trade policy issues in asia - ramesh sharma

Perspectives on the challenges for food security in Asia

Trade Policy

Ramesh SharmaFAO Regional Office, Bangkok

IFPRI-CDRI Workshop on Agricultural Transformation in Asia: Policy Options for Food and Nutrition Security

25-27 September 2013Siem Reap, Cambodia

Outline

1. Landscape of trade policy/interventions in Asia

2. Different views on trade interventions

Part 1

Landscape of trade policy interventions - import policy

- export restrictions- export subsidization- domestic subsidies

Trade policy landscape - (1) -

illustration of interventions on imports AoA Annex 5 Special Treatment (Rice - PHL, KOR,

TWN/CHN – JPN no more) Prohibitive tariff (JPN rice, THA sugar in-quota) Lots of TRQs (JPN rice, THA sugar, maize, CHN several) Pure quota, non-automatic license (IDN liv/hort/rice) Reference prices – PHL pork, poultry STE monopoly/licensing – (MYS rice, many countries) Allegation of exceeding WTO bound tariffs (SLK dairy,

many other cases)

Trade policy landscape (2) –

illustration of export restrictions Export taxation (ad valorem, specific, mixed – many

cases) Variable and differential taxation – (palm oil IDN &

MYS) Minimum Export Price (MEP) (VNM rice, basmati IND,

PAK earlier) Export quota (IND frequent - cotton, rice, wheat,

others) Cartelling? (natural rubber THA, MYS, IDN) Complete ban – (IND rice, wheat 2008-11, BGD rice)

Trade policy landscape (3) –

illustration of export subsidization(mostly WTO-compatible for DCs, AoA Art. 9.1d & e)

IND rice & wheat export during 2001-03 Possibly also IND wheat X 2012/13 (not clear rice) Closely watched for a similar case for Thai rice exports

(also watched - all G2G deals) Export incentives – many products, many countries

(IND many products, cash incentives NPL & BGD, also PAK, many other developing countries)

Cross-subsidization issue raised many times at WTO CoA

Trade policy landscape (4) –

domestic subsidies (illustration of questions asked at the WTO CoA)

Public stockholding for food security – rice, wheat (IND, IDN, PHL)

Article 6.2 subsidies, e.g. fertilizers (IND, IDN) definition of low-income resource-poor farmers (LIRP)

Decoupled income support (CHN) (Thai rice PPP)? Trade-distorting subsidy (AMS) (rice - THA, CHN, &

IDN for notifying only once in 2000, IND for not notifying after 2003)

Part 2:On the connection between trade intervention

and food security--

Different views

One view e.g. the messages in the World Bank distortions

study

One view – distortions are bad for growth

and poverty reduction ... avoid Protection of importables:• misallocates economic resources (Econ 101)• taxes exports (Lerner Symmetry)

So, the way ahead (for growth, food security etc) is full export-orientation of trade policy, not protection

Instead, use domestic interventions for domestic problems

Thus, exemptions like sensitive products, special products, SSM, negative list etc not desirable

So, in a way, “Make trade policy history”

Alternative view – trade/pricing policies have

a positive role to play (for growth and other goals)

Market failures etc mean interventions are desirable (even trade theory supports)

Cant trust “thin” world food markets (e.g. rice) Rice price policy in Asia played a positive role in

structural transformation (e.g. Timmer) So, interventions are ok if linked to stage of structural

transformation In WTO/AoA also - “reform with policy space” is the

mantra etc etc

Articulating appropriate trade/pricing policy - the “Middle Way”

Avoid large distortions (e.g. protection>10%) Be clear/explicit on policy goal aimed at:

o (e.g. food self-sufficiency, fully aware that this is NOT household food security)

Find solutions with fewer interventions (e.g. with 2 instruments, not 7 more rules-based, less ad hoc

Some national problems have global solution only – so negotiate hard at the WTO (e.g. export restrictions, domestic subsidies etc)