Exploring the Contribution of FTAs to Food Security in the APEC Region

Robert Scollay

New Zealand APEC Study Centre

Motivation

• Trade’s Vital Contribution to Food Security– Complementing the contributions of• Technology and innovation• Extension• Infrastructure development• Supply chain efficiency• Water management • etc

APEC Region Supply/Demand Balance of Key Food Security Products

• Cereals– Net exporter of rice, wheat– Net importer of maize

• Animal Products– Net importer of beef, pork, poultry, sheepmeat,

dairy products

• Feed– Large net importer of soya beans

A World of FTAsThe “New Normal”?

• Conventional Wisdom– WTO the only effective venue for liberalising and facilitating

agricultural trade

• Today’s Reality– WTO paralysed– FTAs in practice the main vehicle for international agreements to

liberalise trade – “by default”– APEC Region

• “Noodle Bowl” of Bilateral FTAs• Plurilaterals: “ASEAN-Plus”• Proposed Region-wide trade agreements: EAFTA, CEPEA, TPP

• How effective are FTAs in liberalising agricultural trade?– Example: Cereals

FTA’s and the Imperatives of Modern Agricultural Trade

• “21st Century” / “next generation” trade issues are critically import for trade in food as in other products

• To be relevant, FTAs must address these issues in food trade as well as other trade

But

• Declaring victory over tariffs and other formal barriers is premature

• Barriers to trade in food remain extensive and pervasive– and often explicitly designed to be prohibitive

the “traditional business” remains relevant and important for trade in food

Average agricultural tariffs are still high(….. and peak tariffs are even higher)

e.g. evidence from 2011 WTO/IDE-JETRO Study

FTAs and Food TradeStrengths and Weaknesses

• FTAs directly address applied tariffs– typically reducing them to zero over time

But

• Scope for exclusions may be concentrated in agriculture• TRQs and SSG measures widely used– may be viewed as trade facilitative in some circumstances

• Variable record in addressing regulatory issues e.g. SPS• “Next generation” issues only now beginning to be

addressed

FTAs and Trade in CerealsOutline

• Production, Consumption, Trade Trends– Rice– Wheat– Maize

How reliable/timely is the data?

• Agreement-by-agreement analysis of individual economy commitments for HS Chapter 10– FTA Tariff Elimination Profiles

• Overview of Results– commitments often cautious and partial– almost no liberalisation in some cases

Analysis of HS Chapter 10 CommitmentsBy Agreement By Economy

Key to Agreements/Economies

Examples of Alternative Approach:Analysis of Agreements by Chapter

Key to HS Chapters• 2 (meat), • 3 (fish)• 4 (dairy)• 7 (vegetables)• 8 (fruit)• 10 (cereals)• 11 (milled products)• 12 (oilseeds)• 15 (fats and oils)• 16 (meat preparations)• 17 (sugar)• 19 (cereal preparations)• 20 (fruit and vegetables preparations)• 21 (misc preparations)

Summary

• Cereals– stepped tariff elimination or reduction in cereals in

some FTA commitments• time profile varies – action often delayed

– “no change” also common• reflecting markets already open or remaining closed

• Samples indicate varying effectiveness of FTAs in opening food markets– some instances of comprehensive liberalisation– evidence of concentration of product exclusions on

food chapters also widespread but not universal