Fifty Years of Distortions in Worls Food Markets

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Kym Anderson, University of Adelaide, World Bank and CEPR
14th October 2008, International Food Policy Research Institute, Washington D.C.

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Fifty Years of Distortions in Worls Food Markets

  1. 1. Fifty Years of Distortions in fy f World Food Markets Kym Anderson University of Adelaide, World Bank and CEPR IFPRI Seminar, Washington DC, 14 October 2008 Financial assistance from the World Bank Trust Funds, particularly from DfID, BNPP and the Rockefeller Foundation’s Bellagio Center , plus in-knd support from IFPRI, are gratefully acknowledged, as are the contributions of the country case study authors and the Washington- and Adelaide-based teams. Views expressed are the authors’ alone and not necessarily those of the World Bank or its Executive Directors, nor IFPRI. Project details are at www.worldbank.org/agdistortions
  2. 2. Background In 1958 the Haberler Report on Trends in International Trade warned the GATT Contracting parties of the threat of agricultural protection growth in rich countries D. Gale Johnson, in his 1973 book on World Agriculture in Disarray, despaired at the persistence of: high agricultural protection in OECD countries, anti-agric and anti-trade policies of developing countries, and the tendency for both sets of countries to insulate their domestic y food market from international price fluctuations, thereby exacerbating price volatility for the rest of the world Disarray worsened for another dozen years, with agric protection growth in Europe North America and Japan Europe, peaking in 1986, thanks to an agric export subsidy war Meanwhile, some middle-income economies ‘overshot’, going from taxing their farmers to protecting them from import competition (e.g. Korea, Taiwan) Raising concerns that other emerging economies may follow suit
  3. 3. Background (cont.) However, since the mid-1980s some high- income and developing countries (HICs and DCs) have reformed somewhat Mainly il t ll b t l M i l unilaterally, but also partly in response to tl i t international pressures: • the Uruguay Round, g y , • WTO accession conditions, • structural adjustment loan conditionality by IFIs Has this i H thi improved prospects for poorer d t f agrarian countries to export their way out of poverty?
  4. 4. Three questions being addressed by a World Bank research project To what extent have developing economies moved away from taxing agric. relative to other tradable agric sectors as they’ve grown? and within the agric sector, what is happening to agric protection from import competition in DCs, as compared with DCs HICs? And to agric support globally? How has that affected global agric markets, economic welfare and net farm incomes: retrospectively (since the early 1980s)? prospectively (ie, if remaining distortionary policies were removed)? What of the future, given the evolving domestic politics, the Doha round struggles, and in view of the recent hike in world food prices?
  5. 5. Analyses and elements of explanation f policy t d up t th mid-1980s for li trends to the id 1980 Anderson and Hayami (1986) on agric protection growth in NE Asia compared with that in WE and US Krueger, Schiff and Valdes (1988, 1991) on anti-agric and anti-trade policies of 18 developing countries Tyers and Anderson (1986, 1992) on the econ effects of distortions to world food markets Suggested the OECD countries’ agric policies depressed real international food prices in early 1980s by 20%, but that developing countries’ food policies almost fully offset that (reducing the int l price depressing effect to just 1%) int’l price-depressing Together the domestic-market-insulating nature of those anti-trade agric policies made international food prices >3 times more volatile than they otherwise would have been in early ‘80s y y
  6. 6. So empirical indicators need to show what has happened in DCs and HICs to: Anti- (or pro-)agricultural policy bias intersectorally Anti-trade bias within the agric sector Import protection vs export taxation (or subsidies) Dispersion of distortion rates across industries within the agric sector since welfare cost increases with dispersion Insulation of the domestic market from l f h d k f volatility in the int’l agric marketplace s ce the atte s exacerbated since t e latter is e ace bated by t e former the o e
