Food Price and Trade Policy Biases - The Oxford Topic of Food, Politics, and Society - page 374

sector in particular, notwithstanding the political sensitivities involved. There are more
direct, and hence more efficient, domestic policy instruments than trade policies for
meeting governments' Millennium Development Goals of poverty, malnutrition, and
hunger, but generally they are more of a net drain on treasury finances. This is particu-
larly true for governments of low-income countries, which still rely heavily on trade tax
revenue. One solution for this is to expand aid-for-trade funding as part of official devel-
opment assistance programs (Hoekman and Wilson 2010). Another is to make (more)
use of value added or consumption taxation measures.
Third, most of the national case studies show that domestic reform on its own can
be a way of reducing poverty and inequality. This suggests that developing countries
should not hold back on domestic reforms while negotiations in the World Trade
Organization's Doha Round and other international forums continue. It also suggests
that from a poverty alleviating perspective, developing countries have little to gain, and
potentially much to lose, from negotiating exemptions or delays in national reforms in
the framework of WTO multilateral agreements.
Most commentators believe that Asia's developing economies will keep growing rap-
idly in the foreseeable future, provided they remain open and continue to practice good
macroeconomic governance. Their growth is expected to be more rapid in manufacturing
and service activities than in agriculture. In the more densely populated economies of the
region, the growth in labor-intensive and manufactured component exports will be accom-
panied by rapid increases in the per capita incomes of low-skilled workers (Baldwin 2011).
Agricultural comparative advantage is thus likely to decline in these economies (Anderson
and Strutt 2012). Whether these economies become more dependent on imports of farm
products, however, depends on what happens to their RRAs. The first wave of Asian indus-
trializers (Japan, and then Korea and Taiwan) chose to slow the growth of food import
dependence by raising their NRA for agriculture even as they were bringing down their
NRA for nonfarm tradables, so that their RRA became increasingly above the neutral zero
level. A key question is: Will later industrializers follow suit, given the past close association
of RRAs with rising per capita income and falling agricultural comparative advantage?
The progress of lower-income countries relative to first industrializers can be found
by mapping the RRAs for Japan, Korea, and Taiwan against real per capita income, and
superimposing a graph of the RRAs for lower-income economies onto this. Figure 14.9
does this, and it shows that the RRA trends for China and India (and ASEAN countries to
a lesser extent) over the past three decades are similar to those of richer Northeast Asian
countries. True, the earlier industrializers were not bound under GATT to not raise their
agricultural protection, but the WTO legal bindings on China, India, and ASEAN also
are unlikely to constrain the governments very much in the next decade or two. One can
only hope that China and South and Southeast Asia will not make use of the legal wiggle
room they have allowed themselves in their WTO bindings and follow Japan, Korea, and
Taiwan into high agricultural protection. If they do, Anderson and Nelgen (2011) esti-
mate that the future cost of agricultural protection policies will rise substantially.
A much more efficient and equitable strategy would be to instead treat agriculture in
the same way many developing countries have been treating nonfarm tradable sectors
in recent decades. That would involve opening the sector to international competition