Agricultural trade policy & food security in the caribbean

Agricultural trade policy and food securityin the Caribbean

Structural issues, multilateral negotiations and competitiveness

COOPERAZIONEI T A L I A N AI N E A

Promoting CARICOM/CARIFORUM Food Security

FAO Trust Fund for Food Security and Food Safety – Italian Contribution

This book is largely a result of work implemented under the trade

policy component of the project “Promoting CARICOM/CARIFORUM

Food Security”. The financial contribution of the Italian Directorate

for International Cooperation to the FAO Trust Fund for Food Secu-

rity and Food Safety funded the project. Italy’s National Institute of

Agricultural Economics (INEA) was actively involved in capacity-

building activities under the trade policy component, particularly in

organizing and carrying out training in the areas of trade policy

analysis and negotiations and quality and safety requirements in

international trade and marketing. The book examines various

dimensions of trade policy and related issues of relevance to the

countries in the CARICOM/CARIFORUM region and presents policy

instruments to address trade and food security and rural develop-

ment linkages. It will serve as a useful guide and reference docu-

ment for agricultural trade policy analysts, trade negotiators,

policy-makers and planners in both the public and private sectors.

Agricultural trade policy and food security in the Caribbean

Structural issues, multilateral negotiations and com

petitivenessFA

O

Agricultural trade policy and food securityin the Caribbean

TC/M/A1146E/1/06.07/1500

ISBN 978-92-5-105747-6

9 7 8 9 2 5 1 0 5 7 4 7 6

TRADE AND MARKETS DIVISION

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONSRome, 2007

edited byJ.R. Deep FordCrescenzo dell’AquilaandPiero Conforti


Structural issues, multilateralnegotiations and competitiveness

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Contents

Preface xiiiForeword xvContributors xviiAcronymsandabbreviations xx

Introduction 1J.R.DeepFord,Crescenzodell’AquilaandPieroConforti

1. Tradepolicy,tradeandfoodsecurityintheCaribbean 7J.R.DeepFordandGreggRawlins

2. CaribbeancountriesassmallandvulnerableeconomiesintheWTO 41J.R.DeepFordandHansdeepKhaira

3. AgriculturaltariffpoliciesofCaribbeancountriesandWTOnegotiations 75HansdeepKhairaandJ.R.DeepFord

4. AddressingtradepreferencesandtheirerosionintheCaribbean 107PieroConfortiandJ.R.DeepFord

5. Specialproducts:developingcountryflexibilityintheWTODoharound 123J.R.DeepFordandHansdeepKhaira

6. Effectivespecialsafeguardmechanisms 157RameshSharma

7. SugartradeintheCaribbean 177PieroConfortiandJ.R.DeepFord

8. BananatradeintheCaribbean 191ClaudiusPreville

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9. RicetradeintheCaribbean 223ValentinaRaimondi,ArthurZalmijnandAlessandroOlper

10.Competitiveness,investmentandCaribbeanagriculture 243J.R.DeepFordandAndrewJaque

11.Accessingmarketopportunities:qualityandsafetystandards 263Crescenzodell’AquilaandDarioCaccamisi

12.Tradeandfoodsecuritypolicyanalysis:apracticalguide 289Crescenzodell’Aquila,PieroConforti,J.R.DeepFordandHansdeepKhaira

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Figures

1.1 Tradepolicy,tradeandfoodsecurity:linkages 10

1.2 Tradepolicy,tradeandfoodsecurity:twoviews 12

1.3 Caribbeanagriculturaltradetrends 23

2.1 Opennesstotrade:shareofagriculturaltrade(exports+imports)inagriculturalGDP(average2001–2003) 46

2.2 MainexportedcommoditiesoftheCaribbeancountries(average2000–2002) 48

2.3 ShareofimporttariffrevenuefromagricultureintotalagricultureGDP 52

2.4 Transportcosts(1990):averageCIF/FOBratios 53

3.1 Tariffoverhang(percentage)currentlyandafterapplyingproposedtariffcuts 92

5.1 Conceptualapproachtoidentificationofspecialproducts 127

6.1 Twoexamplesofpersistentlydepressedworldmarketprices(beefandrice) 159

6.2 Actualworldmarketpriceofrefinedsugaralongwithfourreferencesprices 164

6.3 Percentagetriggersandadditionaldutiesfor100%offsetduring2001–2004 167

6.4 Currentimportlevelsandvariousreferenceimports:thecaseofriceimportsforCameroon 168

8.1 WindwardIslandsbananaexportvolumes(1985–2005) 196

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8.2 WindwardIslandsbananaexportvalues(1985–2005) 198

8.3 GrowthofGDPandagricultureGDPinDominica 199

8.4 Dominicabananaexportindexandpercentageofagriculturalexports 200

8.5 GrowthratesofGDP,agricultureGDPandbananaGDPinSaintLucia 201

8.6 Indexoffoodimportsandshareoffoodintotalimports 204

8.7 SaintLucia’sfoodsecuritysituation(1994–2004) 205

8.8 Dominica’sindexoffoodimportsandshareoffoodintotalimports 206

8.9 Dominica’sfoodsecuritysituation(1990–2004) 207

9.1 LDCandACPcountriesinvolvedinEUtradepolicy 240

11.1 Qualitydimensionsandthesupplychain 266

12.1 Apartialequilibriumnettrademodel 309

12.2 Ageneralequilibriummodel 313

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Tables

1.1 Developingcountries:agriculturalexportsharesandnetagriculturaltrade 14

1.2 CARICOM–tradeopennessofmembercountries(average2001–2003) 14

1.3 Shareofagriculturalexportsintotalmerchandiseexports(percentage) 16

1.4 Topagriculturalexport(1),itspercentageintotalagriculturalexports(2),percentageofproductionexported(3),percentageshipped(4)tomainmarket(5) 16

