Media and Learning Ecosystems: Blurring Boundaries, Changing Minds
From self-sufficiency to food security: changing minds, changing market access policies
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Transcript of From self-sufficiency to food security: changing minds, changing market access policies
From self-sufficiency to food security: changing minds, changing
market access policies
David Laborde – [email protected]
WTO Public forum 2011
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
SOME IDEAS
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Two Simple Ideas
“An empty stomach is not a good political adviser.” Albert Einstein
« et le libre échange lui-même la condition absolue de la paix. »
(to establish absolute free trade, and by this very fact to ensure universal peace.)Leon Walras
Food Security is a public good at the country and at the global level
Global and free trade is a public good at the global level that is intrinsically tied to Food Security
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
A Public Goods Story
• As any public goods:• Who will suffer the most without them?
• The weakest entities in the system
• How to provide it? Who will pay for it?• Challenge of Cooperation• Challenge of Free Riders
A clear role for WTO, even an extended role
“Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the
slaves of some defunct economist. ” John Maynard KeynesIFPRI as a knowledge broker
Which role for IFPRI?
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Trade and Food Security: the links
• Food security: availability, affordability and quality• Self Sufficiency is not Food Security• International Trade as the bridge between needs and resources: an
history as long as History• International Trade beyond Agriculture: Source of Income growth• International Trade: Source of cheap food• International Trade: Source of stable food supply• International Trade: Source of productivity gains• Food quality and International trade• Comparative Advantages and Specialization: fears and realities• But limits: unfair competition, and twisted specialization,
exposure to other policies
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SOME FACTS
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Trade Policies: Let’s tax the hungry ?
Average World TariffsBreakdown by nutritional contents and level of developments
All goods
All Food products
Meat
Dairy
Vegetables
Fruits
Cereals
0 10 20 30 40 50
Based on Boumelassa, Laborde and Mitaritonna, 2009; Bouet and Laborde 2009. More at http://gatt.ifpri.info/
Average Tariffs on
Food Products
Average Tariffs on Calories
Average Tariffs on Proteins
0% 5% 10% 15% 20% 25%
Least Developed countries
Middle and Low income countries
High Income Countries
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Volatility of food supply: Trade brings stability
Wor
ld
Africa
Amer
icas
Asia
Europ
e
Bangla
desh
Brazil
Cambo
dia
Camer
oon
Costa
Rica
Egypt
Eritre
a
Ethiop
ia
Franc
eIn
dia
Kyrgy
zsta
n0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000
1980-1990
1990-2000
2000-2010
Sta
nd
ard
Dev
iati
on
of
Kil
oC
alo
ries
by
Ha
From Deason & Laborde, 2011 based on FAOSTAT
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Self Sufficiency vs Trade:a sustainable way to achieve food security
• Quick depletion of the fossil water• 21 km3 a year for desert irrigation, 340 km3 of total
accessible resources… USE=940% of renewable resource
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1000
1500
2000
2500
3000
3500
4000
4500Wheat Exports and Production of Saudi Arabia
Export Quantity
Production Quantity
Year
Th
ou
san
ds
of
To
nn
es
FAOSTAT
FAOSTAT, Aquastat
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Do high tariffs enough to reduce hunger? No
0 5 10 15 20 25 30 35 400%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Global Hunger Index, IFPRI
Tar
iffs
on
Cal
ori
es
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A Snapshot of Policies
Policy Instrument Domestic production
Domestic consumption ( Hunger?)
Trade Self Sufficiency
Import duties + - -- ++Import subsidy - + ++ --Production subsidy ++ 0 - +Consumption subsidy + ++ + -Export Tax - + -- (-)Export Subsidy + - ++ (+)
Small country case
But large countries or numerous small countries create externalities...
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SOME MODELING
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IMPORT DUTIES AND THE DOHA ROUND
For more on IFPRI works on the Doha Round and Import restrictions:
http://www.ifpri.org/book-6308/ourwork/researcharea/doha-round
http://gatt.ifpri.info/dda0/
http://www.ifpri.org/publication/eight-years-doha-trade-talks
http://www.ifpri.org/publication/potential-cost-failed-doha-round
http://www.ifpri.org/publication/why-doha-development-agenda-failing-and-what-can-be-done
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Market access can be delivered with the DDA
Applied tariffs faced on exports Applied tariffs on imports
Base Formulawith
flexibilities Base Formulawith
flexibilitiesAll countries 14.6 9 11.9 14.6 9 11.9Developing (non-LDC) 14.3 8.6 11.5 13.3 11.3 13.2High income countries 15.1 9.3 12.3 15.5 7.5 11.1LDCs 7.4 6.5 7.1 12.5 12.2 12.5
Fo
rmu
la
with
fle
xib
ilitie
s
Fo
rmu
la
with
fle
xib
ilitie
s
Applied tariffs on importsApplied tariffs faced on
exports
-60%
-40%
-20%
0%
All WTO countries Developing (non-LDC) High income countries LDCs
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Visible and Invisible gains of the Doha Round
Effects of finalizing the DDA negotiations:+ $68 Bn annually of
Agricultural Trade
Potential effects of not reaching an agreement
and tariff increase to last 10 years maximum:
- $116 Bn annually of Agricultural Trade
Total cost the DDA failure
Bouet and Laborde, 2009
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Consequences
• Tariffs in Agriculture remain high: Doha Round will provide significant market access in developed countries (1/3 reduction in applied tariffs even with flexibilities) and reduce binding overhang in developing countries.
