Tuesday, February 14, 2012

International Trade and Food Security

Pascal Lamy, Director general of the WTO had this to say about the interlinkage between international trade and food security, 
"International trade plays an important role in global food security.  By fostering greater competition, trade allows food to be produced where this can be most efficiently done.  With the climate crisis, whose beginnings we are now beginning to witness, it will become imperative that we produce food in the right places, and not where we would be wasting scarce water or other natural resources..
International trade allows food to move from countries with a surplus to countries with a deficit.  It is a “global transmission belt”, if you will.   From a purely ethical point of view, it is vital that we allow, and even facilitate, the ability of a country to sell food to another, in particular when that other is suffering from a drought or another natural disaster.  Food must travel.
While trade in agricultural products is only 7% of world trade, we are nevertheless dealing with a much more integrated global food market.  Two-thirds of all countries in today’s world are net food importers, and only one-third are net exporters.  Furthermore, trade in food is more sophisticated today, with about two-thirds of international trade being in processed products.  The bulk of international trade in food, though, remains regional, like the rest of international trade.  Seventy per cent of Europe’s trade is with Europe, not just in food, but in all products, and 50% of North America’s and Asia’s trade is intra-regional. Twenty-five per cent in the case of Latin America.  Africa, as I said earlier, stands out for its difference in this regard.
But just as poor policies hold agricultural production back, poor policies are also holding back the necessary revisions of the global rule-book on agricultural trade.  In other words, the WTO rule-book, or Bible as some call it.  The conclusion of the Agreement on Agriculture in the Uruguay Round in 1994 was a historic event, no doubt.  It brought agriculture firmly under the purview of world trade rules.  But it was, nevertheless, unfinished business, as evidenced by the rendezvous that countries gave themselves for further negotiations. 
Today, high trade-distorting subsidies persist in many developed countries, and so do some extraordinary tariff peaks.  This is what led to the formation of the G-20 coalition of developing, agricultural exporting, countries in the WTO. They want to redress the continued imbalance in WTO rules. 
Worse, the problem of food export restrictions finds almost no place in that global rule-book today.  Export restrictions, unfortunately, can be none other than “starve-thy-neighbour” policies, bringing importing countries on their knees to plead for food security.  In particularly thin international markets, like the rice market, where only 7% of global production gets traded, such restrictions can prove catastrophic.  And let us not forget that export restrictions were right at the heart of the 2008 so-called “food price crisis”, with one restriction triggering another through the panic buying and hoarding of food."

Many issues have been raised in this address. Food security has been, and will continue to be one of the foremost "domestic" agendas of national governments. Free trade in agricultural goods has been seen by many as a threat to domestic food security as well as a challenge to one's sovereignty. Will the "rationale" of international trade prevail over the heavily gurded domestic policy space of national food security? Are the objectives of global food security and "national" food security incompatible? What stand should developing countries with a large population dependent on "subsistence" agriculture take in such situations. Varied interests of domestic consumers and local producers have to be balanced.

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