1.5 Foodimportcapacityindicator(import/export) 17

1.6 Shareofagriculturalemploymentintotalemployment(2000) 18

1.7 Numberofundernourishedpeople(millions) 18

1.8 Prevalenceofundernourishmentintotalpopulation(percentage) 19

1.9 CerealsupplypercapitaintheCaribbean(kg) 20

1.10 Foodimports–selectedfoodgroups(kg/person/yr) 21

1.11 Importsasapercentageofdomesticsupplyofselectedfoodgroups 22

1.12 SummaryofagriculturaltariffstatisticsforCaribbeancountries 26

1.13 SummaryofCARICOMCETagricultureproductratesbyHSCode 27

1.14 SummaryofListA-itemsonwhichsuspensionoftheCEThasbeengrantedwithratestobeappliedbyMemberStates 28

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2.1 Demographyandlandavailabilitydataforcountrygroups(average2001–2003) 45

2.2 Significanceofagriculturalimportsintotalagriculturaltrade(averagefor2001–2003) 46

2.3 Cerealdependency(average2002–2004) 47

2.4 CommoditydependenceofCaribbeancountries:topexportedcommodity(average2001–2003) 49

2.5 Percentageofagriculturalexportsgoingtomajorexportmarkets(average2001–2003) 50

2.6 ShareoftheCaribbeangroupinglobalagriculturaltrade,byimportingcountriesorgroups 50

2.7 ShareoftheCaribbeangroupinglobalexports,bycommodity(average2002/03) 51

3.1 Approximatevalueoftariffrevenuefromagriculturalimportsanditsshareintotalagriculturalimports(2003) 78

3.2 Policyobjectivesandtariffsoncommodities:thecaseofBarbados 79

3.3 Summaryoftariffstatistics–Caribbeancountries 80

3.4 CommoditygroupsandtradepolicytreatmentintheCaribbeancountries 83

3.5 Agriculturaltradesituationandtariffpolicy 85

3.6 Summarystatistics:tariffsbeforeandafterimplementationofcuts 88

3.7 Standarddeviationofboundtariffs,currentandnew(afterimplementationoffourproposals) 91

4.1 ValueofpreferencesundertheEU/ACPtraderegime(000US$) 111

4.2 Importanceofpreferencesinselectedcountries 112

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4.3 DirecteconomicimportanceofsugarexportedtotheEUforselectedcountries 113

4.4 DirecteconomicimportanceofbananasexportedtotheEUforselectedcountries 114

4.5 EvolutionofpreferencesasashareofGDPforselectedcountries(percentages) 116

4.6 Valueofpreferencesin2000/02(000US$peryear) 117

5.1 Summaryofindicatorsusedinidentificationofspecialproducts 132

5.2 PossiblespecialproductgroupsforBelize 136

5.3 CARICOMagriculturalintraregionalimportsundermainHSchaptersandproducts,andtheirshareintotalimportsfromworld(2001) 142

5.4 Dailycalorieconsumption(percapita)andimportsofselectedproductsforHaitiandDominicanRepublic(average2001–2003) 143

5.5 Mainproductcategorieswithmorethan50percentshareinCARICOMintraregionaltrade 144

5.6 Possibleregionalspecialproductscategoriesandnumberoftarifflines 145

6.1 RecenttrendsinsomefoodproductimportsinfourCARICOMmembercountries(inmetrictons) 158

6.2 Numberoftriggersduring1986–2004forvariousreferenceprices165

6.3 Totalnumberoftriggersduring1990–2004forvariousimportreferences 169

6.4 Maximumpercentageofpricedepressionduring1986–2004andadditionaltariffrequiredtooffsetthepricedepressionsfully(100percent) 170

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6.5 G33proposalonadditionaldutyforvaryingintensitiesofimportsurges 171

7.1 SugarcaneoutputinthemainCaribbeanproducers(000tonnes) 179

7.2 Exportofsugar(000tonnesrawequivalent) 179

7.3 TheACPSugarProtocol 180

7.4 RawsugarexportsofACPandACP-LDCcountries(000tonnes) 185

7.5 Changesinthevalueofexports(100=2001-03) 186

8.1 Numberofregisteredbananafarmers(000) 204

8.2 Percentofworldexportsandexportproductionin2000 209

9.1 ArrangementsbetweentheEUandtheACP 225

9.2 RiceimportstotheCaribbeanregion,1996–2000,intonnes 226

9.3 Caribbeanrice:production,imports,exportsandnetquantities(tonnes)fordomesticuse(2005) 227

9.4 Surinamerice:plantedarea,paddyproductionandexports,1985–2005 228

9.5 Guyanarice:paddyproduction,exportquantitiesandearnings,1985–2005 229

9.6 Importlicencevolumesofhuskedriceandconsequenttariffs 232

9.7 EUricequotasasofJune2006(ECRegulationNo965/2006) 234

9.8 Countryquotasonriceimports,intonnes 235

9.9 CotonouAgreementpreferentialtradeagreementsforriceimportsfromACPtoEU 236

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9.10 ImplicationsofthechangedtariffrateforACPpreferencemargins,in€/tonne 237