• Developing countries have a lot of flexibilities. The Food Security argument is used but also misused (delicate issues surrounding the SSM)
• Concluding the Doha Round will be beneficial for Food Security• By removing distortions and increasing farm profitability where it is
needed (to attract investments)• By removing uncertainties in applied trade policy, it will promote trade
(Laborde and Roy, 2009: cutting binding overhang raises agricultural trade through extensive margins) and investments
• Aid for Trade, and trade facilitation, will help to link markets and eliminate waste. Productivity improvements need to be associated to market access to support income growth.
• Least Developed countries situation still deserve specific attention
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EXPORT RESTRICTIONS AND UNCOOPERATIVE POLICIES
For more on IFPRI works on export taxes:http://www.foodsecurityportal.org/agricultural-trade-policies-and-food-crisis-will-they-help-or-hurt
http://www.ifpri.org/publication/economics-export-taxation-context-food-crisisBouet, A., D. Laborde, 2010, « The economics of export taxes in a context of food security », in OECD, The Economic Impact of Export Restrictions on Raw Materials, Paris, OECD Trade Policy Studies, Trade and Agriculture Division, 59-78.
and Bouet and Laborde 2012: Food Crisis and Export Taxation: the Cost of Non-Cooperative Trade Policies. Review of World Economics. no 1, 2012
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An illustration with the wheat market: Effects on world prices of trade policy reactions for selected countries
0% 5% 10% 15% 20% 25%
Exogenous demand increase [initial perturbation]
Effects of increases in export taxes to mitigate the shock on domestic prices
Effects of decrease in import duties to mitigate the shock on domestic prices
Interaction effects between import and export restrictions
Policy Effects
“Natural” Shock
Source: Bouet and Laborde, 2009. MIRAGE simulations
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An illustration with the wheat market: Effects on real income of trade policy reactions for selected countries
Argentina
Egypt
-0.40% -0.30% -0.20% -0.10% 0.00% 0.10% 0.20% 0.30% 0.40%
Exogenous demand increase [initial perturbation]
Effects of increases in export taxes to mitigate the shock on domestic prices
Effects of decrease in import duties to mitigate the shock on domestic prices
Interaction effects between import and export restrictions
“Natural” Shock
“Natural” Shock
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Consequences
• Strong incentives to not “unilaterally” disarm and dismantle protection: No discipline on export restrictions imply limitations to improve agricultural liberalization
• But still they also hurt incentives for long term investments in agriculture in countries using them
• Self enforcing mechanisms to enforce cooperation?• Not a legal framework to retaliate: most export
restrictions are WTO compatible• And in practice, no real capacity to retaliate
• Asymmetry of market power• Limited tools (import duties have limited interests)
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Looking for a solution
• Elimination of export restrictions may be a first best but domestic political economy will make unrealistic such outcome
• What can be done?• Monitoring and notifications• Protection for the vulnerable countries• Punishing “bad” behaviors (if we can not ban them)
• Potential solutions:• Reversed “Quota” for SVE importers: amount of imports (on
historical basis) that should be allowed for SVE, free of restrictions in all situations
• Permits to restrict exports, like permits to pollute, countries using export restrictions have to pay for this deviation from the set of good trade practices, creating negative externalities. The collected money help affected SVE to pay increased import bills on world markets
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Conclusions
• Food security will need a secure trading system to be achieve, and trade liberalization needs to deliver food security to be sustainable.
• Providing such public goods need international cooperation• But the paradigm has changed: WTO is designed to fight policies
depressing prices, not increasing them (e.g. Biofuels)• Policy makers should help to create a more stable environment to help
private investments in agriculture (production and marketing) and therefore eliminate policy volatility that increase overall uncertainty
• These needs have to be fully understood and decisions have to be taken quickly (e.g. even a Doha “light” with large cut in binding overhang is valuable)
• The scope of negotiations has to be enlarged and new disciplines have to cover export restrictions to get a balance and sustainable outcome