1.0 Introduction
1.1 Background information
International Agricultural trade is the exchange of Agricultural goods and services between countries following an agreed policy guideline. This kind of trade gives rise to a world agricultural economy, in which prices of agricultural goods and services, or their supply and demand, are affected by global events. An Agricultural product that is sold to the international market is an export while an agricultural product which is bought from the international market is an import. The agricultural exports and Imports are financially explained in the country's current account in the balance of payments.
It is vital to note that International trade is majorly driven by three main global parties widely categorised as emerging economies, developed and developing countries. The emerging economies and developed nations being overly advantaged with finance, technology and policy framework while developing nations advantaged with resources. The major trading blocks from the developed countries are the major drivers in international agricultural trade since they dictate policy direction in the agricultural through agencies like the Food and Agriculture Organisation (FAO), International Finance for Agricultural Development (IFAD) and International Food and Agricultural Trade Policy Council. It is therefore apparent that international agricultural trade is shaped and will continue to be shaped by developed countries [ CITATION Ree10 \l 1033 ]. The developed nations are also source agencies, companies and organisation that do foreign trade and foreign direct investment (FDI) in emerging economies and developing countries come.
The movement of labour is the transit of skilled and unskilled persons from one place or one country to another. The movement of skilled and unskilled labour is not a new phenomenon, it goes back to the slave trade years where persons were captured to go and work in the sugar, tea and maize plantations in the North and South America. The major players in international trade, associated agencies and organisation developed treaties, policies, protocols and systems that guide and govern not only mobility of goods and services but also human resource. The set framework allows developed nations, emerging economies and developing nations to compete for their fair share of global trade and human resource.
Movements like Fair-trade, organize market-based and social movement that aim at helping producers in developing countries make better trading conditions and promote sustenance. The movement campaigns for higher social and environmental standards as well as for the payment of a higher price to producers.
1.11 Scope and Objective
The objective of this research paper is to examine the policies and policy framework that govern International Agricultural trade and movement of Labour. The research paper will have an in depth look at the major players widely categorised as from developed, emerging economies and developing nations and their role in promoting international agricultural trade and the critical trends in international agricultural trade. A great deal of discussion will centre on global agricultural production and demand in relation to world agencies regulating food trade like the World Trade Organisation.
2.0 Benefits of International agricultural trade
Several benefits can be accrued from international agricultural trade. International agricultural trade allows countries to expand the market for their agricultural goods and services that would have otherwise been limited to regions within their borders. It increases the option spectrum in goods and services. Agricultural trading in the global environment gives countries and consumers the opportunity to access agricultural goods and services not available in their own countries. This gives the client a variety from which to choose from. Generally almost every type of agricultural product can be accessed on the international market: foods, clothes, spare parts, oil, wine, and water. Agricultural services are also exchanged: banking, machinery, consulting and transportation. The trade in agricultural services brings to a country expertise and skills that may not be available within their borders. International agricultural trade culminate into competition which in turn drives down the prices of food all to the benefit of consumers. Finally international agricultural trade, like any other form of trade, enhances social interaction, cohesion and diversity[ CITATION Int07 \l 1033 ].
3.0 The Policy Frame work related to international Agricultural Trade.
A debate of agricultural trade policy should emanate from the understanding that for most nations, agricultural trade policy is an extrapolation of domestic agricultural policy particularly for Western Europe. The social and economic values that Western Europe has put on viable rural areas and family farm system, explain why agricultural policies were formulated with the goal of protecting farm incomes. Generally low cost producing countries (those with big farms, more advanced technology and favourable agricultural conditions) support pro-open market policy, because they can battle easily on the world market with nations that have expensive agricultural structure[ CITATION Int07 \l 1033 ].
Western European countries have maintained a domestic trade policy framework that protects their domestic farmers from external competition. These protectionism policies are driven by the perception that pauperisation of rural areas could occur because the farmers are unable to compete in a market flooded with cheaper imports. Countries with expensive agricultural structures are very much unwilling to liberalize their trade without necessary structural support. These countries use territorial measures such as elevated tariffs and levies to maintain home prices at some politically predictable levels above world prices thus protect their agricultural sector. Most countries also provide subsidies to their farmers thereby lower their cost of production so that they can compete favourably. Export subsidies are used to bridge the gap between the international market price and the higher domestic price if domestic production exceeded domestic demand. It is worth noting that in some countries there is a total ban on imports[ CITATION Int07 \l 2057 ].
On the opposite end of the spectrum there are countries that have adopted liberalization policies. Mainly these countries have a low cost of production therefore their products can compete with the imported products. The liberalisation policies are also predominant in countries that experience deficient food production thus they rely on international supply to ensure food security. The liberalization policies are also adopted in an attempt to encourage industrial development by availing raw materials.
