What Is The Level Of Agricultural Protectionism In The Developed World And Why Does It Occur - Essay Example

2.a) What is the level of agricultural protectionism in the developed world and why does it occur Agricultural protectionism is known to worsen the global poverty by imposing high import tariffs for small or developing countries. High tariffs are imposed to protect one country from too much importing. Avoiding too much importing will protect the countries, especially developed, to lose the balance of trade as well as local businesses in their country. It protects its countries local industries to decline. According to Hussein Haeri, 'Agricultural protectionism' in the European Union takes many guises, such as "domestic support policies, import barriers, and export subsidies,3" to name a few measures. In fact, the European Common Agricultural Policy accounts for almost half of the European Union's budget. This results in significant distortions in both European and international agricultural markets. (Haeri, 2001) In the event of educating the poorer countries with regards to the benefits of 'free trade' the EU adopts and formulated policies, which restrain the trading of agricultural products freely or at a lower tariff. While the rich gets richer and the poor gets poorer, some rich countries are hiding in disguises. Agricultural protectionism occurs because when tariff levels are low, the productivity of the farms of the developed countries will be low. It is not difficult to see why price supports for dairy, sugar, peanuts, tobacco, and other U.S. farm products have led to protectionist policies. In recent years, for example, domestic prices of U.S. dairy products frequently have been two to three times world prices. The case of sugar, for which domestic price in mid-1986 was about four times world price, is even more dramatic. Without rigid import controls, consumers would undermine domestic price support programs by substituting lower priced imports for price-supported products including sugar, butter, cheese, and peanuts. (Pasour, n.d) 2.b) What form does it take and effect does it have. Agricultural protectionism comes in discreet forms. They over ride in domestic support policies, import barriers, and export subsidies. The effects of agricultural protectionism are: Farmers and other workers are not permitted to do their activities such as farming, etc. It is their field and because of agricultural protectionism, they are not allowed to do their job of which they are most productive. If farmers and other workers can't do their forte, they cannot gain enough income and benefits, thus they became poor. Billions of dollars of taxpayer subsidies are paid to U.S, European and Japanese farmers which depress world prices and make it tougher for our farmers to earn a decent return for their hard work," Mr Vaile said. (Vaile, 2005) The high global cost of goods deprives the poor ones to buy enough for their living. Commercialize agricultural goods that are not usually good for the health. Flooding of their (developing countries) domestic market (import surges) with products sold on the world market at less than their cost of production. (n.d) Displacement of local trading capacity which was intended to, and in some circumstances initially did, fill the void left following the deregulation of local markets and associated dismantling of parastatals. (n.d) Worsen the global poverty by imposing high import tariffs for small or developing countries, so instead of pulling up those developing countries, many of which have dived down to poverty due to these factors. Increased tradeproblems, tensions and job losses. For sugar, the deterioration of economic conditions which initially curtailed imports into major Asian markets has also led to a substantial drop in imports into the Russian. (FAO, n.d) Tight supplies in the vegetable oil market, particularly emanating from a drought-induced contraction in palm oil availability from major Asian producing countries, boosted prices, while oilmeal prices suffered from a decline in the demand for animal feeds in crisis-affected regions, accentuated by abundant supplies of competing feed grains. (FAO, n.d) 2.c) Illustrate the effects, using diagrams, of this protectionism on developed countries. One of the effects of Agricultural Protectionism in developed countries is the protection of standard of products and sanitary restrictions of their countries. One example is to protect their country from the wide spread of bird disease such as bird flu. Thus, while fading fears of consuming beef, pork and poultry meat contaminated by BSE and e-coli, foot-and-mouth disease and avian flu, respectively, led to a modest recovery in demand in a number of countries, the loss in purchasing power in crisis-affected countries had the opposite effect, despite financial incentives granted by major exporting countries. (FAO, n.d) Common Agricultural Policy of Europe and agro-subsidies of United States of America developed policies which are incorporated with measures which works by maintaining commodity price levels within the EU and USA and by securing production. Illustration 2: Common Agricultural Policy (Wikipedia, the free encyclopedia) The secured productions are giving the developed countries the confidence to reject other deals which was seen as uncomplimentary to other non developed countries, thus, for developed countries, their productivity is protected solely intended for their country. The agricultural protectionism also protects and maintains the credibility of products of the developed countries. Illustrate the effects, using