Food aid, food policy and the Uruguay round: implications for Bangladesh

The relationship between the effects of food aid and those of the completion of the Uruguay Round of the GATT are studied in this paper, focusing upon the food aid recipient countries, and taking Bangladesh as an illustrative example. It is argued that, among other factors, the magnitudes of these effects depend crucially on the policy environment within the food aid recipient country itself, particularly the government's policy with respect to commercial food imports. It is shown that when the quantity of Bangladesh's commercial food imports is controlled by the government, the benefits derived from food aid are smaller than when these imports are liberalised. Likewise, the negative effects that the Uruguay Round may be expected to have on Bangladesh will also he larger if commercial food imports are subject to quantitative controls than if they are liberalised. The effects the Uruguay Round will have on Bangladesh will also depend on the way food aid donors respond to the Round. If donors reduce the volumes of food aid, either because of reduced food surpluses resulting from lower agricultural subsidies, or in response to increased international food prices resulting from the Round, the losses incurred by Bangladesh will be magnified. But these effects will also depend heavily on whether Bangladesh itself participates in the liberalisations that are central to the Round itself. If it were to participate fully, the negative effects that the Uruguay Round would otherwise have on Bangladesh may be entirely offset by the gains Bangladesh would derive from its own liberalisation.