Tim Josling ROA Panel Comments Tim Josling Stanford University.
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Transcript of Tim Josling ROA Panel Comments Tim Josling Stanford University.
Tim Josling
ROA Panel Comments
Tim Josling
Stanford University
Tim Josling
Introduction
• I am an “outsider” to the project
• I currently work on trade issues
• I am more familiar with domestic policies of developed countries
• I know only a few of the 11 countries in ROA
• But I am very pleased to be on the panel!
Tim Josling
OUTLINE
• Focus my remarks into two topics– How do these case studies fit in with notions
about policy reform in developed countries?– Where is the interface between the ROA study
and the regional and multilateral trade system?
Tim Josling
Dynamics of Policy Reform
• Students of policy reform have made use of the concept of a policy paradigm
• Paradigms are a bundle of policy ideas, beliefs about reality, aims and objectives, policy instruments, and associated interest group/political support
• Agricultural policy paradigms are useful “shorthand” for different policy situations
Tim Josling
(Over)simplify policy choices
• Agricultural Policy Paradigms– Set of ideas about the nature of agriculture– Consistent objectives for government action– Instruments designed to achieve objectives– Political base and pressure from interest groups– World market view– Trade policy objectives
• Paradigm is the policy plus its rationale
Tim Josling
Paradigms in ROA
• Six paradigms apparent– Agriculture Ignored– Agriculture Exploited– Agriculture Supported– Agriculture Liberalized– Agriculture as Public Good– Agriculture Retail-driven
Tim Josling
Table 1: The Nature of Agricultural “Problem” implied by each Paradigm Nature of Agricultural Problem
Ignored Agriculture not seen as a high priority sector
Exploited Agriculture is low productivity sector Substantial labor reserves available for
industrialization Low prices for urban consumers needed for
development Supported Low incomes chronic in agriculture
Not competitive with other sectors without assistance
Not competitive with other countries without protection
Liberalized Average or above average income levels in farming Competitive with other sectors for resources only if
costs are kept under control Competitive in world markets only with “level
playing field”?
Public-Good Incomes from farming inadequate for support of rural areas
Production of public goods under-rewarded
Retail-driven Farmers as part of supply chain, managing land and livestock resources
Consumer-driven (i.e.: top-down) sector implies focus on market opportunities, product differentiation
Incomes depend on bargaining power within chain, not just on costs
Tim Josling
Table 2: Policy Objectives implied by each of the Paradigms Policy Objective
Ignored No explicit objective
Exploited Extract surplus resources from agricultural sector Maintain low food prices in urban areas by
imports Focus investment in more productive (industrial)
sectors Supported Government needed to find markets
Protection from low-cost imports Supply control necessary to avoid surpluses
Liberalized Move towards free market Relax supply control Provide safety-net in times of price weakness
Public Good Preserve countryside for recreational value Keep family businesses viable Stimulate rural development top provide off-farm
jobs Retail-driven Establish quality, reputation, and process
attributes High food and worker safety standards Promote fairness in contractual relationships
Tim Josling
Table 3: Suggested Policy Instruments for each Paradigm Policy Instruments
Ignored No policy instruments
Exploited Fixed farm prices Parastatal Export marketing Domestic sales targets
Supported Border protection Surplus buying State trading enterprises for imports Export assistance
Liberalized Decoupled payments in transition Risk management Low safety-nets
Public Good Environmental subsidies Cross-compliance to enforce environmental
regulations Protection against “mono-functional”
agriculture
Retail-driven Harmonization of regulations and standards Competition enforcement Protection of intellectual property
Tim Josling
Table 4: Alternative world market paradigms implied by different views of agricultural policy
World Market Paradigm
Ignored Food aid available to make up any domestic shortfall
Exploited World markets able to provide for urban demand Export sector parastatals have preferential access
Supported World market unstable Prices depressed and no basis for domestic policy
Liberalized World market stable and reliable if domestic policies are reformed
World prices best guide for domestic policy
Public Good World market reflects “mono-functional” agriculture Prices inadequate for supply of public goods
Retail-driven “World market” is often intra-firm sales Instability and uncertainty created by government
intervention
Tim Josling
Table 5: Differences among trade policy objectives implied by the paradigms Trade Policy Aims
Ignored Maintain Food Aid
Exploited Low tariffs on imported staples Avoid foreign export restrictions Maintain preferred access for exports
Supported Avoid restrictive trade rules on market access Keep high level of protection where needed Avoid restraints on export subsidies
Liberalized Improve market access in other countries Remove competitor export subsidies Constrain domestic support in other markets
Public Good Moderate pressure on agricultural markets Allow subsidies for process attributes Allow subsidies for costs of meeting higher standards
Retail-driven Strengthen intellectual property rules Harmonize SPS and TBT rules Ensure competitive conditions
Tim Josling
Paradigms and Countries
• Many countries exhibit more than one paradigm
• Can vary by commodity, depending on structure, efficiency and trade patterns
• Can vary over time, depending on non-agricultural policy paradigms, macroeconomic conditions and external situation
Tim Josling
Dynamics?
• Is there a progression through the stages?
• Can one skip a stage?
• Can one go backwards?
• Are some stages precluded by conditions in non-farm sector?
• Are these stages a useful way to think about future scenarios?
Tim Josling
Supported Agriculture
Liberalized AgriculturePublic Good Agriculture
Retail-Driven Agriculture
Exploited Agriculture Ignored Agriculture
Tim Josling
Links to Trade System
• WTO and RTAs have a significant role to play in the development of agriculture
• Some RTAs restrict policy options (Mexico and NAFTA)
• WTO/URAA is a “Framework” for national policies, even if it has not yet driven policy in ROA countries
• WTO will become even more “restraining” in future
Tim Josling
Links between Paradigms and Trade Rules
• Uruguay Round featured the paradigm clash between Supported and Liberalized models
• Agreement on Agriculture paved the way for Liberalized Agriculture rules system
• Supported agriculture still survived as a result of high levels of border protection, export subsidies and domestic support
• TRIPS, GATS paved the way for Retail-driven Agriculture rules
Tim Josling
Links between Paradigms and Trade Rules, contd.
• Public-goods paradigm not addressed in UR, but included as “non-trade concerns” in Doha round
• Retail-driven paradigm rising on agenda: EU now pushing for the inclusion of Geographical Indications (GIs); GM issue before a panel, etc.
• Current Doha Round floundering as developing countries complain about supported paradigms in developed countries but wish to retain them for their own economies
Tim Josling
Links to Trade System
• Market Access– NAMA– Agric tariffs– TRQs– Safeguards– Special Products– Preferences
Tim Josling
Links to Trade System
• Export Competition– Subsidies– Food aid– Export credit– Single-desk sellers
Tim Josling
Links to Trade System
• Domestic Support– Article 6.2– Development box– Benefits of cap on all developed country
subsidies
Tim Josling
Links to Trade System
• SPS– Representation on standard setting agencies– Meeting developed country standards– Use of biotech
Tim Josling
Links to Trade System
• TRIPS– Biotech patents– Plant breeders rights– GIs for foodstuffs
Tim Josling
Links to Trade System
• GATS– Liberalisation of infrastructure services– Wholesale services– Movement of natural persons
Tim Josling
Links to Trade System
• Singapore Issues?– Transparency in Government Procurement– Trade and Competition– Trade and Investment– Trade Facilitation
• Linkage to agriculture much less direct
Tim Josling
Links to Trade System
• RTAs– Preferential market access– Constraints on export competition– Trade remedies– Dispute settlement processes– Improved investment conditions– But not much on subsidies – Labor migration within RTAs?