FAO tells WTO meeting that trade liberalization can promote food security
Poorer farmers need a level playing field, better infrastructure and increased productivity
15 December 2005, Hong Kong - “Agricultural trade and trade liberalization can unlock the potential of the food and agriculture sector to stimulate economic growth and promote food security,” FAO today told Trade Ministers and delegates at the World Trade Organization meeting in Hong Kong.
“Agricultural growth and greater trade prospects have the potential to contribute significantly to improve food security and promote wider economic growth in poor countries,” the Organization said. However FAO warned: “The gains from freer trade are neither automatic nor universal.”
In his statement to the 6th WTO Ministerial Conference, FAO Assistant Director-General Hartwig de Haen said: “Despite progress in trade liberalization, markets in agricultural products are still characterized by trade barriers and trade distorting subsidies. The same is true for international trade in fish and fish products.”
Making the situation worse for many developing countries, according to de Haen is the fact that higher value processed products “are often subject to even higher barriers, to the detriment of income and employment generation of developing countries.”
FAO called for multilateral trade rules to be crafted in a way that is conducive to development and food security. “Poorer countries will need assistance to overcome problems that limit their ability to take advantage of improved trading opportunities.”
De Haen added that a freer global agricultural trade regime could lead to increased prices for agricultural commodities that are presently highly protected, including basic foodstuffs. If passed on to domestic markets, this will benefit farmers in countries that do not subsidize their agriculture and provide incentives for investment. However, FAO warned: “Developing countries differ widely in terms of economic structure and the capacity they have to respond to market incentives.”
Some of the more advanced and competitive developing country exporters would benefit greatly from reduced protection in agriculture worldwide, according to FAO.
The less advanced developing countries will face greater obstacles to participating in the gains from reduced distortions in international markets. As agricultural exporters, many of the poorer developing countries already have significant duty and quota free access to developed country markets through reciprocal and non-reciprocal preferential trade arrangements. The erosion of these preferences may lead to decreases in their export revenues, unless they expand their volumes of exports or diversify into value-added and non-agricultural production.
FAO said that net food importing countries may face greater food import bills. As a result of tightened disciplines on export credits and on food aid, these countries could also lose access to facilities that lessen the cost of their food imports and many will need assistance during the adjustment period.
For such countries, increased food security will have to come primarily from improvements in productivity of local food crops, FAO said. Most of the required investment in infrastructure and research is non-trade distorting. In addition, FAO said these countries would need flexibility in using product-specific policies specifically directed to improving food and livelihood security and rural development.
According to FAO, freer agricultural trade will deliver global gains and contribute to reducing hunger and poverty. However, the benefits from trade would not be evenly distributed.
The less advanced developing countries are likely to gain less from trade and could even suffer losses, at least in the short run. For these countries, excessive opening of national agricultural markets to international competition, before domestic markets and infrastructure function adequately can undermine the potential stimulus to growth from the agricultural sector.
FAO recommends a twin-track approach to ensure that the poor and food insecure developing countries realize the potential of trade.
The fist track calls for increased investment in agriculture and rural areas in order to improve productivity and build competitiveness, especially in food production for domestic markets. Such investments have multiple payoffs, not the least of which is the increased capacity of developing countries to participate more effectively in the international economy.
The second track calls for safety nets to protect vulnerable groups from trade-related shocks and to allow the poor to take advantage of the economic opportunities arising from trade.
FAO called on member countries of the WTO to establish trade rules that contribute to the reduction of global hunger and malnutrition, while moving the world towards a fairer and more development-friendly agricultural trading system.
Information Officer, FAO
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