9.11 EBAtariffquotasforriceimportsfromLDCs 239

10.1 GlobalCompetitivenessIndex(GCI):basicrequirements 246

10.2 GlobalCompetitivenessIndex(GCI):efficiencyandinnovationfactors 248

10.3 Businesscompetitivenessindex(BCI) 249

10.4 Summaryresultsofthe28PAMsforCaribbeannon-traditionalcommodities 254

10.5 SummaryoffactorsinfluencingthecompetitivenessofriceinselectedCARICOMcountries 257

10.7 SummaryoffactorsinfluencingthecompetitivenessoflivestockproductsinselectedCARICOMcountries 260

12.1 Cerealsupplyindicator 297

12.2 Foodimportcapacityindicator 298

12.3 Foodimportcoverageindicator 299

12.4 ThePolicyAnalysisMatrix(PAM) 306

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Appendices

1.1 ListofNegotiatingGroupsandtheirmembercountriesinthecontextoftheWTOnegotiations 36

1.2 Matrixofinterventionstoalleviatekeybindingconstraintstoagriculture 38

2.1 TheCommonwealthSecretariats’CompositeVulnerabilityIndex(CVI)relatedtosmallnessandvulnerability 72

3.1 Theproposedreductionformulae 96

3.2 ResultsoftariffreductionformulaeforCaribbeancountries–graphicalrepresentation 99

3.3 PercentageofHStarifflinesandcorrespondingcommoditiesseverelyaffected(resultingboundrate=or<thancurrentappliedrate)bythefourtariffcuttingproposals 104

5.1 ListofpossiblespecialproductsforBelize 152

8.1 WindwardIslandsbananaexports 221

12.1Glossaryoftradeterminology 323

12.2Tradedatabases 333

12.3ProductnomenclaturesandWITSutilities 338

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Preface

Thisdocument isanoutputof theworkontradeandfoodsecurity in theCaribbeanledbystaffof theTradeandMarketsDivisionofFAOincloseassociation with the implementation of the CARICOM/CARIFORUMRegional Special Program for Food Security (RSPFS). The financialcontribution of the Italian Directorate for International Cooperation totheFAOTrustFundforFoodSecurityandFoodSafetymademanyoftheregional trade policy activities and the publication of this book possible.ThecontributionofINEAresearchersisrecognizedasbeingcriticaltothecompletionofseveralchapters.Theeditorswould liketoacknowledgethevaluableinputofalltheparticipantsatseveralworkshopsandtrainingcoursesontradeandfoodsecurityheldintheCaribbeanregionbetween2004and2006.TheyalsotakethisopportunitytothankAndreaStoutlandandChrissiRedfernfortheirassistanceinpreparingthevolumeforpublication.

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Foreword

FAO

Agriculturaltradehasbeenandcontinuestobeamajorfactordeterminingfood security outcomes in Caribbean countries. In these small openeconomies, exports are essential to income-earning opportunities, whileimportsprovidealargecomponentofthefoodsupply.Thisbookdiscussesthestructuralfeaturescharacterizingthesecountries,andspecificallythedynamicrelationshipsbetweentradeandfoodsecurity.Itfocusesonmultilateraltradenegotiations,mainly thoseof theWorldTradeOrganization;elaboratesonthe implications for Caribbean agricultural and food sector performanceand policies; and introduces analytical tools for trade policy evaluation. ItbenefitsfromtrainingactivitiescarriedoutbyprofessionalsoftheTradeandMarketsDivisioncollaboratingwithItalianandCaribbeancounterpartswhoworkontradepolicyissuesintheCaribbeanregion.TheactivitiesleadingtotheproductionandpublicationofthisbookweresupportedbyFAOandtheItalianDirectorateforInternationalCooperation.

Alexander SarrisDirector, Trade and Markets Division, FAO

INEA

In response to a request from the CARICOM Secretariat on behalf of itsmember countries, the Italian Directorate for International Cooperation,throughitsTrustFundforFoodSecurityandFoodSafety,enabledFAOtoimplement a project directed at improving food systems in the Caribbeanin collaboration with Italian agricultural sector technical institutions. ThegeneralobjectiveoftheCARIFORUMFoodSecurityProjectistoimprovethe food security situation of the CARIFORUM states by increasing theavailability and access to adequate quantities of safe, quality-assured foodproducts to food insecure and poor rural communities throughout theregion. National- and regional-level project activities were programmed.At the regional level, activities focused on several themes, including tradepolices,community-levelfoodsecurityprogramming,foodprocessing,food

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valueandsafety.Thisbookisoneofmanyresultsoftheactivitiesthatfellwithinthetradepolicycomponentoftheproject.Italy’sNationalInstituteofAgriculturalEconomics(INEA)wasactively involvedincapacity-buildingactivities under that project component, particularly in organizing andcarrying out training in the areas of trade policy analysis and negotiationsand quality and safety requirements in international trade and marketing.Theseareincreasinglyimportantconcernsinagrifoodtradeasglobalizationproceeds; and it is only through an agrifood system pursuing quality,includingrecognitionofthemultifunctionalroleofagriculture,thatitwillbepossibletomeettheexpectationsoftoday’scitizensandconsumers.

Lino RavaPresident, INEA, Rome, Italy

CARICOM/CARIFORUM Regional Special Program for Food Security (RSPFS)

The Regional Project Management Unit (RPMU) of the CARICOM/CARIFORUMRSPFSisextremelypleasedtobeassociatedwiththisbook,whichdrawsuponanumberofcapacity-buildingactivitiesandtrade-relatedstudiespursuedunderthetradefacilitationareaofRegionalFoodSecurityproject. The book is timely given that in recent years the multilateral,hemisphericandregionaltradeandeconomicenvironmenthasexperiencedprofound changes with far-reaching consequences for food security inall its dimensions: availability, accessibility, utilization/consumption andstability.Tradeliberalization,othertradereformsandtherelatednegotiationshave already had and continue to have a significant impact on Caribbeaneconomies, particularly as a result of the challenges facing commoditiessuchassugar,bananasandriceintraditionalpreferentialmarkets.Thebookexaminesvariousdimensionsoftradepolicyandrelatedissuesofrelevanceto the countries in the CARICOM/CARIFORUM region and presentspolicyinstrumentstoaddresstradeandfoodsecurityandruraldevelopmentlinkages.Itwillserveasausefulguideandreferencedocumentforagriculturaltradepolicyanalysts,tradenegotiators,policy-makersandplannersinboththe public and private sectors. The RPMU welcomed the opportunity toworkwithanumberofagenciesand individualsduring thepreparationofthisbook,most importantly,staffoftheFAOTradeandMarketsDivisionandINEA.

