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Finishing Global Farm Trade Reform: Implications for Developing Countries Welcome to the electronic edition of Finishing Global Farm Trade Reform: implications for developing countries. The book opens with the bookmark panel and you will see the contents page. Click on this anytime to return to the contents. You can also add your own bookmarks. Each chapter heading in the contents table is clickable and will take you direct to the chapter. Return using the contents link in the bookmarks. Please use the ‘Rotate View’ feature of your PDF reader when needed. The whole document is fully searchable. Enjoy. Finishing Global Farm Trade Reform This publication has been funded by the Australian Government through ANU Enterprise Pty Ltd. The views expressed in this publication are the author’s alone and are not necessarily the views of the Australian Government. The Australian Government neither endorses the views in this publication, nor vouches for the accuracy or completeness of the information contained within the publication. The Australian Government, its officers, employees and agents, accept no liability for any loss, damage or expense arising out of, or in connection with, any reliance on any omissions or inaccuracies in the material contained in this publication. Finishing Global Farm Trade Reform Implications for Developing Countries Kym Anderson This book is available as a free ebook from adelaide.edu.au/press Published in Adelaide by University of Adelaide Press The University of Adelaide South Australia 5005 [email protected] www.adelaide.edu.au/press The University of Adelaide Press publishes externally refereed scholarly books by staff of the University of Adelaide. It aims to maximise access to the University’s best research by publishing works through the internet as free downloads and for sale as high quality printed volumes. © 2017 Kym Anderson ORCID 0000-0002-1472-3352 This work is licenced under the Creative Commons Attribution 4.0 International (CC BY-NC-ND 4.0) License. To view a copy of this licence, visit http://creativecommons. org/licenses/by/4.0/ or send a letter to Creative Commons, 444 Castro Street, Suite 900, Mountain View, California, 94041, USA. This licence allows for copying any part of the work for personal and commercial use, providing author attribution is clearly stated. Address all inquiries to the Director at the above address. For the full Cataloguing-in-Publication data please contact the National Library of Australia: [email protected] ISBN (paperback) 978-1-925261-34-9 ISBN (ebook: PDF): 978-1-925261-35-6 DOI: http://dx.doi.org/10.20851/agtrade Cover design: Emma Spoehr Image: iStockphoto Paperback printed by Griffin Press, South Australia CONTENTS Page List of Figures vii List of Tables ix Preface x Abbreviations xi Executive Summary xiii 1 Introduction 1 2 Why open agricultural trade matters 6 2.1 Trade policies and long-run food security 6 2.2 Trade policies and short-run food security 20 2.3 Implications of rising food demand: projections to 2030 23 2.4 Implications of climate change for food supplies and trade policy 28 3 Reform achievements so far, and GATT/WTO contributions 32 3.1 The disarray by the mid-1980s 33 3.2 Evaluating the Uruguay Round Agreement on Agriculture 36 3.3 Impacts of Uruguay Round agreements on developing countries 39 3.4 Effects of the Uruguay Round and other trade policy reforms by 2004 40 3.5 WTO contributions to multilateral policy reforms since 2004 41 4 Remaining barriers to farm trade 43 4.1 Indicators of national distortions to prices 44 4.2 Empirical estimates of policies’ distortions to prices: NRAs 46 4.3 Empirical estimates of policies’ distortions to prices: RRAs 50 4.4 Empirical estimates of policies’ distortions to prices: TRIs and WRIs 52 4.5 Conclusions 56 v 5 Trade and welfare effects of further partial reforms under WTO 59 5.1 Background to the DDA 59 5.2 What questions have been in focus? 64 5.3 Reform scenarios modelled 65 5.4 The DDA proposals: model results 66 5.5 What has been learnt from analyses of DDA proposals? 80 5.6 Is WTO passé? 81 6 Ongoing and emerging issues in agricultural trade negotiations 84 6.1 Export competition 85 6.2 Market access 88 6.3 Domestic support 91 6.4 Cotton 93 6.5 Safeguards 94 6.6 Public stockholding 94 6.7 Export restrictions 95 7 Ways forward 97 7.1 Some proposals for dealing with agricultural DDA issues 97 7.2 New reasons and opportunities for re-instrumenting support 101 7.3 Conclusion 109 References 111 vi LIST OF FIGURES Page Figure 1.1: Real international prices of food and fossil fuel, 1960 to 2015 3 Figure 2.1: Volume of global agricultural and total merchandise exports, 1950 to 2013 16 Figure 2.2: Volume of global agricultural production and exports, 1950 to 2013 16 Figure 2.3: Hirfendahl index of concentration of production of key food products among the countries exporting them, 1970 to 2009 18 Figure 2.4: Share of volume of global production of