RESEARCH AND ANALYSIS

How can Trade Contribute to Food Security?

Clemens Boonekamp, Trade Policy Advisor and Maria Perez-Esteve, WTO Secretariat

 
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Food security is a key international issue that gives rise to keen debate. It refers to the availability of food and one’s access to it. It is a political and indeed moral imperative. In order to ensure lasting food security, a range of different policies must be brought to bear, including in relation to trade.

In our system of Westphalian nation states the responsibility for achieving food security rests at the national level. Governments are sovereign, free to implement policies they consider essential to ensure food security for their people, while fully complying with their international obligations, including coming to the rescue of those in need.

One of the policy choices, supported by many, is food self-sufficiency. Even if possible, the self-sufficiency objective is questionable, given that such a policy choice would in all likelihood have a negative impact on national income, and reduce purchasing power, which could in turn compromise, food security.

What other options could then be considered? Trade is an essential element in achieving food security but trade alone will not guarantee food security. Rather trade is a tool, a necessary part of a comprehensive policy package to achieve food security. Accompanying policies, such as, irrigation policies, nutrition policies, access to fertilizers and credit, and other policies, including sound macro and development strategies, are also key.

Trade can be thought of as a means of connecting “those that have plenty of food with those that do not have enough“. Food security in that context is supported by stabilizing our interconnectedness. In this the World Trade Organization (WTO) has a crucial role to play. In this context the Uruguay Round Agreement on Agriculture (AoA) was a landmark achievement. It initiated a reform process, aimed at a more equitable, efficient agricultural trading system through specific commitments to reduce protection in the areas of domestic support, export subsidies and market access and through the establishment of more operationally effective GATT rules and disciplines. It was careful to ensure that non — or minimal trade distortive support remained available (the Green Box) and, importantly, that for developing countries agricultural and rural assistance measures that are integral to development strategies were exempt from commitments. In other words, policy space was retained.

Implementation of the AoA improves the production and investment environment, guiding resources into more productive uses, both within agriculture and economy wide — an essential element of food security. Moreover, the AoA — and indeed the WTO as a whole — has acted as a safeguard against the tempting introduction of protectionist measures in the present difficult economic climate.

But the present Agreement is not perfect. It needs to be improved; the system has to be made more equitable. Thus, the on-going WTO negotiations on agriculture, particularly in the context of the Doha Round, seek significant reductions, especially by developed countries, in trade distorting support, very much improved market access conditions and the elimination of export subsidies. Implementation of these measures would enable many in the developing world to better benefit from their comparative advantage in agriculture. Negotiations also remain very mindful of the development aspects of trade, and the required flexibilities for developing countries to implement their chosen food security policies.

The WTO negotiations also include a planned agreement on trade facilitation. “Aid for Trade”, constitutes another effort to lessen supply constraints facing developing countries. These measures should also impact positively on food security. Thus, a successful conclusion of the Doha Round could make a positive contribution to the development of food security.

But is a successful conclusion of the Doha Round likely? After ten years of negotiations, four ministerial conferences, thousands of pages of negotiating texts, and several near collapses, the Doha Round is at an impasse. The Doha impasse carries costs not only in relation to food security but also in terms of economic growth, jobs, poverty reduction and business confidence.

While the opening of markets produces benefits for many, it also creates adjustment costs which cannot be ignored. According to a 2009 study by the International Food Policy Research Institute and the World Bank, the estimated benefits of a Doha Round agreement include global-income gains of up to $160 billion per year from market opening. A 2010 study by the Peterson Institute for International Economics estimates both income and trade gains in the $300 billion range.  A successful conclusion of the Doha Round would amount to a global stimulus package of no less than $300 billion. How can progress be achieved?

The rise of emerging economies and the relative decline of traditional economic powers have created tension. This has prevented the Doha Round from moving forward. Until a new equilibrium in global leadership and international co-operation emerges, progress on the multilateral trade agenda will remain difficult. But this problem of fractured leadership is not just about trade. The same is true for macroeconomic coordination, financial regulation and climate change. Nations are struggling to define and implement agreements where international co-operation is at a premium. In the WTO, the growing role of emerging economies, together with more assertive developing country coalitions, have changed the dynamics and configuration of the Doha Round negotiations. The economy of China, for example, is more than twice the size today than it was a decade ago at the outset of the Doha Round. Progress will only be made if WTO Members deliver a political response to the stalemate. Leaders now need to agree upon a fair distribution of rights and obligations within the trading system among WTO Members at different levels of development. They need to balance demands upon the larger emerging economies with an understanding of the developmental challenges that these countries still face, including widespread poverty.