Gregg RawlinsConsultant Project Manager, CARICOM/CARIFORUM RSPFS

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Contributors

Dario Caccamisiisanagronomistspecializinginissuesrelatedtoagriculturalmarkets and food standards. The former director of an Italian wholesaleagricultural product market, he currently teaches at the University ofAlbania.HehasworkedasaconsultantwiththeWorldBankinanumberofcountries.

Piero Conforti is an economist who has worked in the FAO Trade andMarkets Division since 2003. Formerly he worked as an analyst of theCommonAgriculturalPolicyatINEA.HegraduatedfromtheDepartmentofEconomicsoftheUniversityofSiena,withaResearchDoctorateontheEuropean Union food aid programme. He holds an MSc in AgriculturalEconomicsfromtheUniversityofOxford.

Crescenzo dell’Aquila is Chief of Staff of the Regional Ministry forAgriculture, Industry and Trade of Campania, Italy. Prior to joining theregional government he was a policy analyst at INEA, focusing mainlyon the themes of Common Agricultural Policy and agricultural tradepolicyandagreements.HegraduatedfromtheDepartmentofAgriculturalEconomicsoftheUniversityofPadova,withaResearchDoctoratediscussingagriculturalpolicyissuesofEUenlargementandNAFTA.HeholdsanMScinAgriculturalEconomicsfromtheUniversityofGuelphinCanada.

Deep Ford has worked as an economist for FAO since 2000, focusing onissuesrelatedtofoodsecurity,tradepolicyandinvestment.Currently,heisaSeniorEconomistintheCommoditiesandTradeDivision.PriortojoiningFAO he was an Associate Professor at the University of Vermont, wherehecoordinatedtheInternationalAgriculturalDevelopmentProgramintheDepartmentofAgriculturalandResourceEconomics.Hismainprofessionalinterestsareinanalysinganddevelopingpolicyandprogrammeinterventionsdirected at promoting rural area development and reducing poverty. HeholdsaPhDinAgriculturalEconomicsfromPurdueUniversity.

Andrew Jacque is an Agricultural Officer in the Ministry of Agriculture,LandandMarineResources inTrinidadandTobago.Hishasworkedas aLecturer in the Department of Agricultural Economics, University of theWest Indies; a trade policy specialist, FAO/CARICOM/CARIFORUM

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Food Security Project; and Programme Coordinator in the Ministry ofPlanning and Development of Trinidad and Tobago. He holds a PhD inagriculturaleconomicsfromPurdueUniversity(economicdevelopmentandpolicyanalysis)andanMScinAgriculturalEconomicsfromMichiganStateUniversity.Hisinterestsareinpolicyformulationandanalysis.

Hansdeep Khaira has worked as a consultant economist in the FAOTrade and Markets Division since 2001. His work involves research andanalysis on agriculture, trade and development policies; and conductingtraininginagriculturaleconomicandpolicyinformation,andanalyticalandsimulationtoolsrelatedtoagriculturaltradepolicy.HeholdsanMBAfromMumbaiUniversity,Indiawithaspecializationininternationalbusinessandmarketing.

Alessandro Olper is an Associate Professor of Agricultural Economicsat the University of Milano, Department of Agricultural Economics andPolicy. He graduated from the Department of Agricultural Science of theUniversity of Milano, with a Research Doctorate discussing the politicaleconomyofEuropeanUnionagriculturalpolicy.Hismainresearchinterestsareinagrifoodinternationaltrade,politicaleconomyoftradeprotectionandEuropeanUnionagrifoodpolicy.

Claudius Preville is presently employed with the Caribbean RegionalNegotiating Machinery (RNM) as trade policy advisor for developingtrade policy positions for the various negotiating theatres. He has workedextensively in the area of market access, developing models for gains andlosses from trade liberalization and creating lists of sensitive products inthe various negotiating areas, and has a keen interest in agricultural trade.Heregularlybriefsofficialsandministersoftradeonthestatusofexternalnegotiationsinallmajortheatresandhasheldseveralconsultationswiththeprivate sector.Heholds aPhD from the InstituteofSocial Studies inTheHague.

Valentina RaimondiisaresearcherattheUniversityofMilano,DepartmentofAgriculturalEconomicsandPolicy.ShegraduatedfromtheDepartmentofAgriculturalScienceoftheUniversityofMilano,withaResearchDoctoratediscussingtradeprotectioninEuropeanUnionagrifoodpolicy.

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Gregg Rawlins has worked in the public sector in various technical andmanagerial positions over the past twenty years, including that of SeniorProject Officer with the CARICOM Secretariat and Chief Economistin the Ministry of Agriculture in Barbados. He is currently ConsultantProject Manager of the FAO CARICOM/CARIFORUM Governmentof Italy funded Food Security Project. He has been deeply involved incommodity trade and development analysis, trade policy formulation andimplementationatthemultilateral,hemisphericandregionallevels.HeholdsanMScinAgriculturalEconomicsfromWyeCollege,UniversityofLondon,EnglandandaBScinAgriculturefromtheUniversityoftheWestIndies,St.Augustine,TrinidadandTobago.