  7. 7. Outline: 2 main courses plus dessert What did the World Bank project learn from its NRA/CTE estimates and other indicators? What global effects have reforms had since the ea y 980s early 1980s? What more cou d be co t buted at o e could contributed? retrospective and prospective global CGE modeling What prospect is there for further reform? p p
  8. 8. First Fi t main course i New estimates of changes in distortions over the past 50 years
  9. 9. Structure of the World Bank’s current research project Stage 1 (2006-08): [to be summarized today] Country case studies, to provide time series of the extent of agric price distortions and an analytical narrative explaining the i i di t ti d l ti l ti l i i th evolution of agric price and trade policies since mid-1950s • leading to 4 regional volumes (on Africa, Asia, Latin America and Europe’s transition economies), plus a global overview book p ), p g (including the high-income countries), plus public global database • 75 countries covered (India and Ethiopia by IFPRI staff) Stage 2 (2008-09): [to be p g ( ) [ presented at IATRC in Dec.] ] More-intensive empirical analysis across countries and over time of causes, and of effects on inequality and poverty, of chosen vs. alternative policies • Leading to 2 more edited volumes in 2009, with IFPRI contributing d d d l h b
  10. 10. Indicators estimated as part of the World Bank research We began with nominal rates of assistance (NRAs) for major crop and livestock products covering 70% of gross value of agric production at undistorted prices in each of 75 focus countries Also included are ‘guesstimates’ of NRAs for the other 30%, plus non-product-specific assistance We l W also calculate the g oss subsidy l l t th gross s bsid equivalent (GSE) of assistance to agric, in total and per farmer (in constant 2000 US$) And counterpart food consumer tax equivalents
  11. 11. Project’s focus countries: number and 2000-04 2000 04 shares (%) of global economy No. of Pop’n AgGDP GDP countries share share share Africa 21 11 7 1 Asia 12 51 37 11 Latin America 8 7 8 5 European TEs 14 7 7 3 High-income 20 14 33 75 WORLD TOTAL 75 90% 92% 95%
  12. 12. Product coverage of nominal rate of assistance (NRA) estimates (% of national agric prod’n of focus countries) 1980-84 1990-94 2000-04 1980 84 1990 94 2000 04 Africa Af i 71 1 71 1 72 2 Asia 75 73 66 Latin America 65 69 70 SUB-TOTAL, focus DCs 73 72 67 European transition econs 62 61 60 High income High-income countries 70 70 70 TOTAL, focus countries 71 70 68
  13. 13. Global coverage of NRA estimates for 30 major agric products Share (%) Share (%) of global ag of global ag production exports Grains and tubers (10) 85 90 Oilseeds (6 products) 78 85 Tropical crops (7) 74 71 Livestock Li t k products (7) d t 72 88 SUM OF ABOVE (30) ( ) 77 85
  14. 14. NRAag: high-income and developing countries, 1955-2004 (%, wted averages) 1955 2004 70 60 50 40 30 percent 20 p 10 0 1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 -10 10 -20 -30 30 HIC & ECA HIC & ECA, incl. decoupled payments Developing countries
  15. 15. NRA by region (%), 1980-84 vs 2000-04 140 1980-84 120 2000 04 2000-04 100 80 60 40 20 0 -20 -40 a ia E Z n C A ica ri c pa AN As W LA EC Af er Ja Am r th No
  16. 16. GSE (constant US$b), 1980-84 vs 2000-04 130 90 50 10 -30 -70 -110 110 Africa ANZ LAC ECA North Japan WE Asia America 1980-84 2000-04
  17. 17. Global subsidy equiv. for all ag., 1955-07: it continues to grow (constant 2000 US$b ) 300 200 100 0 -100 -200 200 1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 2005-07 Developing countries (no averages for periods 1955-59 and 2005-07) 1955 59 2005 07) High-income countries and Europe's transition economies Net, global (decoupled payments are included in the higher, dashed line)
  18. 18. Subsidy equivalent per farmer constant (2000) US$ per year 1980-84 1990-94 2000-04 DCs -140 -10 50 HICs 8,170 11,330 9,920 HICs (incl. (incl 9,140 9 140 12,890 12 890 13,530 13 530 decoupled)
  19. 19. Consumer tax equivalent per capita constant (2000) US$ per year 1980-84 1990-94 2000-04 DCs -22 -1 8 HICs 195 175 95
  20. 20. In DCs: NRA ag export taxation disappearing, but ag import-competing NRA is >0 & g g p p g growingg 50 40 30 20 10 percent 0 -10 1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 20 -20 -30 -40 -50 -60 Covered import-competing agricultural products C di t ti i lt l d t Covered exportable agricultural products
