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#2: What are the impacts of policies on African producers (ex. cotton)? What are the recommendations for WTO?

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Soonho.Kim
#2: What are the impacts of policies on African producers (ex. cotton)? What are the recommendations for WTO?

Rethinking the WTO domestic support policies in a fast changing world: What rules are needed for Overall Trade- Distorting Domestic Support (OTDS)? 

What rules are needed for cotton domestic support? 

Fousseini Traore
Cotton policy

The impact of Developped countries contries subsidies on african producers has been well documented. The main impact is through world prices. According to models the impact of a complete suppression of subsidies would yield an increase in world price from 3 to 17%. The impact on african producers depends on many factors among which the market structure in those countries (there used to be monpsonies), the exchange rate evolution (US  Dollar versus local currency) and the ability to increase supply.

Now the EU and the US has changed their policies towards decoupled payments and those subsidies are expected to decline in the future. China is now the first country in terms of support of its cotton sector and also the main destination of african exports. China has also a protectionist policy in terms of trade barriers although it has promised to grant Duty free quota access to cotton from Least Developed Countries (LDCs).

Even if a large part of the domestic support could be seen as decoupled and fall into WTO green box, there are at least two channels through which they will affect production. First they may have a wealth effect and then pushing producers to take more risk. Second it may be seen as lowering any credit constraint producers may face. Finally the fact that the base years, areas are sometimes updated may yield producers to produce more today, expecting higher payments in the future. 

 

 

Sara.Gustafson
Recommendations

What are some recommendations for the WTO to address these issues? 

Wajid Pirzada
Imports and competitiveness

This comment was first posted on the FSN forum.

Impact of import surges on regional/national food security needs to be closely monitored and evidence-based informed policy choices be explored, to avail policy spaces including iner alia safeguards unde WTO Ageements. At the same time, poficiency in competitiveness needs to be developed, by investing/specialization  in areas of comparative advantage, diversification of production & trade base, and standards' economy.  Alongside these, value chain development & management and Sanitary & Phytosanitary (SPS) compliance can  help  leverage  both tading opportunities alongside attainment of food security and thus  SDGs.

Wajid Pirzada

Roots Pakistan

Eugenio Diaz-Bonilla
It is important to determine

It is important to determine whether the import increases (or surges) are the result of changing domestic production, or are caused by external events. A simple statistical causality analysis I did at the aggregate levels seems to indicate that it is the decline in domestic production which leads to more imports and not the reverse (see pages 28-29 in this discussion paper I prepared for FAO http://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/129861/filename/130072.pdf)

Emile Houngbo
export restrictions and regional integration

This comment was first posted on the FSN forum.

Agricultural trade and food security are two factors important for economic growth and development. They are concerned about public policy. That's why, through the 2014 Malabo Declaration, African governments made a specific and clear commitment to boosting intra-African trade in agricultural commodities and services, and to harnessing market and trade opportunities locally, regionally, and internationally. This is also why a place of choice has been given to the fight against hunger in the SDGs, especially the 2nd SDG, which aims to eliminate hunger, ensure food security, improve nutrition and promote sustainable agriculture. Unfortunately, the logic that governs agricultural trade is fundamentally different from that governing the achievement of food security for the population. While agricultural trade is governed by the economic rule of profit maximization, food security is governed by the social rule of justice and altruism for the production of sufficient human resources for development. It even happens that this contradiction of logic leads to what I called "perverse trade" in my article entitled “When Food Trade Threatens Food Security of Small Farmers in West Africa: the Perverse Food Trade”. This article is accessible on:

 https://www.researchgate.net/publication/318099303_When_Food_Trade_Threatens_Food_Security_of_Small_Farmers_in_West_Africa_the_Perverse_Food_Trade

This means that trade is not the right way to eradicate hunger by 2030 as the SDGs provide. Precise answers to the three questions of the discussion are provided below.

1. Do you think the provisions of the WTO Agreement on Agriculture (AoA) provide sufficient policy space for domestic support for countries in Africa? Why or why not?

The general approach of the Agreement on Agriculture with regard to domestic support is to allow unlimited support through policies. As far as I’m concerned, I think these provisions of the WTO Agreement on Agriculture (AoA) could provide surely sufficient policy space for domestic support for countries in Africa.  For, if properly applied, they can improve production, crop yield, product conservation and the limitation of food losses and waste. In short, they are provisions that will lead globally to abundant agricultural production. But, it should be emphasized that to be effective, the efforts must be centered on "staple crops". Effective promotion of the staple crops requires taking into account the different food systems at both national and intra-national levels in West Africa.

2. In your opinion, do export restrictions enhance or undermine food security in African countries? Should the WTO disciplines on export restrictions be stricter or allow greater flexibility?

Generally, export restrictions of agricultural products are not effective. Two reasons justify this phenomenon. First, export restrictions are never effective in the long run. They can only really be used in case of emergency to respond punctually to a random phenomenon that has negatively affected food availability (flood, drought, ...). The second reason is that trade is still essential for a proper distribution of agricultural products. As then, trade is a means of optimizing labor productivity among the countries in the West African sub-region. This is an economic theory already known and supported by the Economist David RICARDO; the theory of comparative advantage.   

3. What efforts can be made at the multilateral level, to complement regional integration efforts? In your opinion, are there some policy areas that are better addressed at the multilateral level, and others at the regional level?

Regional legal measures hardly succeed in West Africa. The success of decisions will not necessarily come from regional or multilateral measures, but from objective, realistic and inclusive national measures. For, corruption, language barriers, poor communication routes and poor physical security of people are often obstacles to compliance with regional legal provisions in Africa in general, and West Africa in particular.

Emile Houngbo

National University of Agriculture, Porto-Novo (UNA)Benin

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