Ramesh Sharma is a Senior Economist in the FAO Trade and MarketsDivision.Hehaspublishedwidelyontradepolicyanddevelopmentissues,particularlyas theserelate toagriculturalnegotiations in the frameworkoftheWorldTradeOrganization.HeholdsaPhDinAgriculturalEconomicsfromStanfordUniversity.

Arthur Zalmijn is an agricultural and rural development specialist, withconsiderableexperience intherice industry,andhasservedastheMinisterofAgricultureinSurinam.HeholdsMaster’sdegreesfromtheAgriculturalCollegeLarenstein(Netherlands)andtheUniversityofReading.

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Acronymsandabbreviations

ACP African,CaribbeanandPacificGroupofStatesADB AgriculturalDevelopmentBankAFT AidforTradeAMF AgriculturalModernizationFundAMS aggregatemeasurementofsupportAoA AgreementonAgricultureAQ additionalquantityATPSM TheAgriculturalTradePolicySimulationModelBADMC BarbadosAgriculturalDevelopmentandMarketing

CorporationBCI businesscompetitivenessindexBMB BelizeMarketingBoardBRC BritishRetailConsortiumCABEX CaribbeanAgribusinessExportClubCAHFSA CaribbeanAgriculturalHealthandFoodSafetyAgencyCAP CommonAgriculturalPolicyCARD CenterforAgriculturalandRuralDevelopmentCARDI CaribbeanAgriculturalResearchandDevelopment

InstituteCARIBCAM Caribbean–CanadaTradeAgreementCARICOM CaribbeanCommunityandCommonMarketCARIFORUM CaribbeanForumCARTF CARIFORUMAgribusinessResearchandTraining

FundCBERA CaribbeanBasinEconomicRecoveryActCBI CaribbeanBasinInitiativeCDB CaribbeanDevelopmentBankCET commonexternaltariffCFNI CaribbeanFoodandNutritionInstituteCFRAMP CARICOMFisheriesResourceAssessmentand

ManagementProgramme

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CIF costinsurancefreightCMOB CommonMarketOrganisationforBananasCN combinednomenclatureCRNM CaribbeanRegionalNegotiatingMachineryCROSQ CARICOMRegionalOrganisationforStandardsand

QualityCSME CARICOMSingleMarketandEconomyDBMC DominicaBananaMarketingCorporationDBPL DominicaBananaProducersLimitedDG DirectoratesGeneralDRC domesticresourcecost(coefficient)DSU DisputeSettlementUnderstandingDWP DohaWorkProgram(WTO)EBA EverythingButArmsEC EuropeanCommunityECJ EuropeanCourtofJusticeEPA EconomicPartnershipAgreementsEPC effectiveprotectioncoefficientESIM EuropeansimulationmodelEU EuropeanUnionEUREP Euro-RetailerProduceWorkingGroupFAO FoodandAgricultureOrganizationoftheUnited

NationsFAPRI FoodandAgriculturalPolicyResearchInstituteFIC foodimportcoverageindicatorFLO-I FairtradeLabellingOrganizationsInternationalFOB freeonboardFTAA FreeTradeoftheAmericasGAPs goodagriculturalpracticesGATS GeneralAgreementonTradeinServicesGATT GeneralAgreementonTradeandTariffsGCI GlobalCompetitivenessIndexGDP grossdomesticproductGE generalequilibriumGI geographicalindications

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GMO geneticallymodifiedorganismGMPs goodmanufacturingpracticesGRDB GuyanaRiceDevelopmentBoardGSP generalizedsystemofpreferencesGTAP GlobalTradeAnalysisProjectHACCP HazardAnalysisandCriticalControlPointsHS harmonizedsystemHX concentrationindexICI foodimportcapacityindicatorIDB InteramericanDevelopmentBankIFPRI InternationalFoodPolicyResearchInstituteIMF InternationalMonetaryFundIOP InstituteofPackagingIPCC IntergovernmentalPanelonClimateChange(IPCC)ISO InternationalStandardsOrganization(ISO)JI JagdeoInitiativeLDC least-developedcountryLIFDC low-incomefood-deficitcountryMALMR MinistryofAgriculture,LandandMarineResourcesMDG MillenniumDevelopmentGoalmt metrictonMFN most-favourednationMRL maximumresiduelimitMTN multilateraltradenegotiationsNAMDECO NationalAgriculturalMarketingandDevelopment

CompanyNARI NationalAgriculturalResearchInstituteNB normalizedtradebalanceNFIDC net-food-importingdevelopingcountriesNGO non-governmentalorganizationNPC nominalprotectioncoefficientNTBs non-tariffbarriersOCT AssociationoftheOverseasCountriesandTerritoriesOECD OrganisationforEconomicCo-operationand

DevelopmentOECS OrganisationofEasternCaribbeanStates

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OIE WorldorganizationforanimalhealthPAM policyanalysismatrixPE partialequilibriumPSE producersubsidyequivalentQA qualityassuranceRCA revealedcomparativeadvantageREER realeffectiveexchangerateROI returnoninvestmentRPA RiceProducers’Association(Guyana)RTA RegionalTradeAgreementsRTP RegionalTransformationProgrammeforAgricultureSD standarddeviationSDT specialanddifferentialtreatmentSEM SingleEuropeanMarketSI cerealsupplyindicatorSIDS smallislanddevelopingstatesSITC StandardInternationalTradeClassificationSystemSLBC StLuciaBananaCorporationSLBGA StLuciaBananaGrowersAssociationSPS sanitaryandphytosanitarymeasuresSSG specialagriculturalsafeguardSSM specialsafeguardmechanismSTE statetradingenterprisesSVEs small,vulnerableeconomiesTBT technicalbarrierstotradeTNC transnationalcorporationsTRIPS trade-relatedaspectsofintellectualpropertyrightsTRQ tariffratequotaUNCTAD UnitedNationsConferenceonTradeandDevelopmentUNEP UnitedNationsEnvironmentProgrammeUR UruguayRound(WTO)URAA UruguayRoundAgreementonAgricultureUWI UniversityoftheWestIndiesWFS WorldFoodSummit

