The performance of developing country economies in light of the liberalization reforms of the 1980s and 1990s, and especially the impact of these measures on food security and poverty, are being widely debated today in the context of the ongoing WTO agricultural negotiations under the Doha Development Agenda, and the challenges inherent in meeting the Millennium Development Goals. It is in this context that a High-Level Round Table was organized by FAO to coincide with the 65th Session of the Committee on Commodity Problems (CCP) and the 19th Session of the Committee on Agriculture (COAG). The Round Table provided a forum for discussing these issues and sharing experiences related to the process of agricultural trade liberalization and its impact on food security and poverty.
The High Level Round Table was organized in two parts, opening statements by the Director General of FAO and a panel of invited speakers, and statements by delegations participating in the meeting. Opening statements were made by the Chair of the Session, the Honourable Mallam Adamu Bello, Federal Minister of Agriculture and Rural Development, Federal Republic of Nigeria on behalf of the President of Nigeria, by Dr Jacques Diouf, Director General of FAO, by Dr Supachai Panitchpakdi, Director General of WTO, by His Excellency Sultan Bin Hassan Al Dhabet Al Dosari, Minister of Municipal Affairs and Agriculture, State of Qatar on behalf of the Prime Minister of Qatar, and by Mr Ivan Demchak, First Deputy Minister of Agricultural Policy, Ukraine. There were also statements by 17 delegations.
FAO prepared a brief background document on the following three key questions that touch on the most controversial aspects of the ongoing policy debate.
The opening statements addressed the importance of trade to food security suggesting that past as well as present experience show that food security is best achieved in an economically integrated and politically interdependent world. In such a world, the burdens of short-term fluctuations and long-run structural change are reduced as deficits in food production in one region or country can be covered by imports, i.e. the use of surpluses from other countries or regions. Global stability and peace was cited as essential to achieving food security, and stable trading relationships were presented as being vital for both food security and global security.
Although there seems to be broad agreement that trade liberalization fosters efficiency and economic growth in the longer run, the immediate results for the poor and food insecure are mixed and it is this that seems to contribute to disagreement about the effects of further trade reforms.
Given that global supplies are sufficient to meet global needs, it was recalled that hunger and malnutrition result more from inadequate incomes than from inadequate food supplies. The Rome Declaration and Plan of Action of the World Food Summit indicated that trade is one of the factors determining food security, as it can stimulate the economic growth that increases incomes and provides access to food through imports.
The negative immediate effects that the poor might face as a result of trade policy reforms were recognized as needing particular attention. However, the appropriate response recommended was not to abandon trade or the reform process per se, but rather to implement reforms in a planned manner, recognizing that there is no one policy set that will be appropriate in all contexts, and that in some cases it might be appropriate to provide support to alleviate the hardships of the poor. The experience of China and India was pointed to as countries where opening of their economies and introducing economic reform policies led to reduced poverty and increased food security. It was also pointed out that these countries had put in place, before opening their economies, the necessary policies to ensure the development of strong institutions and markets to enable them to benefit from greater openness.
Food security is very important for collective security, i.e. for peace. Conversely, peace and good governance are prerequisites to achieving food security and this should be more clearly recognized. Moreover, food security will not be achieved through trade liberalization only, but requires a shared purpose and collective will to solve related adjustment problems. FAO’s work on the Right to Food was cited as an important dimension of the efforts to increase food security and it was suggested that it should be better integrated into all of the work of the institution.
In terms of the three specific questions of the debate, views expressed reflected the tension that exists between pursuing the longer term goal of a more open trading system to which most aspire, and the shorter term negative impacts on poverty, rural development and food security that greater openness can cause:
1. Under which circumstances can protection of the agricultural sector be justified to enhance and ultimately ensure food security?
Given the importance of the agriculture sector to economic development and food security in many countries, it was suggested that protective measures could be required for a range of reasons and that different levels and forms of protection would be appropriate at different levels of development.
Arguments brought forward for protection included:
2. Does agricultural trade liberalization threaten food security and the goal of reducing rural poverty?
Again, views expressed differed in the extent to which trade liberalization should be seen as a threat or opportunity. Some delegates replied to this question suggesting that trade liberalization was not a threat, but rather an opportunity, for the following reasons:
By contrast, other participants stated that trade liberalization was indeed a threat, arguing that SDT and related measures may not be sufficient to guard against potential negative impacts of trade liberalization. Arguments for this position included the following:
Generally, there was wide consensus that trade liberalization creates both opportunities and challenges and has winners and losers. It is important to recognize this. Appropriate phasing of reforms is critical to ensuring that countries don’t prematurely expose their agriculture sectors to greater competition without adequate institutional mechanisms to safeguard against potentially negative impacts. Trade liberalization is not a development strategy by itself and the impact of increased competition should be addressed, especially when it has a negative effect on local production which is well documented.
When the process of trade liberalization begins, in some circumstances, compensatory policies should be in place to accommodate the transition of the losers to more viable and sustainable situations, especially focusing on vulnerable groups within countries.
Vulnerability to crises is more apparent in countries at lower levels of development, where it may be difficult to manage the threats from greater openness.
Trade reform per se is not the real issue, rather the issue is under what circumstances it is appropriate, and how better it can be managed in order to achieve national objectives, including food security.
3.Which national policies are appropriate to ensure food security during the transition towards freer agricultural trade?
It was agreed that no one policy fits all, and the importance of domestic policy reform and institution strengthening to ensure an enabling environment was stressed. Experience shows that appropriate liberalization policies depend on specific contexts and situations. The most important aspects mentioned in this context included the following:
There was considerable convergence on the following issues–
Further analysis is required to understand and present the evidence on a
range of questions related to the above issues –
1. Regarding the justification of protection :
2. Regarding the possible threat to food security resulting from trade liberalization:
3. Regarding the choice of appropriate policies