  21. 21. In HICs: export support >0 but now falling 90 70 50 30 10 -10 1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 -30 -50 50 Import competing Import-competing Exportables Total
  22. 22. Long-run trend in NRA import-competing ag. goods: growing as fast in DCs as in HICs (hence the need for market access disciplines via Doha commitments) 80 70 60 50 p e rc e n t 40 30 20 10 0 1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 1955 59 1960 64 1965 69 1970 74 1975 79 1980 84 1985 89 1990 94 1995 99 2000 04 High-income countries Developing countries
  23. 23. What about relative rates of assistance, for farmers vs non-ag producers? non ag Assistance to non-ag tradable sectors non ag (NRAnonagt) can be as important for farmers as direct agric policies, in terms of encouraging (or di ( discouraging) resource use in agric i ) i i Lerner’s (1936) Symmetry Theorem Simple criterion for anti-agricultural bias in policy: Is RRA < 0, where RRA = (1+NRAagt)/(1+NRAnonagt) – 1 ( g )/( g
  24. 24. For HICs, RRA is similar to NRA… NRA agriculture 100 NRA non-agriculture i lt 80 RRA 60 40 20 0 1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 -20 -40 -60
  25. 25. -50 0 50 100 150 200 1 9 5 5 -5 9 1 9 6 0 -6 4 US EU Canada 1 9 6 5 -6 9 Non-EU WE Japan/ Korea 1 9 7 0 -7 4 1 9 7 5 -7 9 Australia/ New Zealand 1 9 8 0 -8 4 1 9 8 5 -8 9 1 9 9 0 -9 4 1 9 9 5 -9 9 2 0 0 0 -0 4 2 0 0 5 -0 7 … although much variation within HIC group
  26. 26. Evolution from negative to positive average relative rate of assistance for DCs … 80 60 40 20 p ercen t 0 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 -20 -40 -60 RRA NRA non-ag tradables NRA ag tradables
  27. 27. RRA rise is greatest for Asia, least for Africa 10 0 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 -10 20 -20 p e rc e n t -30 -40 -50 -60 -70 Asia Africa LAC
  28. 28. …especially in China & India: >half due to cuts in non ag protection, which is now very low non-ag INDIA CHINA
  29. 29. Contribution of exchange rate distortion to China’s RRA (p (percent) ) 1981-84 1985-89 1990-94 1995-99 RRA, incl. -61 -50 -31 -3 exchange rate h t distortion RRA, RRA excl. l -52 52 -41 41 -27 27 -3 3 exchange rate distortion
  30. 30. China’s RRA trend helps explain two apparent paradoxes: China has remained close to self sufficient in farm products over the past three decades … yet was expected to experience rising import dependence in food and fibre given its relatively fibre, low endowment of agric land per capita and rapid industrialization China’s commitments under WTO to cut agric tariffs was expected to reduce agric self sufficiency and add to farm household poverty That hasn’t happened either. Instead, farm household incomes have been rising in all deciles and in all regions of that country
  31. 31. All agric and processed food: 100(X-M)/(X+M) ( (includes cotton, whose net imports g p grew with end of MFA) f ) 1980-84 1985-89 1990-94 1995-99 2000-04 percent C China a 9 7 19 9 1 -16 6 South 8 3 10 1 -6 Asia
  32. 32. How H much global policy reform progress since h l b l li f i the early 1980s? A two-dimensional summary: Reductions in the anti-ag sectoral bias in DCs, and the pro-agric sectoral bias in HICs, would p g , mean the RRA is approaching zero, where relative rate of assistance to farmers vs producers of other tradables is RRA = (1+NRAagt)/(1+NRAnonagt) – 1 Reductions in the anti-trade bias within agric would mean the trade bias index is approaching zero, where T d Bi I d h Trade Bias Index f all agric is for ll i i TBI = (1+NRAagx)/(1+NRAagm) – 1
  33. 33. RRA and trade bias index: 1980-84 vs 2000-04 150 Japan Relativ Rate of Assistance (%) e 100 Japan WE 50 WE Asia NA ves ECA LAC NA ANZ 0 Africa ANZ Africa LAC Asia 50 -5 -0.6 -0.5 -.4 -0.3 -0.2 -0.1 0 Trade Bias Index RRA Triangle: 1980-84, Circle: 2000-04
  34. 34. However, dispersion in NRAs (in addition to that due to anti-trade bias) is still high ) g Across countries and sub regions sub-regions And across commodities within each country Which Whi h means resources in agric i i continue to be inefficiently allocated both between, and within countries between within,
