Sit down at the ball game: how trade barriers make the world less food secure
This paper analyses the impacts of trade policy responses to rising world food prices by carrying out a series of stylised experiments in the wheat market using a world trade model, GTAP. The sequence of events that is modelled comprises a negative wheat supply shock and subsequent implementation of an export tax by a major net exporter and a reduction in import tariffs by a small importer. The effects of trade policy responses are contrasted with those of full liberalisation of the wheat market. At the core are the (opposite) effects on producers and consumers, as well as the terms-of-trade and trade tax revenue effects. Food security is shown to depend crucially on changes in prices but also in incomes that are associated with changes in factor returns. The results reveal that major net exporters are generally better off when implementing export taxes for food security purposes. Large exporting countries export price instability causing world food prices to rise further. Net importing countries lose out and have limited leeway to reduce tariffs or subsidise imports. Liberalising wheat trade mitigates rising prices and contributes to food security, but to the detriment of production in Africa and Asia, making them more dependent on and vulnerable to changes in the world market. Concerted action at the WTO forum is required, notably clarifying and sharpening the rules regarding export measures.
|Date of creation:||18 Apr 2011|
|Date of revision:|
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- Keeney, Roman & Thomas Hertel, 2005. "GTAP-AGR : A Framework for Assessing the Implications of Multilateral Changes in Agricultural Policies," GTAP Technical Papers 1869, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Hertel, Thomas W. & Preckel, Paul V. & Reimer, Jeffrey J., 2001. "Trade Policy, Food Price Variability, And The Vulnerability Of Low-Income Households," 2001 Annual meeting, August 5-8, Chicago, IL 20692, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- 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).
- Piesse, Jenifer & Thirtle, Colin, 2009. "Three bubbles and a panic: An explanatory review of recent food commodity price events," Food Policy, Elsevier, vol. 34(2), pages 119-129, April.
- Headey, Derek D., 2010. "Rethinking the global food crisis," IFPRI discussion papers 958, International Food Policy Research Institute (IFPRI).
- Abbott, Philip C. & Hurt, Christopher & Tyner, Wallace E., 2008. "What's Driving Food Prices?," Issue Reports 37951, Farm Foundation.
- Pyakuryal, Bishwambher & Thapa, Y. B. & Roy, Devesh, 2005.
"Trade liberalization and food security in Nepal,"
MTID discussion papers
88, International Food Policy Research Institute (IFPRI).
- 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.
- Jeonghoi Kim, 2010. "Recent Trends in Export Restrictions," OECD Trade Policy Papers 101, OECD Publishing.
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