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WIBDECO Windward Islands Banana Development and Exporting Company

WINFA Windward Islands Farmers’ AssociationWINBAN Windward Islands Banana Growers AssociationWITS World Integrated Trade SolutionWMO World Meteorological Organization (WMO)WTO World Trade OrganizationXC coverage ratio

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Introduction

J.R. Deep Ford, Crescenzo dell’Aquila and Piero Conforti

TradeandfoodsecurityintheCaribbeanaretiedtogetherthroughavarietyof linkagesrooted inthe importanceofexportsand imports tothesesmallopen economies. On the one hand, export-oriented economic activity is amajor source of foreign exchange and employment-based income-earningopportunities (linked to both the supply and accessibility dimensions offoodsecurity).Ontheother, importsareequallycriticaltonutritionalandstability dimensions of food security, as most of these countries are netfood importers. Analysing the dynamic relationships between trade andfoodsecurityisthereforeimportant,especiallyinthewakeoftheprofoundchanges occurring in the multilateral, hemispheric and regional economicenvironment.Agricultural trade liberalization,andtradereformingeneral,have significant impacts on all dimensions of food security for Caribbeancountries–availability,access,utilizationandstability.

ThebookexaminesthevariousdimensionsofagriculturaltradeandfoodsecurityofCaribbeancountries.Itfocusesonmultilateraltradenegotiations,mainly those of the World Trade Organization, and its implications forCaribbeanagriculturalandfoodsectorperformanceandpolicies.Moreover,itpresentspolicyinstrumentstoanalyseandaddresslinkagesbetweentrade,andfoodsecurityandruraldevelopment.

Chapters1and2serveasanintroductiontothemajor linkagesbetweentrade policy, trade and food security and presents small and vulnerableeconomiesintheframeworkoftheongoingWTOnegotiations.

Chapter � outlinesthe complexlinkagesbetweenagriculturaltrade,tradepolicyandfoodsecurityintheCaribbean.DifferentpointsofviewontradepolicyareassessedandthemainresultsoftheCaribbeanexperienceintherecentdecadeoftradeliberalizationisanalysed.Whiletradeasanengineofgrowthisagenerallyacceptedperspective,thecontroversyovertheimpactsof lowering tariffs on domestic food security is developed by consideringprosandconsoftradeliberalization.Ifloweringtariffsshouldresultinfoodbecoming more readily available and accessible to consumers, adjustmentimpactsonsmallagriculturalproducersisalsoarelevantsourceofconcerns

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due to the strong link between agrifood systems and income-earningopportunitiesintheregion.Thechapterdrawsthefundamentalconclusionthattradeliberalizationisnotasufficientconditionforpromotingeconomicdevelopment,andcallsforamorecomprehensiveandintegratedCaribbeanpolicy, inwhichtradepolicyplaysacentralrole inconjunctionwithothersectoral,nationalandregionalpolicies.

Chapter �discussestheunderstandingofsmallandvulnerableeconomies(SVEs)intheWTOcontext,withspecialreferencetoCaribbeancountries,and defines the main negotiating issues relevant to their food security andtrade-relatedrisks.Thechapterindicatesthattheheterogeneityofdevelopingcountries,andoftheSVEs,canbeassessedthroughawidesetofindicators,andproposeswaysofaddressingsuchspecificitiesintheWTO,thatwouldlessen the adverse impacts on food security and rural livelihoods. TwoalternativestrategiesmightbeemployedintheWTOtoframeappropriateresponses for the Caribbean countries: either assigning them additionalspecialanddifferentialtreatment(SDT),similartothoseenvisagedforLDCs;or strengthening of the current SDT measures available to all developingcountries, with additional specific measures. While some WTO membershave expressed resistance to the creation of new subgroups there is alsowide acceptance of the need to address heterogeneity to facilitate a fullerparticipationandbetterintegrationofSVEsintotheglobaltradingarena.

Chapter3and4 focusontwomajortradepolicyissuesfacingCaribbeancountries,proposedtariffcutsanditsimplicationsfortheirtariffprofilesandchangesinpreferenceregimesandtheimpactonthevalueoftheirexports.

Chapter 3presentsandevaluatesthecurrentagriculturaltariffprofilesfor12Caribbeancountriesinthecontextofthemaintariffreductionformulaedebated in the WTO Doha Round of negotiations. The tariff profilesrepresentthecurrentpolicytreatmentmetedouttothesectoringeneral,andtosomecommoditiesinparticular.Thechapteremphasizesmanagementoftariffpolicyasaninstrumentforpromotingthedomesticobjectivesoffoodsecurityandviable rural livelihoods in the faceof increasingglobalization,andcallsforanappropriatesensitivityintariffsetting.Howeverdistortionary,tariffscanenablelocalcommunitiestoproducefoodwithalowerthreatofsubsidized imports displacing their products in the market, and can createanenablingenvironment fordiversification intovalue addedcommodities.Theirroleinthisrespectshouldbeanalysedcomparativelyalongwiththatofotherpolicymeasures.Thechapterappliesthemaintariffreductionformulaeproposed by some WTO Members to the tariff structure of Caribbeancountriesanddemonstrates the likely impactof further tariff reductiononthecurrentpolicyflexibility.Thechapterconcludeswithrecommendationson tariff management strategies in the WTO arena, and in relation to acommonexternaltariffstructurefortheCaribbeancountries.