diagrams, of this protectionism on developed countries. Table 1 showed the direct, indirect and total nominal protection rates by region 1960-1984 (percent). An illustration of the conditions under which developing country producers operated, pre-structural adjustment. Region Indirect protection Direct protection Total protection Direct protection of importables Direct protection of exportables Asia1 -22.9 -2.5 -25.2 22.4 -14.6 Latin America2 -21.3 -6.4 -27.8 13.2 -6.4 Mediterranean3 -18.9 -6.4 -25.2 3.2 -11.8 Sub-Saharan Africa4 -28.6 -23.0 -51.6 17.6 -20.5 Asia region includes Republic of Korea, Malaysia, Pakistan, Philippines, Sri Lanka and Thailand. Latin America region includes Argentina, Brazil, Chile, Colombia, Dominican Republic. Mediterranean Region includes countries of Egypt, Morocco, Portugal, Turkey. Sub-Saharan Africa includes Cte d'Ivoire, Ghana, Zambia. Source: Table 1-2, p. 11, Krueger, A., Schiff, M. & Valds, A.. 1991. The Political Economy of Agricultural Pricing Policy. Volume 1. A World Bank Comparative Study. Johns Hopkins Press, Baltimore. ( FAO corporate Government Repository) Importable goods are commonly found in these developing countries and of which there is an overvaluation of the exchange rate and industrial protection. The negative impact on indirect taxation is much greater than the over all direct taxation of all regions stated above. Total net taxation of agriculture was greater than 25 percent of the value of production in all regions, and exceeded 50 percent in the SSA countries. (n.d) 2.d) What did the Doha Development Round set out to achieve and how far has it got The Doha Development Round aims to improve the agricultural market access, internal and export aids. It also aims to give a special treatment for developing countries as well as give a market access for non-agricultural products. Aside from that, Doha Development Round aims to liberalise the trade in services and focus on Singapore issues with regards to trade facilitation, investments, government procurement contracts, conditions governing competition. The agenda also includes new trade talks; an action program to resolve developing countries' complaints about the implementation of Uruguay Round agreements; and, in a major breakthrough, an accord on TRIPS ensuring that patent protection does not block developing countries' access to affordable medicines. The conference also paved the way for China and Taiwan Province of China to get full membership in the WTO. (Mc Guirk, 2002) So far, since the beginning of the World Trade Organization, the 4th WTO Ministerial Conference held in Doha (Qatar) in 2001 which formulated the DOHA Development Round has the greatest achievement. The trade has helped bridge many of the small and big markets that made them key players in the worlds' trading industry. Some countries have increased their exports of which, 40 % goes to other developing countries. 2.e) Bearing in mind all the information in 1-3, what is the next step forward for the Doha Development Round - not only the official version, but what do you think should be done Faizel stressed a three different treatment for developing countries. First, is the taking off of the anti-development misrepresentations should be the main focus of Doha Development Agenda. Although developing countries cannot be expected to pay for this highly recommended change in agriculture, the high tariffs are not realistic to the economic development level of a developing country. Second, provision of a well developed or heightened exporting process and equipment is encouraged. Through this, developing countries will have an exposure on the high-end markets of industrial countries. Third, Doha Development Agenda short term goals are not applicable to all developing countries. Due to the markets latest innovations, improvements, and upgrading, the weak countries will have no ability to cope up with, or compete with the latest technology and export qualities. These vulnerable countries should be trained to be more ambitious in developing their products. Trainings and plant tours can be sponsored for them. The commitment of the developed countries is also significant in providing free access to those less developed countries, provided that they too are encouraged to do the same. References: Haeri, Hussei, (2001) Agricultural protectionism in the European Union. Industry and Economy [online] Available from: http://www.pakistaneconomist.com/issue2001/issue20/i&e3.htm [ April 21, 2006] Mc Guirk, Anne (2002) The DOHA Development Agenda. Finance and Development [online] Available from: http://www.imf.org/external/pubs/ft/fandd/2002/09/mcguirk.htm [April 22, 2006] Pasour, E.C. Jr (n.d.) Protectionism and Agricultural Price Supports. Liberty Haven [online] Available from: http://www.libertyhaven.com/theoreticalorphilosophicalissues/protectionismpopulismandinterventionism/protecagricultural.shtml [April 22, 2006] Vaile, Mark (March 16, 2005). Vaile Supports NFF Campaign to End Agricultural Protectionism. Commonwealth of Australia [online] Available from: http://www.trademinister.gov.au/releases/2005/mvt020_05.html [April 22, 2006] Economic and Social Department. Trade Reforms and Food Security. [online] Available from: http://www.fao.org/documents/show_cdr.aspurl_file=/DOCREP/005/Y4671E/y4671e0b.htm [April 21, 2006] Committee on Commodity Problems. FAO [ online] Available from: http://www.fao.org/UNFAO/bodies/ccp/Ccp62/X0315E.htm (2006) Common Agricultural Policy, Wikipedia, the free enciclopedia [online] Available from: http://en.wikipedia.org/wiki/Common_Agricultural_Policy [ April 18, 2006] Read More