Agriculture trade policy measures and geopolitics in major regional trading blocs: Policy advocacy

• Published date: 01 May 2021
• Author: Madiga Bala Dastagiri,Padigapati Venkata Naga Sindhuja
• Date: 01 May 2021
• DOI: http://doi.org/10.1002/wfp2.12024

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wileyonlinelibrary.com/journal/wfp2 World Food Policy. 2021;7:62–81.

© 2021 Policy Studies Organization

Received: 6 June 2020

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Revised: 24 January 2021

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Accepted: 3 March 2021

DOI: 10.1002/wfp2.12024

RESEARCH ARTICLE

Agriculture trade policy measures and geopolitics in

major regional trading blocs: Policy advocacy

MadigaBala Dastagiri

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Padigapati VenkataNaga Sindhuja

ICAR- National Academy of Agricultural

Research Management, Rajendranagar,

Hyderabad, India

Correspondence

Madiga Bala Dastagiri, ICAR-

National Academy of Agricultural

Research Management, Rajendranagar,

Hyderabad- 500030, India.

Email: dgiri_mb@yahoo.co.in

Abstract

Trading blocs are usually groups of countries in specific re-

gions that manage and endorse trade activities. The present

status of agricultural support, tariff, and non- tariff measures

of WTO members has critical issues for debate on trade

policy. The study is a quantitative analysis and framework

of geopolitical effects of WTO measures on the most sig-

nificant regional trading blocs and global agriculture. The

study found that the Association of Southeast Asian Nations

(ASEAN) trading blocs were highly supporting the agricul-

tural sector followed by South Asian Free Trade Area in

terms of total support estimates, whereas reverse trends in

terms of producer support estimates. North American Free

Trade Agreement imposed the highest number of sanitary

and phytosanitary measures, technical barriers to trade, anti-

dumping, countervailing, and special safeguards. However,

ASEAN trading bloc imposed more number of safeguards

and quantitative restrictions. European Free Trade Area and

Common Market of the South, South American Regional

Economic Organization trading blocs imposed higher tariff

rate quotas and export subsidies, respectively. India gave

more price advantage to domestic goods. The United States

and the European Union imposed higher tariffs on both

agriculture and non- agriculture sectors. Globally, most of

the countries' Agricultural Orientation Index (AOI) has less

than unity indicating not giving priority to agriculture in

budget allocation except for South Korea and Switzerland.

These findings will have significant impact on world trade

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BALA DASTAGIRI AnD nAGA SInDHUJA

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INTRODUCTION

Agricultural sector provides livelihood either directly or indirectly to a significant portion of the pop-

ulation of all developing countries (Zepeda,2020). Relative decline in the agricultural sector in grow-

ing economies is one of the most striking features of economic development. There was decline in the

share of global agricultural output from the United States while China, India, Brazil, and Indonesia

was rapidly increasing their share to global agricultural output (Alston & Philip,2014). Agricultural

trade provided an opportunity for alleviating poverty by creating jobs all around the world (UNCTAD

& International Labour Organization,2013). World Trade Organization rules on agriculture, the most

contentious issue in the international political economy due to the importance of agriculture in the

production of tradable commodities as well as economic development and food security in developing

countries. Opening of trade led to improve global welfare and reduce inequality, poverty, malnutrition,

and hunger (Anderson,2010). At present, developing countries accounted 37% of agricultural trade

(FAO, 2013). The European Union (EU) market continued to be open largely for non- agricultural

products except for textiles (WTO, 2017).

Tariffs remained a feature of trading under WTO rules (Margulis,2008). Every WTO member has

a list of tariffs (taxes on imports of goods) and quotas (limits on the number of goods) that they apply

to other countries. Agriculture stayed to enjoy the protection of high tariffs, especially on cereals,

meat, dairy and poultry, sugar, and tobacco in the world (WTO, 2017). Over 6years, developed coun-

tries were required to eliminate tariffs on an average of 36% in equal steps. While developing countries

are required to eliminate tariffs on an average of 24% over 10years (Joseph, 2020). ASEAN member

countries had resolved to work on the elimination of non- tariff bar riers (Yan etal.,2016).

Regional trade blocs are a detriment to the continued expansion of globalization (Gordon &

Venkataramany,2006). Trading blocs are usually groups of countries in specific regions that manage

and endorse trade activities. Trading blocs lead to the liberalization of trade. Improvements in the

trade policy of agriculture especially the role of regional trade agreements need to create a fair and

market- oriented trading system for agriculture (FAO,2020). WTO permits the existence of trading

blocs, specified that they result in lower protection against outside countries than existed before the

creation of the trading bloc.

The most significant trading blocs currently are as follows:

European Union— a customs union, a single market and now with a single currency, European

Free Trade Area (EFTA), North American Free Trade Agreement (NAFTA) between the United

States, Canada, and Mexico, MERCOSUR— a customs union between Brazil, Argentina, Uruguay,

Paraguay, and Venezuela, Association of Southeast Asian Nations (ASEAN), Common Market of

Eastern and Southern Africa (COMESA), South Asian Free Trade Area (SAFTA) created with

countries such as India and Pakistan in 2006 and Pacific Alliance (PA): a regional trade agree-

ment between Chile, Colombia, Mexico, and Peru, 2013. United Nations Conference on Trade and

Development (UNCTAD) (2003) concluded that agriculture had been customarily benefited from

negotiations, world trading rules, designing WTO agree-

ments or policies or programs, multilateral agreements.

KEYWORDS

regional trading blocs and trade policies, WTO