Introduction

3

Chapter 4addressestradepreferences,anotherkeytradepolicyissueforthe agrifood sector in the Caribbean. While preferential trade agreementsclashwiththefundamentalWTOprincipleofnon-discrimination,theywereconceivedasaprimarytooltointegratedevelopingcountriesintotheworldtradingsystem,topromotetheirgrowthanddevelopment,andabovealltobenefitsmallerandlessdiversifiedeconomies.Thechapterreviewsthelogic,structureandvalueoftradepreferences,withreferencetothemainfeaturesofthecurrentACPpreferentialsystemandthethreatofpreferenceerosion.It discusses the role that preferential agreements might play in the futureoftheCaribbeanregionandprovidesframeworkelementstobetakenintoaccountforthedefinitionofspecificstrategies.ThegradualdeparturefromACPpreferencesrequiresprivateandpublicinvestmentstrategiesdirectedatkeyproducts,suchassugarandbananas,aimedatreducingtheirdependencyupon preferences. Investment plans for both traditional and new exportproducts may gather resources from the partially eroded rents generatedbypreferential trade, from theWTOSDTapproach, from thegeneralizedsystem of preferences (GSP) and also from the European PartnershipAgreements(EPAs).

Chapter5and6presentmoredetailedanalysisontwoWTOnegotiationsthemes of particular relevance to SVEs and already outlined in Chapter 2,SpecialProducts(SPs)andtheSpecialSafeguardMechanism(SSM).

The concept and identification of Special Products is dealt with inChapter 5, which also provides more general insights on the reason whydeveloping countries argued extensively on this point in the Doha round.The chapter reinforces the importance of trade policy analysis capacitybuildingasitdemonstratesanapproachandamethodologyforidentifyingSPs. The indicators presented in this connection represent the criteriaoutlinedintheWTO2004Framework:foodsecurity,livelihoodsecurityandruraldevelopment.TheseareemployedtoidentifyalistofpossiblespecialproductsandresultsfromBelizearepresentedasaCaribbeancasestudy.Thechapterconsidersidentificationofspecialproductsattheregionallevel,withaviewtopromotingregionalintegrationandagriculturaldevelopment.

Vulnerability to import surges is of particular concern to developingcountries that are endeavouring to develop their agricultural potential anddiversify production in order to enhance their food security and alleviatepoverty. A possible WTO Special Safeguard Mechanism (SSM) for dealingwith import surges and depressed import prices in developing countries isanalysedin Chapter 6.TheconceptofSSMhasbeenacceptedintheDohaRound negotiations as an effective trade remedy specific to developingcountriesandthechapteranalysesalternativeproposals inthenegotiationswithaviewtoidentifyingasimpleandeffectiveSSM.Themainfindingsreferto:a)producteligibilityforanSSMb)betterandmoreappropriateoptions

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forpriceandvolumesafeguardsandtheirtriggerandremedylevels;andc)empiricallimitationsintheidentificationofappropriateadditionalduties.

The following three chapters focus on trade policy related to threecommodities, which formed the core of Caribbean trade in the context oftheEU-ACPtradeprotocol:sugar,bananasandrice.ThesechapterspartlyfollowuponChapter4onpreferences,astheyalsoaimatidentifyingwaysoutofthesituationofagradualerosionoftradepreferences.

Chapter 7reviewstheperspectivesofthesugarsectorintheCaribbeaninrelationtotwomajorpolicychanges:theimplementationoftheEverythingBut Arms (EBA) initiative and the reform of the Common MarketOrganizationforsugar intheEUwhichresults inmajorpricedeclinesforACPexportersofsugartotheEU.AfterabriefoverviewofthehistoricalbackgroundandpresentorganizationofsugartradebetweentheCaribbeancountries and the EU, the chapter discusses the expected outcomes of theongoing policy changes towards a more market-oriented regime. Thesechanges will deeply affect the position of the current exporters to theEuropeanmarket,anditplacespressureontheCaribbeansugarindustrytodevise strategies to survive in a wider and more competitive environment.ThefuturefortheCaribbeansugarindustryappearschallengingforatleastthreereasons:a)theprobabledisplacementofCaribbeansugarexportsintotheEU;b)thestagnanttrendinthedemandforsugarindevelopedcountries;and c) the relatively limited opportunities for product differentiation (fairtrade, organic, bio-fuel). Opportunities for minimizing negative socialconsequencesandforbuildingalong-termstrategyforthesugarindustryareanalysedwithreferencetotheregionalmarket,theEU–ACPrelations,theGSPframeworkandotherformsofassistance.

TherecentexperienceandfutureofthebananasectorintheCaribbeanisdiscussedin Chapter 8.Particularattentionispaidto thesteadyerosionofthepreferentialmarketaccess,tothecurrentprecariouspositionofCaribbeancountries in world markets, and to the employment and food securityconditionsoftheruralpopulationwhichdependsonbananaproductionandtrade.Thechapteraddressestradepolicyissuesfromaregionalperspective,anddrawsmainlyonproductionandtradeexperiencewithintheOrganisationofEasternCaribbeanStates(OECS),wherethebananaindustryisoneofthemaincomponentsof theeconomy.Several interventionsandmeasures thatseektoensureameaningfulinterfacebetweenchangesinthecurrentpolicyframeworkandfoodsecurityarehighlighted:theimportanceofbothpublicandprivatesector investmentat thenational level; theneedtotargetnicheandspecialtymarketsglobally;andnegotiatingeffectivelywithintheWTOondevelopmentmeasuressuchasSPsandAidforTrade.