4.0 Trends in agricultural production, demand and trade
Agricultural production has steadily increased, more than the world population growth by a broader margin since the 1960s. However, the growth has witnessed inter-regional discrepancies in which production has been slowing. It worth noting that there has been spatial distribution of global demand demographically. The global productivity of and demand for the major agricultural products have shown a decreasing growth trend. The production and consumption in the developing countries of the major agricultural products have been growing at rapid rates than in either the emerging economies or developed countries due to population explosion in the developing countries[ CITATION Cha01 \l 1033 ].
The emerging economies or economies in transition have witnessed contraction in consumption and production due to systemic changes causing economic dislocation. The demand in developing countries accelerated significantly while production growth rate lagged. Their overall consumption for main agricultural goods widened at a reducing rate. The developing nations were responsible for overall commodity demand growth because of rapid rate in population growth. The heightened responsiveness of demand for income, population growth and comparatively floating caput GDP steadily increased and raised their share in world production and consumption of almost all agricultural commodities. The South and East Asia have made considerable gains in production, doubling cereals production and increasing their global share of cereals. The Caribbean and Latin America also increased production to surpass the global average. They increased their global production share, consumption and trade for several commodities[ CITATION FAO99 \l 1033 ]. The Near East and North Africa made considerably little gains in exports (or production) of agricultural products, relative to the world totals. The sub-Saharan Africa has considerably failed in their global agricultural imports and exports, consumption and production share. At some point their production of livestock and cereals surpassed the global average, raising their production share of globally[ CITATION MRo01 \l 2057 ].
The major trends in agricultural food and agricultural trade relate to: the uneven growth over the past few decades and the important role of developing and developed countries. The dynamism in commodity composition and direction of agricultural trade underpinned by policy reforms like the Uruguay Round Agreement on Agriculture drove this unevenness. The volume of agricultural trade has grown by 75% since 1970 particularly for tropical and temperate zone products, and forestry and fishery products.
Manufacturing grew more rapid than agriculture and therefore average calculations could not give a clear growth trend in agricultural industry. High-income countries have put less emphasis on agricultural trade but it still remains an important source of foreign exchange for some like the United States, New Zealand, France and Australia. It is worth noting that one-third of global agricultural trade occurs in Western Europe. Asia is by far the major world importer, thanks to Common Agriculture Policy which has driven Pacific Rim and others to development and sustainability agriculture[ CITATION Han92 \l 2057 ].
The interplay of vertical diversification by level of processing (value addition) and horizontal diversification by product (many products from one raw material) has led to structural shift in commodity composition from bulk goods to value-added products. However several factors have conspired against the value addition process. These factors include ever escalating and fluctuating oil prices; increase in interest rates that led to global debt crisis, slow growth and recession in most developing nations and developed countries; price boom of commodities led to uneven expansion of agricultural trade. Agricultural trade led to substantial improvement in global house hold food security, the volatility in world prices were controlled under United Nations agencies and policy framework lead by Food and Agricultural Organisation of the United Nation[ CITATION FAO99 \l 2057 ].
5.0 Principles of trading system and global food trade
The WTO formulates and governs the policy framework for global trade; it defines general outcomes for this framework. To understand the role of WTO and the predecessor GATT (General Agreement on Trade and Tariff) with regard to international agricultural five principles are of particular importance.
Non-Discrimination principle has two major components; the national policy and the most favoured nation (MFN) rule. This principle requires that a country that is a member of WTO should not discriminate another member country but should favour it over a non-member country in the process of trade. A WTO member is required, under the MFN rule, to grant the most favourable conditions on any type of product or grant a special favour for that matter to every WTO member. The domestically produced and imported goods will be treated the same in terms of technical and security standards. These were formulated to tackle non-tariff barriers to trade[ CITATION Cha01 \p 111 \l 2057 ].
Reciprocity principle reflects both a longing to limit the scope of free-riding that may have arisen because of the MFN rule, and a clear desire to get better access to foreign markets. A connected indicator is that for a nation to negotiate, it is essential that the benefit from doing so be greater than the gain at disposal from universal liberalization; reciprocal compromise intend to ensure that such gains will materialise.
Enforcing and Binding commitments principle is where the tariff agreements made by WTO members in a multilateral trade deliberations and on accession are outlined in a schedule (list) of concessions. These schedules establish "the thresh hold": a nation may change its bindings, but only after discussing with its trading partners, which could mean paying off for loss of trade. If approval is not obtained, the complaining country may appeal to the WTO dispute resolution tribunal.
Transparency is another principle governing the WTO members, in which members are obliged to publish their trade regulations, to sustain institutions permitting for the review of governing decisions affecting trade, to follow up on requests for information by other partner, and to give notice on changes in domestic trade policies to the WTO. These transparency obligations are supplemented and facilitated by constant country-specific reports (reviews on trade policy) through the Trade Policy Review Mechanism (TPRM). The WTO system discourages use of quotas and other measures applied to limit on quantities of imports which ultimately improves predictability and stability[ CITATION Ree10 \l 1033 ].
