 Multilateral Trade Liberalization and Developing Countries: A North-South Perspective on Agriculture and Processing SectorsHans van Meijl and Frank van Tongeren No 330951, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Abstract: This paper assesses the impact of further trade liberalisation on prototypical groups of developing countries, with special attention to the linkages between trade and development of the agri-food sector. The findings of this paper are based on a new country classification approach which uses a combination of income- and trade criteria. We distinguish between developing countries whose producers compete with OECD producers in primary and/or processed agricultural products versus those countries that are not competing. We are also able to single out countries which are potentially able to develop their agricultural sector and those that will in all likelihood never be able to do so. In a second step, a quantitative study is conducted of the impact of further liberalisation on developing countries. Here, we are able to pinpoint diverging (and common) interests among (groups of ) developing countries, based on our novel country classification. The quantitative assessment uses the GTAP modelling framework as a tool, with a recent version (5.2 pre-release) of the GTAP database. Partial agricultural trade liberalisation is expected to generate positive economic effects in general. An important exception are the low-income exporters of primary agricultural commodities, which see a fall in net-exports as a result of stiffer competition their key markets. Extending liberalisation in trade alone to reforms of domestic agricultural policies in high income countries is not as advantageous to developing countries as often thought. While our findings support the widely held view that developing country importers are expected to face higher import prices, we also find that policy reform in high income countries may lead to production shifts away from currently supported crops towards other activities which compete directly and indirectly with developing country exports (e.g. sugar and horticultural products). Including trade liberalisation in agri-processing industries is expected to lead to significant gains for developing countries. Among other things, these gains are relatively high because the processing sectors in high income countries are even more protected by import barriers than primary agriculture. The partial elimination of tariff escalation avails improved trade opportunities to both current agri-processing exporters from developing countries and to developing country exporters of primary commodities. A comprehensive liberalisation that includes also textiles, manufacturing and services best enables economies to adjust their production structure to their comparative advantage. An important exception are some low-income agricultural exporters. The economic structure of these countries is heavily dependent on trade with a few high income countries in a selected set of commodities. With a global lowering of trade barriers the value of existing preferences is eroded and other, more efficient producers take over. Keywords: International Relations/Trade; International Development (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:330951 Access Statistics for this paper More papers in Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Contact information at EDIRC. |
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