  35. 35. -50 0 50 100 150 Zimba eabw C ote d 'iivoire Za m bia Tanz zania Arge ntina Eth iopia U k raine Sen negal N ig geria E Egypt N icara agua S udan A South Africa C am e roon Tha iland M adaga ascar U gaanda Aus tralia Pak istan Mala aysia D om inican R ep Banglad desh N ew Zea aland Bulg garia G hana B Brazil C hile C hina Pooland K Kenya Sri L anka Ecu uador M exico n Indo nesia India R ussia u US Est tonia Vie tnam p Philip pines Tuurkey C a nada C olo m bia h C zech R ep M ozam bique b Slov vakia Lith uania u S Spain H unngary Por rtugal Italy L Latvia D en m ark Frrance Germ any m Finnland UK Sw eden e Auustria N etherla ands R om ania m Ta iw an eland Ire Slov venia K Korea Sw itze rland o N orw ay Cross-country dispersion in NRAagric, 2000-04
  36. 36. NRAs by product: DCs versus HICs 387 Sugar Rice Milk Sugar Rice Milk Poultry Beef Wheat Poultry Maize Cotton Pigmeat Pigmeat Coffee Soybean Soybean 2000-04 Maize 2000-04 1980-84 1980-84 Beef Wheat Coconut Barley Cotton Rapeseed -150 -50 50 -150 -50 50 150 250
  37. 37. Also insulation of food markets persists Also, persists, so volatility of int’l food prices continues Fluctuations around trend NRAag from year to year remain common, esp. for food staples such as rice This reluctance to import instability from int’l food market, and tendency to export , y p instability from domestic food market, imposes an international public ‘bad’ on the rest of the world Beggar-thy-neighbour behavior: requires more WTO discipline, including on export policy?
  38. 38. Rice NRA for South Asia is inversely correlated with int’l price int l 600 30 20 500 10 0 400 -10 NRA % US D 300 -20 30 -30 200 -40 -50 100 -60 - -70 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 197 197 197 197 197 198 198 198 198 198 199 199 199 199 199 200 200 200 Pw S Asia
  39. 39. What have we learned? Inter-sectoral anti-agricultural bias has declined greatly, greatly and their intra-agric sector anti-trade bias also intra agric anti trade has declined somewhat on average in DCs since 1980s And pro-agric bias in HICs also has declined somewhat But some reforming DCs have ‘overshot’, in the sense of overshot moving from RRA<0 to RRA>0 as their incomes rose But, within agric, the dispersion across product NRAs is still high in many countries, as it is across countries countries much resource misallocation within and between countries still Also, trade measures continue to contribute to int’l food price volatility b attempting t stabilize d i l tilit by tt ti to t bili domestic f d ti food markets So, how far have these reforms reduced the disarray in y world agricultural markets?
  40. 40. Second main course S d i New estimates of global effects of 2004 policies
  41. 41. Global CGE results New global, economy wide modeling results (from Linkage Model) on effects of national price distortions, drawing on WB project’s NRA estimates as of 2004 project s and comparing their effects with: What 1980-84 distortions’ effects were and 1980 84 were, What the world would be like with fully liberalized goods markets
  42. 42. New agric distortions we insert in global model for 2004 (%) Agric Agric Agric Non-ag domestic export import import support subsidy tariff tariff HICs 3 7 22 1 ETEs 1 -0 22 8 DCs: Africa -1 0 20 11 Asia 2 1 30 8 L Amer -0 0 -1 1 8 6 WORLD 2 3 22 3
  43. 43. Sources of cost of policies t S f t f li i to the global economy (%, 2004) Agric & Other ALL Due to food merch. GOODS policies in: policies tariffs SECTORS High income High-income 36 6 42 countries Developing 24 34 58 countries WORLD 60 40 100
  44. 44. Sources of costs of policies to developing economies (%, 2004) Agric & Other ALL Due to food merch. GOODS policies in: policies tariffs SECTORS High income High-income 53 12 65 countries Developing 30 5 35 countries WORLD 83 17 100
  45. 45. Reform effects: retrospectively since 1980 84, 1980-84 and prospectively as of 2004 Reform from Move to 1980-84 t 1980 84 to free t d f trade 2004 as of 2004 Global econ welfare $b (%) welfare, $233 (0 8%) $168b (0.6%) (0.8%) (0 6%) DCs’ econ welfare, $b (%) $73b (1.0%) $65b (0.9%) % global ag output exported 9% 8% 8% 13% DC share of global ag output g g p 58% 62% 62% 65% DC share of global ag exports 43% 55% 55% 64% % rise in int’l ag &food prices 13% <1% % rise in DC ag (nonag) VA 4.9%(0.4%) 5.6%(1.9%)
  46. 46. What do these CGE results imply? Economic welfare cost to world (to DCs) of global distortions to goods markets has fallen by 58% (46%) since early 1980s and DCs gained disproportionately from reforms since early 1980s, and would again from completing the process (0.9% vs 0.6% for HICs) Of that prospective gain to DCs, 5/6ths would be due to agric policy reform, of which 2/3rds would come from HIC policies means DCs have a much bigger stake in WTO’s Doha round, and esp. its agric negotiations, than previous analyses using GTAP protection database suggest • Why are DCs so reluctant to engage in DDA and commit? DC farmers have gained since early 1980s, and would be main gainers from completing the reform (5.6% boost to ag value added vs 1.9% for nonag VA)