Riceproduction,tradepolicyandtheimpactofmarketdevelopmentsonruraldevelopmentandfoodsecurityintheCaribbeanisthefocusofChapter 9. After a brief description of the world rice situation, the chapter turns

Introduction

5

to the Caribbean rice market, which is considered from a trade and foodsecurity standpoint. For two countries of the region in particular, Guyanaand Suriname, rice trade under the EU-ACP preference schemes has beenan importantsourceforgovernmentrevenuethathasbeenchannelled intonationaldevelopment initiatives.Thechapterreviewstherecentchanges intheEUricesupportpolicyandhowtheyhaveaffectedearningsandtheACPcompetitiveposition.Itconcludeswithelementsofastrategyforsupportingrice industry development in the Caribbean, emphasising: a) the relevanceof intraregionalopportunities for the sector;b) theneed for strengtheningguarantees of a level playing field for Caribbean operators, who are oftencompetingoninternationalmarketsagainststronglysubsidizedcompetitors;andc)theneedtosecureopportunitieswithinEU-ACPEPAs.

The following two chapters deal with competitiveness of the Caribbeanagrifoodsectorinthecontextoftradeliberalizationfromdifferentanglesandemphasizesomeofthebasicmessagesofthebook:thattradeliberalizationwouldnotresultingrowthanddevelopmentinruralareasunlessdomesticproducers and traders are able to increase production and marketingefficiencies, and achieve quality levels and standards necessary to accessincreasedtradingopportunities.

Chapter �0 provides an introduction to the conceptual framework ofcompetitiveness, considering increased market access as an opportunity.It emphasises investment to develop supply-side capacity, enterprisesand entrepreneurship as the major route to achieving competitivenessand sustainability. The chapter seeks to broaden the understanding of thedeterminantsofcompetitivenessandaddressestheseinordertofacilitatethetransitionofagriculturalsectorsfromdependenceonafewcropstogreaterlevelsofdiversificationandvalue-added.ThecompetitivepositionofseveralCaribbeancommoditiesisassessedwithaqualitativeapproachandthroughindicators derived from a Policy Analysis Matrix. Recommendations forimproving the competitiveness of the agricultural sector in the Caribbeanbased on product differentiation and on reducing production costs aremade.Giventhechallengestomakingthemaintraditionalexportproductscompetitive,becausetheyrequiremostlycostreductionswhileopportunitiesforproductdifferentiationarelimited,thepromotionofnon-traditionalcropsandlivestockproductsisrecommended.Thechapterconcludesemphasisingthe need for partnerships between the public and the private sectors toensure that factors influencing competitiveness are adequately addressed,consideringboththemacroeconomicandmicroeconomicdeterminants.

Chapter �� focusesonqualityandsafetystandardsasincreasinglycriticalfactors affecting competitiveness in agrifood trade. The chapter presents adescriptionofvariousframeworksforaddressingqualityissues,andprovidesreferencesforunderstandingfeaturesandimplicationsofthemostcommonfoodqualityandsafetyregulationsshieldingdevelopedmarkets.Specifically,

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thechapter:a)introducesthelinkbetweenqualityandsafetystandardsandsupplymanagement issues;b)discusses current featuresof themultilateralinstitutionalframeworkprovidingtechnicalandlegalreferencesfornationallegislationrelevanttoqualityandsafetyofagrifoodproducts;c)introducesthemajorprivatequalityassuranceandcertificationschemesanddiscussestheirrelationshipswithmultilateralarrangements;andd)facilitatesawarenessamonginstitutionsandoperatorsofthegrowingrelevanceofqualityandsafetystandards, providing essential references for addressing them. The chaptersuggeststhatCaribbeancountriesandoperatorsarefacingacomplexsetofpublicandprivatequalityandsafetyrules,whichposeseriousorganizationalandtechnologicalchallenges for them.Itsuggests that thesechallengescanbeeffectivelyfacedbydevelopingregionalcooperationintherelevantareas,using international assistance for institutional building, and participatingmoreeffectivelyininternationalstandard-settingorganizations.

The last chapter, Chapter ��, aims at providing an introduction tothe more common tools that can be used in the quantitative analysis oftrade policies. An attempt is made to show how the linkages with foodsecurity,agriculturaldevelopmentandruraldevelopmentcanbeaddressed.Specifically, the chapter aims to: a) show the potentials of quantitativeanalysis, while highlighting the associated challenges and limitations; b)introduce different approaches and analytical frameworks; and c) facilitateawarenessoftheavailabilityofdatabasesandcomputerbasedtoolsthatcanbeusedasstartingpointsfortradepolicyanalysis.Theoverviewofthemajorapproachesisorganizedconsideringthetwowidecategoriesofex postandex antepolicyanalysis.Ex postapproachesdeepensomeofthemostcommondescriptiveindicatorsusedforfoodsecurity,tradeandtradepolicyanalysis,whileex anteapproachesintroducethemainmodellingframeworksavailableandtherelatedpolicyrepresentationissues.Partialandgeneralequilibriumapproachesareintroduced,andreferenceismadetosomeofthemorereadilyaccessibleinternationaldatasets.

Chapter12 ismostdirectlyaimedat supportingcapacitybuilding in theareaof tradepolicy analysis and food security linkages for theCaribbean.However, it is worth emphasizing that all the chapters of this book sharethis common goal – to provide agricultural trade policy analysts, tradenegotiators,policy-makersandplanners,professionalsinboththepublicandprivatesectors,withcurrentanalyticalapproaches,frameworksandtoolsforevaluating agricultural trade policy and its potential effects on agriculturaland rural development and food security. Attempting to provide effective,up-to-date and analytical insights on agricultural trade policy and foodsecurity in the Caribbean is, from our point of view, a valuable effort forsupportingregionalfoodsecurity.

Education

Agricultural trade policy & food security in the caribbean