Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Balancing disciplines & policy space in agricultural trade

693 views

Published on

Presented by Will Martin, senior research fellow, IFPRI

Published in: Education
  • Be the first to comment

Balancing disciplines & policy space in agricultural trade

  1. 1. Balancing Disciplines & Policy Space in Agricultural Trade Will Martin February 23, 2016
  2. 2. Roadmap • Policy space & collective action • Developing country growth & policy change • Policy options
  3. 3. Policy space & collective action • Unilateral trade policy very attractive to policy makers – Quantitative restrictions allow control of trade volumes & discrimination – Protection can improve the terms of trade – Insulation can stabilize domestic prices • But these policies are sub-optimal for the world – QRs create international & domestic price volatility – Protection reduces world income • Rising protection can cause trade to collapse – Insulation is beggar-thy-neighbor • Collective action can improve outcomes – Ban QRs – Limit & reduce protection levels – Discipline price insulation
  4. 4. • When developing countries were small their markets didn’t matter for partners – Developing countries have grown dramatically • And policies have changed sharply Developing country size & policies
  5. 5. From High Y DCs Total High Y 20 23 42 Developing 24 34 58 Total 44 56 100 From High Y DCs Total High Y 39 20 59 Developing 28 12 41 Total 67 33 100 Increasing importance of developing countries 1992-93 2012-13
  6. 6. Policy patterns also matter • Historical pattern in developing countries – Taxation of relatively poor farmers • Reduced exports, encouraged imports • Developing countries moving to positive protection • And price insulation strong – As it was in industrial countries in the past
  7. 7. -30 -20 -10 0 10 20 30 40 50 60 70 1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 percent HIC & ECA HIC & ECA, incl. decoupled payments Developing countries Industrial & DC protection levels
  8. 8. Price insulation in developing countries • Very strong insulation against price shocks – Creating serious collective action problems • Substantial increases in world price volatility – Ineffective in protecting the poor • But longer term price changes passed through
  9. 9. 0.7 0.9 1.1 1.3 1.5 1.7 1.9 2.1 2.3 2.5 2.7 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Domestic International Indexes of staple food prices
  10. 10. • Improving information & market efficiency • Social safety nets • Disciplines on protection & insulation Potential policy options
  11. 11. • Poor information about stocks played an important role in the 2008 food crisis – AMIS seeks to improve market information • Market-based risk management may play a role – Futures and, especially, options – Insurance Improving information & market efficiency
  12. 12. • Social safety nets individually & collectively effective • Domestic food aid exempt from WTO disciplines Social safety nets
  13. 13. • Disciplines on protection levels – Uruguay Round introduced limits for developed countries – Need more discipline on developed & developing countries • Proved challenging in the Doha Agenda – Nairobi agreement to abolish export subsidies a major step • Disciplines on insulation have some WTO precedents – Abolition of variable levies a success – Price-based SSM proposal disciplines insulation against price falls • Quantity-based SSM proposals make no sense • Some, partial discipline on export restrictions needed – Otherwise importers feel they can’t rely on markets Disciplines on protection & insulation
  14. 14. Conclusions • Most WTO trade reform involves agreed reductions in policy space to achieve goals • Rapid growth in developing country agricultural trade makes developing country reform important – Only 20% of world agri trade between industrial ctries • Nairobi agreement moves forward on some fronts – Especially export subsidy disciplines – But much remains to be done
  15. 15. References • Anderson, K., Ivanic, M. and Martin, W. (2014), ‘Food price spikes, price insulation and poverty’ in Chavas, J-P, Hummels, D. and Wright, B. eds. The Economics of Food Price Volatility, University of Chicago Press for NBER. • Ivanic, M. and Martin, W. (2014), ‘Implications of Domestic Price Insulation for Global Food Price Volatility’ Journal of International Money and Finance 42:272-88. • Ivanic, M. and Martin, W.(2014) ‘Poverty Impacts of the Volume-Based Special Safeguard Mechanism’ Australian Journal of Agricultural and Resource Economics 58(4):607-21. • Laborde, D. and Martin, W. (2015), ‘Formulas for failure? Were the Doha tariff formulas too ambitious for success? World Trade Review 14(1): 46-65.

×