  47. 47. Dessert D t Future policy trends p y and prospects for more reform
  48. 48. Will DCs stop RRA at zero, or follow HICs with positive and rising RRAs as their incomes grow? 400 %) ssistance (% 300 00 20 Relative Rate of As 100 0 -100 -1 0 1 2 3 Ln real GDP per capita HIC RRA obs HIC fitted values DC RRA obs DC fitted values
  49. 49. 50 200 150 0 0 100 RRA (%) -50 Korea and Taiwan followed Japan … 7 8 9 10 Ln real GDP per capita Japan Korea Taiwan
  50. 50. … so will China and India too, to avoid social 200 150 100 0 unrest from widening urban-rural income gap? f g g p RRA (%) 50 0 -50 7 8 9 10 Ln real GDP per capita China Japan Korea Taiwan India
  51. 51. Are WTO bindings helping to prevent agric protection growth in developing countries? Most DCs have very high binding overhang in agric (gap between WTO-bound and applied tariff or domestic subsidy), following the Uruguay Round Agreement on Agriculture g g China has little overhang on tariffs on average, but plenty where it matters, and also lots of p y overhang in bindings of domestic farm subsidies
  52. 52. China’s Chi ’ WTO commitments allow considerable it t ll id bl scope for agric protection growth Out-of-quota tariffs are high (currently prohibitive): 65% for grains 50% for sugar g 40% for cotton And China is allowed up to 8.5% product- specific domestic support, plus another 8.5% non-product-specific assistance (or more if ‘decoupled’ somewhat f ‘d l d’ h t from production) d ti )
  53. 53. Bindings matter: What if agric protection in Japan and Korea had been bound when they joined GATT? yj 200 Japan China (1955 = 16.6%) (2001 = 4.5%) ( ) 150 Korea (1967 = 7.4%) 100 N R A (% ) 50 0 1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-05 -50 -100 Japan Korea China
  54. 54. If Chi chooses t k China h to keep it RRA near its zero, will it push up int’l food prices? China’s impact on int’l prices of food has been less than for minerals and energy because of low income elasticities of demand for food and rising RRA over the past 3 decades Now with China’s RAA close to zero, its future agric import growth could accelerate if it chooses not to follow Ja/Ko/Ta in raising its NRAag continually over time
  55. 55. Implications for WTO negotiations Need large cuts to bound tariffs and subsidies so as to reduce prospect of: trend NRAag and RRA rising with incomes continuing fluctuations around trend for product NRAs via variable trade restrictions Need to not only ban agric export subsidies but also discipline agric export restrictions at WTO? As a quid pro quo, abandon proposed ‘Special Products’ and ‘Special Safeguard Mechanism’ (which will add to ag p g ( g protection growth and to int’l food price volatility)? and instead encourage DCs to pour more of their ag support into ag R&D, rural education and infrastructure (via aid-for-trade?) • C Currently agric R&D is equiv. to just 0.3% NRA in DCs (1% in HICs) tl i i i t j t 0 3% i DC i HIC )
  56. 56. References Anderson, K., M. Kurzweil, W. Martin, D. Sandri and E. Valenzuela, “Measuring Distortions to Agricultural Incentives Revisited”, World Trade Review 7(4): Incentives, Revisited 675–704, October 2008 Valenzuela, E., D. van der Mensbrugghe and K. Anderson, “General Equilibrium Effects of Price General Distortions on Global Markets, Farm Incomes and Welfare”, Ch. 13 in Anderson, K. and Associates, Distortions to Agricultural Incentives: A Global g Perspective, 1955 to 2007, forthcoming 2009 For all project working papers and (by end-October 2008) the global agric distortions database, see www.worldbank.org/agdistortions ldb k / di t ti
  57. 57. Thanks! www.worldbank.org/agdistortions ldb k / di t ti kym.anderson@adelaide.edu.au y @
  58. 58. Trade Restrictiveness Index: a way of incorporating mean and dispersion in a single policy indicator p g p y The more NRAs vary across products within an agric sector, the more the sectoral average NRA understates th welfare cost of th d t t the lf t f those di t ti distortions especially if some NRAs are <0 and others >0, as is often the case in DCs What Wh common ad valorem NRA or CTE (or trade tax) d l ( d ) would have the same effect on national econ welfare (or on trade volume) as the observed structure of NRAs and CTEs across the product range? dC h d ? Taking into account that the welfare cost of a distortion is proportional to the square of its NRA or CTE
