WTO and Global Agricultural Trade: Philosophy, Polices, Politics and Prophecy

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WTO and Global Agricultural Trade: Philosophy, Polices, Politics and Prophecy

October 5, 2020 AGRICULTURE 0

Competition among the nations is the biggest problem within the international trading system. WTO deals with the rules of trade among countries and plays an important role for supporting global economic development. CAGR formulae, Delphi survey method and meta-analysis were used for analysis. The study analyzed the importance of WTO trade policies in the global agriculture trade. Favorable trade in the agricultural products had been noticed in the European and American continents whereas the negative trade balance has been noticed in the Asian and African continent. Europe exported and imported more agricultural products in the world. African agricultural trade was very poor. Agricultural exports growth rate was higher than imports in the Asia but reverse trend was seen in other continents. The exports price elasticity of agricultural products in Europe was marginally higher than imports. Agricultural commodities trade was shown negative growth in the Brazil and Argentina of the American continent and Angola of the African continent. USA and China imposed high tariff rates, which affect the whole global economy. This study used for policy makers, decision makers, producers, consumers and multi-stake holders.

 

Adam Smith (1776) is revolutionary Economic Idea is that proposed Free Trade Theory against British Colony Monopoly. The WTO called the farming agreement “historic”. The study is quantitative frame work of geopolitical effects of WTO measures on the most significant regional trading blocs and global agriculture. The study found that developing countries support more to agriculture when compared to developed countries. The study found that the NAFTA trading bloc consisted of the highest number of non-tariff measures such as Sanitary and Phyto-sanitary, Technical Barriers to Trade, Anti-Dumping, Countervailing & Special Safeguards. Similarly, more number of Safeguards & Quantitative Restrictions were imposed by the ASEAN trading bloc. While more number of Tariff Rate Quotas & Export Subsidies were imposed by EFTA & MERCOSUR trading blocs, respectively. The study of political economy found that, globally government is not giving priority to agriculture in budget allocation except for South Korea and Switzerland. This study significant discovery is many countries targeted to protect agriculture by trade and domestic support polices in one or other way. This necessitates further reforms to be benefited all regions. These findings have significant impact on World trade negotiations, world trading rules, designing WTO agreements or policies or programs, multilateral agreements.

 

Since world market economies are dynamic, the responsiveness of export quantities to changes in international prices is of direct relevance in international economics. India has 12% share of world tea exports and is the seventh largest coffee producer in the world (2013–2014). This study analyses the exports and price growth rates, elasticity, instability and major global markets for Indian tea and coffee. The study found that elasticity for coffee and tea was 61.4 and 13.5%, respectively. The destinations which account for the major share of exports for Indian tea are developed countries including Australia (18.7%), Russia (17.3%), and the United States (15.9%) and for coffee are Italy (28.7%), Germany (13.8%), and Belgium (7.6%). Based on an analysis of individual country elasticity and growth rates, India has comparative advantage to export to the Middle East, Europe, the United States, and Australia.

 

Global trade of pulse crops represents about 15% of global production. Even though India is the largest pulses producer of the world, it imports large amount of pulses from rest of the world. So, it is important to analyze, how the inflow and outflow of pulses from India is changed over the period of time. The study period is 1990-2017. The study observed that import markets are shifting from developing to developed nations. The maximum export and import quantity growth rate is witnessed for African and American region respectively. Export price of all major pulses were more than import prices indicating that India has comparative advantage in pulses. The study found that, the total pulses, export price elasticities for all regions is elastic, whereas the import price elasticities is also elastic except for Asia and Oceania. India is importing from Canada, Myanmar, Australia, Russia and USA and exporting to Sri Lanka, Pakistan, Bangladesh, Egypt and Saudi Arabia. The study suggest that Import from inelastic countries should be exempted from any ban which would help to boost the trade and treat under MFN status.

 

Agricultural prices play greater role in living Economics. Since many decades’ farmers faced declining agricultural prices and low prices in developing countries. The specific objectives are to review various agricultural price theories, research evidences and construct the theory of agricultural price bubble and crash and their effect on macro economy and suggest measures to improve. The study reviews various agricultural price theories, concepts, policies, research gaps and do meta-analysis and formulated the theory of Agricultural prices bubble and price crash. Many countries are unable to make successful pricing policies due to there is not enough operative methodological and theoretical support for decision-making. “Demand channel” is the crucial factor in elucidation of commodity price growth. Future prices moments in agriculture have fat-tailed distributions and display quick and unpredicted price jumps. The theory of NAFTA regionalism did not lead to regionalization and not increasing share of intraregional international trade. In EU countries land rents in modern agriculture causing upward trend in agricultural land prices. Information friction, agricultural supports, agricultural price & trade policies, agricultural price transmission are responsible price fluctuations. In economic theory, asymmetric price transmission has been the subject of considerable attention in agricultural gaps.

