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How to Improve World Food Supply Stability Under Future Uncertainty: Potential Role of WTO Regulation on Export Restrictions in Rice

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  • Karapinar, Baris
  • Tanaka, Tetsuji
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    Abstract

    In recent years, international grain markets have been exposed to considerable price volatility which was partly caused by supply shocks driven by extreme climate events affecting major grain exporters. In addition, a number of exporting countries resorted to distortive trade measures in the form of export restrictions which have led to additional shortages, undermining the reliability of the world trading system. Recent climate studies suggest that climate changeinduced extreme events are likely to increase yield fluctuations. As trade volumes are also projected to increase, export restrictions constitute a systemic threat to the security of the global food supply. However, WTO rules and regulations on export restrictions are lenient, offering ample ‘policy space’ to member countries. In this context, this paper explores the potential welfare implications of productivity shocks and consequent export restrictions imposed on rice. We use a world trade stochastic computable general equilibrium (CGE) model with the Monte Carlo method, taking into account risk factors in the form of a wide range of productivity shocks to world rice supplies. Our findings suggest that welfare losses that are likely to be caused by increased yield variability, due to climate change or other factors, are expected to grow substantially if countries react to productivity shocks by imposing export restrictions. Losses incurred by rice importing countries in Asia and Africa are expected to be particularly high. The paper links these results to potential WTO reform initiatives aiming at improving world food supply stability under future uncertainty.

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    File URL: http://purl.umn.edu/160387
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    Bibliographic Info

    Paper provided by European Association of Agricultural Economists in its series 135th Seminar, August 28-30, 2013, Belgrade, Serbia with number 160387.

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    Date of creation: Aug 2013
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    Handle: RePEc:ags:eaa135:160387

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    Related research

    Keywords: Food Security and Poverty; International Relations/Trade; Risk and Uncertainty;

    This paper has been announced in the following NEP Reports:

    References

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    1. Headey, Derek, 2011. "Rethinking the global food crisis: The role of trade shocks," Food Policy, Elsevier, vol. 36(2), pages 136-146, April.
    2. Götz, Linde & Glauben, Thomas & Brümmer, Bernhard, 2013. "Wheat export restrictions and domestic market effects in Russia and Ukraine during the food crisis," Food Policy, Elsevier, vol. 38(C), pages 214-226.
    3. Derek D. Headey, 2013. "The Impact of the Global Food Crisis on Self-Assessed Food Security," World Bank Economic Review, World Bank Group, vol. 27(1), pages 1-27.
    4. Reimer, Jeffrey J. & Li, Man, 2009. "Yield Variability and Agricultural Trade," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 38(2), October.
    5. Baris Karapinar, 2012. "Defining the Legal Boundaries of Export Restrictions: A Case Law Analysis," Journal of International Economic Law, Oxford University Press, vol. 15(2), pages 443-479, June.
    6. Anderson, Kym & Nelgen, Signe, 2012. "Trade Barrier Volatility and Agricultural Price Stabilization," World Development, Elsevier, vol. 40(1), pages 36-48.
    7. Nazlioglu, Saban & Erdem, Cumhur & Soytas, Ugur, 2013. "Volatility spillover between oil and agricultural commodity markets," Energy Economics, Elsevier, vol. 36(C), pages 658-665.
    8. Hertel, Thomas W. & Martin, William J. & Leister, Amanda M., 2010. "Potential Implications of a Special Safeguard Mechanism in the WTO: the Case of Wheat," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61000, Agricultural and Applied Economics Association.
    9. Thomas W. Hertel & Will Martin & Amanda M. Leister, 2010. "Potential Implications of a Special Safeguard Mechanism in the World Trade Organization: the Case of Wheat," World Bank Economic Review, World Bank Group, vol. 24(2), pages 330-359, August.
    10. Tanaka, Tetsuji & Hosoe, Nobuhiro, 2011. "Does agricultural trade liberalization increase risks of supply-side uncertainty?: Effects of productivity shocks and export restrictions on welfare and food supply in Japan," Food Policy, Elsevier, vol. 36(3), pages 368-377, June.
    11. Bouet, Antoine & Laborde Debucquet, David, 2010. "Economics of export taxation in a context of food crisis," IFPRI discussion papers 994, International Food Policy Research Institute (IFPRI).
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