  59. 59. Variants of the Trade Restrictiveness Index J. Anderson and P. Neary focused mostly on tariff equivalents and import restrictiveness As has the World Bank’s global monitoring report to date Measured it from the viewpoints of welfare and trade reductions (using estimated import demand elasticities for each product) But an early Anderson/Bannister (1992) paper, and a chapter of the Anderson/Neary 2005 book, look at PSEs and CSEs for Mexican agric algebra is complex, and requires domestic demand and supply elasticities for each product Lloyd (2008) simplifies the algebra, in part by being willing to make assumptions about domestic demand and supply elasticities Enables the calculation of separate producer distortion index and consumer distortion index for covered agric products (PDI and CDI), and their combination (a welfare-reduction index, WRI), all of which are >0 ), Also enables the calculation of a trade-reduction index (TRI)
  60. 60. Assumptions to make index calculations possible with just NRAs and CTEs For PDI (or CDI), assume price elasticities of domestic supply (demand) are the same for each product, and cross-price elasticities of supply (demand) are zero l ti iti f l (d d) For WRI and TRI, assume also that aggregate sectoral domestic supply and demand elasticities (ignoring sign) are equal All that s then needed are NRA and CTE estimates, and that’s production (consumption) valued at undistorted prices to serve as weights to aggregate across parts of or the whole product range And, And for TRI need to nominate the trade status of each industry TRI, While these elasticity assumptions are limiting, this at least takes us some way towards what a formal PE or CGE model can do in terms of capturing the welfare effect of a dispersed structure of NRAs within the agricultural sector
  61. 61. Welfare reduction index: DCs, HICs and ETEs (percent) 80 60 40 20 0 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 2005-07 Developing countries Europe’s transition econs. High-income countriesb
  62. 62. NRAag, DCs, HICs and ETEs, 1955-2004 (percent) 60 40 20 0 1955-59 1965-69 1975-79 1985-89 1995-99 2005-07 -20 High-income countries High-income countries (incl. Europe's transition economies) Developing countries
  63. 63. Welfare reduction index: Africa, Asia, LAm (percent) 80 60 40 20 0 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 Africa Asia Latin America
  64. 64. Points to note from WRI/NRA comparison Africa’s NRA is zero in 1985-89, but that s that’s when its WRI is at its highest (because large increase in NRAm meant it offset NRAx but added to WRI) ) This is also why Africa’s TRI spikes in the 1985-89 period (next slide) p ( ) Notice also on next slide the rapid TRI decline for Asia (whereas it turns up again slightly for Africa & LA after 1990s) li htl f Af i ft 1990 )
  65. 65. Trade reduction index: Africa, Asia, LAm (percent) 60 40 20 0 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 Africa Af i Asia Ai Latin A i L ti America
  66. 66. Trade reduction index: DCs, ETEs and HICs (percent) 60 40 20 0 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 2005-07 -20 0 Developing countries Europe’s transition econs. High-income countriesb
  67. 67. What have we learned? K/S/V’s inter-sectoral anti-agricultural bias has declined greatly, and their intra-agric sector anti-trade bias also has declined somewhat on average in DC since 1980s some hat a e age But some reforming DCs have ‘overshot’, in the sense of moving from RRA<0 to RRA>0 as their incomes rose, rather than stopping at neutral policies (RRA=0) p ( ) Because on import side, agric protection growth continues Domestic market insulation continues Legally possible because of import tariff and export subsidy binding overhang at WTO, and no discipline on export restrictions WTO Within agric, there is still much dispersion across product NRAs in many countries reflected in PDIs (and CDIs) being much higher than NRAs (and CTEs) Next question: How far have these reforms reduced the disarray in world agricultural markets?

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