IIT index values, even though the increased exports and imports do not take place in the same industries. As a result, one might infer (presumably incorrectly) that labour readjustments took place primarily within industries rather than across industries. Shelburne's caution about the conditioning influence of prior trade imbalances on changes in calculated ITT indices is well taken, and it is an issue that has been recognized in the literature. 2 Discussion of this issue has not led to a clear consensus on how to "adjust" for trade imbalances. In part, the lack of consensus reflects a variety of motives for calculating IIT indices. In some cases, the concern is simply to document how trade flows change over time regardless of the specific determining influences. Here, adjustments for initial trade imbalances seem unwarranted. In other cases, the interest is to document changes in trade flows associated with changes in trade policy. Here, adjustments for disequilibria in exchange rates and other "macro" influences on trade flows seem warranted, since one presumably wants to isolate the structural "micro" factors influencing trade flows that are set in motion by trade liberalization.

International Comparisons of Trade in Forest Products and some Implications for Australian Forest Policy

SUMMARY The arguments used to justify the rapid expansion of Australia's softwood plantations are based largely on a deficiency of softwoods and the size of the forest products import bill. Australia is deficient in softwoods, but while the forest products import bill is large, it is not excessive compared with that of other net importing countries either on a per capita or per $1000 GNP basis. The comparatively unfavourable export performance of the Australian forest products industry (although partially caused by the defectiveness of the raw material and the low availability of softwood) strongly suggests organisational difficulties within the growing and processing industries. Considerably more attention should be directed towards defining and removing these difficulties because their presence after the year 2000, when Australia is likely to be a net exporter could cause major problems. More reliable and continuously updated econometric studies and projections of consumption and production, and studies...