 

Globally, Legumes are vital crops for achieving food and nutritional security. This study analyzes global legumes growth and developments. The study period was 1990-91 to 2017-18. The compound annual growth rates, terms of trade, price elasticity’s, trends and instability analysis used. Globally and continent wise, soybean took the first position in area and production among selected legumes except groundnut in the African continent. Globally, TOT were found to be increased for beans, groundnut, and soybean. In Asia, during 1990-91 to 2017-18, the exports price of beans, chickpea, groundnut, peas, and soybean was more than imports price except lentil. Globally, the export price elasticity of chickpea, lentil, and peas were found to be marginally higher than imports in the world. The import price elasticity of all legume crops were found to be marginally higher compared to exports in Asian continent but reverse trend noticed in other continents in some crops. The export price of soybean and peas witnessed more or less linear trends in the world. The study suggests that multilateral trade relationship with high CAGR regions would help in smooth trade of legume crops.

 

Globally, the oilseed production has continued to increase. This increasing production calls for the need to have a thorough research in the area. The study is based on analyzing the domestic as well as global policies that affect the production and consumption pattern of oilseeds in an economy. The methodology employed is the estimation of CAGR, Instability Index, elasticity and terms of trade of oilseeds. The study period is 1990-91 to 2017-18. The results showed that Soybean has the highest CAGR. Groundnut and Niger Seeds have higher terms of trade. The terms of trade of India’s oilseeds were found to have increased for all oilseeds except mustard crop. During the period 1990-91 to 2015-16, the export import price elasticity’s of all oilseeds were found to be positive except imports price elasticity of soybean (-0.45 %) crop. The study found that the exports price elasticity of Soybean, Mustard, Safflower, Sesamum and Sunflower were found to be marginally higher than compared to imports giving a comparative advantage in to India in this regard. These observations can help in remodeling the policies which can accompany the changing policies under WTO.

 

2017-18. The current study analysed the growth rate, elasticity and instability of export quantity, prices of selected legumes and their export destinations in the Indian and global market. The study found that Indian peas have more demand in overseas market. Export price of chickpea was more than other legumes in India. The export prices of Indian legumes were stable. India should export their beans to Brazil, China and Australia for making profits in the international markets. India exported more quantity of chickpea to Canada followed by Argentina and USA. Export price of chickpea was more in Mexico, Australia and Argentina. Canada, Mexico, Ethiopia and UAE were stable in export quantity of chickpea. India should expand lentils exports by making appropriate strategies in global markets because some of the exporting countries realized instability of export prices. The export price of beans, chickpea and peas were stable in all countries. Indian legumes should export to the highly demanded countries such as Argentina, Canada and USA in an overseas market. The major destinations are Brazil, Japan and UK for beans; Pakistan, Bangladesh and Spain for chickpea; Turkey, Sri Lanka and Bangladesh for lentils; and China, Belgium and Bangladesh for peas. India should seek for new developed markets for the legume crops.

 

In world, coffee and tea are the most enjoyable consumer beverages. Drinking coffee and tea reduce the risk of several diseases. This is based on the foreign trade research study during the period from 1990-91 to 2017-18. CAGR, price elasticity’s, instability and trends of exports and import price analysis were employed for the study analysis. The study found that MERCOSUR and SAFTA are the major producers of coffee and tea, respectively in the world. Globally import prices of coffee and tea were higher than export prices. The terms of trade of coffee and tea were favored in the European Union, NAFTA, COMESA, SAFTA and Pacific Alliance. MERCOSUR would get benefited from other countries due to the higher export prices of coffee. Similarly, EFTA, NAFTA, COMESA and Pacific Alliance trading blocs would be profited for tea. Globally, Export price elasticity’s of coffee in MERCOSUR and COMESA were marginally higher than imports price elasticity. Export price elasticity’s of coffee was found to be marginally higher than imports in the Germany, Italy and Netherlands (EU); Norway (EFTA); Canada and USA (NAFTA); Venezuela (MERCOSUR); Australia (ASEAN); Egypt (COMESA); India (SAFTA); and Chile and Peru (Pacific Alliance). Export price elasticity’s of tea was found to be marginally greater than the imports in the Italy (EU), Norway and Switzerland (EFTA), USA (NAFTA), Australia, Indonesia and Thailand (ASEAN), and Chile and Peru (Pacific Alliance). This foreign trade study is very helpful for multi-stake holders, producers, traders and consumers of coffee and tea.

Author (s) Details

M. B. Dastagiri
ICAR-National Academy of Agricultural Research Management, Rajendranagar, Hyderabad- 500030, India.

P. V. Naga Sindhuja
ICAR-National Academy of Agricultural Research Management, Rajendranagar, Hyderabad- 500030, India.

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