Transcript International Agricultural Trade.

International Agricultural Trade
Chad Hart
[email protected]
515-294-9911
Farm-Church Discussion Group
West Des Moines, Iowa
September 12, 2008
Department of Economics
Outlook from WTO
On July 27, 2006, Pascal Lamy, DirectorGeneral of the World Trade Organization
stated that the failure to reach an
agreement on the Doha round negotiations
would be a choice to forgo “the best hope
for growth and poverty alleviation.”
Department of Economics
Another Quote
“Trade liberalization leads to economic gains for
both developed and developing countries through
more efficient use of resources as well as the
productivity and investment growth that come
with more open markets.”
-- Anne Effland, Mary Anne Normile, and John Wainio,
“Global Agriculture and the Doha Round: Market Access
Is The Key”, Amber Waves, Sept. 2006
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Projected Pathway
More open markets
More efficient resource allocation
Higher economic activity values
Higher incomes
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Agriculture: Crucial to Developing Countries
For most developing countries, agriculture is:
1. The largest employer,
2. The largest source of GDP,
3. The largest source of exports, and
4. The largest source of outside funds.
Nearly three-quarters of the world’s poor live in rural
areas and are dependent on agriculture for their
living.
Source: McCalla and Nash, 2007
Department of Economics
Poverty Rates
Source: McCalla and Nash, 2007
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Agricultural Protection
Source: McCalla and Nash, 2007
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Agricultural Protection
Source: McCalla and Nash, 2007
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Trade Shares
Source: McCalla and Nash, 2007
Department of Economics
Reducing Barriers to Trade
Agriculture is seen as the trade area with the
greatest number of distortion and the greatest
potential in economic gains from trade reform.
Studies have shown that two-thirds of the potential
economic gains from trade reform would come
from agricultural trade reform (Anderson, Martin,
and van der Mensbrugghe, 2006; Hertel and
Keeney, 2006).
Source: McCalla and Nash, 2007
Department of Economics
Negative Size Effects
Net agricultural importers could face higher market
prices for agricultural commodities.
Counterpoint: Prices for other products would rise
as well, providing some offset from exportable
goods.
Reduction or elimination of preferential market
access many developing countries currently have
to developed country markets.
Counterpoint: Several studies indicate the
economic losses would on the order of $200-300
million worldwide and can be made up with aid.
Source: McCalla and Nash, 2007
Department of Economics
Developing Country Power
Developing countries have begun to “flex their
muscles” during the Doha round.
Targeting significant reductions in agricultural trade
barriers and domestic support
Specific targeting for liberalization of cotton trade
Source: McCalla and Nash, 2007
Department of Economics