farm products traded internationally, 2013-15 18 Figure 2.5: Agricultural Nominal Rates of Assistance in China, India and Indonesia, 1990 to 2015 27 Figure 2.6: Nominal rate of assistance (NRA) in Japan, Korea and China and date of accession to GATT or WTO, 1955 to 2005 29 Figure 4.1: NRAs to agriculture in high-income and developing countries, 1955 to 2014 48 Figure 4.2: NRAs to exportable, import-competing, and all agricultural products in developing and high-income countries, 1955 to 2014 49 Figure 4.3: Developing and high-income countries’ NRAs to agricultural and non-agricultural tradable sectors, and RRAs, 1955 to 2011 51 Figure 4.4: Nominal rates of assistance to agriculture in key emerging countries and the OECD, 1995 to 2014 52 Figure 4.5: NRAs across developing countries and across products globally, 2005-10 53 Figure 4.6: WRIs and TRIs among high-income, transition, and developing countries for tradable farm products, 1960 to 2010 55 Figure 4.7: Contributions of various instruments to the border component of the welfare reduction index (WRI) for developing countries, 1960 to 2009 56 Figure 4.8: Contributions of various policy instruments to the producer component of the WRI, selected high-income and transition countries, 1980-84 and 2005-10 57 vii Figure 4.9: Contributions of market-distorting and other policy instruments to the producer support estimate (PSE), high- income and emerging countries, 2012-14 58 viii LIST OF TABLES Page Table 2.1: Coefficient of variation of global production and consumption of key food products, 1970 to 2010 14 Table 2.2: Top six exporting countries for eight key traded farm products, 2013 17 Table 2.3: Indexes of diversity of national food production and availability, by developing country region, 2000-09 17 Table 2.4: Number of exporting and importing countries for key food products, 1970 to 2009 19 Table 2.5: Poverty effects of countries insulating themselves from the 2006-2008 spike in international food prices 22 Table 2.6: Projected shares of agricultural imports under different tariffs for China and India, 2030 25 Table 3.1: Effects on developing countries (DCs) and the world of reforming global goods markets between 1980-84 and 2004, and of removing remaining price and trade distortions as of 2004 40 Table 5.1: Average applied import tariffs, by sector and region, 2001 61 Table 5.2: Agricultural weighted average import tariffs, by region, 2001 62 Table 5.3: Six Doha partial liberalization scenarios projected to 2015 67 Table 5.4: Projected effects on economic welfare of full trade liberalization from different groups of countries and products, 69 Table 5.5: Distribution of global welfare impacts of fully removing 2001 agricultural tariffs and subsidies 70 Table 5.6: Projected welfare effects of possible Doha reform scenarios 72 Table 5.7: Projected dollar change in real income in alternative Doha scenarios 74 Table 5.8: Projected change in real income in alternative Doha scenarios 75 Table 5.9: Projected effects on bilateral merchandise trade flows of adding non-agricultural tariff cuts to agricultural reform under Doha 76 Table 5.10: Projected effects of a comprehensive Doha reform on agricultural output and employment growth, by region 77 Table 5.11: Projected impact of Doha reform scenarios on average international product prices 78 Table 6.1: Reported agricultural-exporting state trading enterprises 87 Table 6.2: Average applied agricultural tariffs before and after tariff cuts under two Rev 4 scenarios 90 ix PREFACE In the late 1990s, as members of the World Trade Organization (WTO) began preparing themselves for the next round of multilateral trade negotiations, the Australian Government commissioned a study on The Impact of Agricultural Trade Liberalisation on Developing Countries (Freeman et al. 2000). Its purpose was to provide a better understanding of the specific concerns of developing countries in the farm trade policy space. Since then, following the launch of the WTO’s so-called Doha Development Agenda (DDA) in late 2001, some developing country members have sought to keep certain agricultural trade matters high on the negotiating agenda. They have not been able to reach a consensus with other WTO members on several of those matters, however. Certainly some progress was made at the biennial Trade Ministerial Meetings in Bali in late 2013 and Nairobi in late 2015, but for many WTO members there is no longer an expectation that a comprehensive single undertaking will emerge from the DDA process. The purpose of this study is to review how matters have developed in recent years and, in the light of that, to explore ways in which further consensus might be reached so as to progress multilateral or plurilateral farm trade policy reforms on Doha issues, and in ways that ensure welfare is improved in developing countries, especially for those food-insecure households still suffering from poverty, hunger and malnutrition.
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