In explicit circumstances, governments are able to restrict trade. The safety valves principle has three basic components: articles permitting for the use of trade measures to attain noneconomic objectives; articles intended at ensuring "fair competition"; and provisions allowing intervention in trade for economic reasons. Exemptions to the MFN principle also permit for preferential treatment of developed countries, customs unions and regional free trade areas[ CITATION Wor97 \l 2057 ].
6.0 Free trade Vs. Protectionism in international agricultural trade
International food trade has two divergent views regarding the level of control placed on agricultural commodities trade: protectionism and free food trade. Free trade is the simplest of the two policy framework: an approach called laissez-fair, with no imposed trade restrictions. The efficiency in production will be ensured by global factors of demand and supply. Therefore, the market forces will automatically promote or protect growth without government intervention. Protectionism on the other hand holds that regulation of international food trade is important to ensure sound market function. To guide market accordingly and reap from the benefits of international food trade, tariffs, quotas and subsidies are common protectionism structures applied.
7.0 The major players in international trade and movement of labour
The mother world trading agency is the WTO. In January 1995 the World Trade Organisation was officially started under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which was started in 1948. Regulation of Trade between participating countries and providing framework for negotiating and formalizing trade agreements is the major function of WTO.
The European Union is a major trading block comprising of countries in the continental Europe. Europe can further be divided into sub-blocks like East Europe, West Europe and Central Europe. United State of America and Canada can for special purposes be treated as a separate giant trading block. The US is the lead block in spearheading domestic and global policy framework regarding agricultural goods and services. The regulatory framework favour domestic agricultural production and export on one hand and selective liberalization and restricted importation on the other hand. The EU, US and Canada are mainly industrial giants thus major consumers of agricultural products and suppliers of agricultural machinery. Africa and South America comprise several trading blocks that mainly produce unprocessed agricultural commodities for the world market. Asia is another major trade block and player whose role in global trade in agriculture is indispensable.
9.0 The Doha development agenda
The Doha Development Agenda which was launched in 2001 was spearheaded by WTO to enhance equitable participation of poorer countries in global trade. The 4th WTO Ministerial meeting in 2001 witnessed persistent differences between the developing countries, the European Union and United states on major issues relating to trade. The issues touched significantly on trade remedies, services, non-tariff barriers, industry and agriculture. The success of the agenda meant that some Industries would face increased competition from imports while others would gain access to foreign markets in the developed world. The developed countries felt that the agenda would hurt their economy and citizenry while the developing countries felt that the agenda levelled the playing ground in trade. The stalemate put negotiators beyond the reach of concurrence under trade promotion authority (TPA) which expired in July 2007.
The parties have been attempting to make progress in the deliberations to extend TPA. The chairmen of the agriculture, rules and industrial negotiating groups drafted the texts during the second half of 2007. Agriculture and agricultural commodities have been at the centre of Doha Development Agenda. The United States is in favour of considerable reduction of trade-distorting domestic support; improved market access and elimination of export subsidies. The control of trade-distorting domestic support and accelerated change of the U.S. 2007 farm bill was anticipated at the round, but it has been frustrated by the stalemate. The United States has a highly influential position in shaping decisions in WTO being the biggest trading nation in the world.
Important to developing countries are multilateral negotiations, which might otherwise be left out of more selective agreements. It is worth to note that trade liberalization would also lead to job losses in addition to other economic disturbances. In conclusion, the trade in agricultural goods and services are at the centre of this deadlock. The exporters of agricultural bulk commodities disagree with countries with large number of subsistence farmers on precise condition and terms ‘special safeguard measure’ to protect producers from surging imports.
This deadlock led to the collapse of the Doha agenda.
10.0 Movement of Labour and international trade
There is an emerging Bilateralism which is outside the context of WTO. The Bilateral Labour Market Access Agreements (BLMAA) and Foreign Trade Agreement (FTAs) regulates policies guiding movement of labour and trade across countries. There are heightened discussions on temporary movement of workers from developing countries to developed countries. Permanent and temporary mobility and migration of labor serves as an important source of foreign exchange earnings for both the mother and destination countries. High profile discussions between developed countries and developing countries on temporary movement for workers (ANZ fruit pickers, US guest worker schemes, Canada) took place to ease movement of labour and enhance international trade. This movement of labour is vital in increasing agricultural productivity due to transfer of expertise.
11.0 Conclusion
International agricultural trade has a lot of benefits but is full of controversies especially with regards to fair trade. With the rich countries controlling the trade the poor countries are disadvantaged. The Doha agenda was convened by the WTO in an attempt to resolve these controversies and even the playing ground. Unfortunately the Doha agreement collapsed without accomplishing the intended purpose. Several trading blocks and agencies are involved in international agricultural trade with WTO playing a regulatory role. The policies governing international agricultural trade are either protectionism or free market based. Movement of labour facilitates trade by transferring skills from one place to another.
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