Draft Paper – Not to be cited without author’s permission
The Impacts of Liberalized Agricultural Trade
Liberalized agricultural trade, like liberalized trade in general, is meant to boost
Yet at the level of national economies, the idea that trade
liberalization and openness actually lead to economic growth in practice has come under increasing attack in recent years.27 At the broadest scale, studies conducted at the Center for Economic Policy Research in Washington reveal that rates of economic growth in the South have been much lower during the decades of liberalization (from the mid-1970s on) than in prior decades (the earlier part of the post-war period). They also project the likely gains and losses to the South from further liberalization, and find that the South would gain much less from market access in the North than it would lose from giving up more access to its own markets. 28
A recent empirical study published in the prestigious Journal of Development Economics shows that, on the average, greater market opening in the South has been associated with less economic growth. More specifically, the studies show that tariffs and non-tariff trade barriers can actually help promote growth in poorer countries, while removing them can impede growth, as domestic enterprises markets are undercut by cheap imports. 29 .
On the specific subject of trade in food and agricultural products, data from the United Nations Conference on Trade and Development (UNCTAD) shows that trade liberalization, and the dumping of farm products that inevitably follows, has generated a growing food deficit in LDCs, as shown in Figure 2. The excess of exports over imports is a good proxy for the impact on the livelihoods of local farmers, who are typically squeezed out of their own national markets for food, markets they once dominated in the past, thus deepening the social and economic dimensions of the rural .
Organization (FAO) of the UN documented the experiences of 16 developing countries with the implementation of the WTO’s AoA and other Uruguay Round (UR) agreements affecting agriculture.30 When markets were opened, in most cases food imports flooded in. Country after country experienced import surges that were damaging to competing
Figure 2. Food exports and imports of Least Developed Countries (LDCs), 1980–2001. After UNCTAD, 2004.
domestic farming sectors.
typical was that while countries experienced expanded imports, they were largely unable to compensate by increasing their own export earnings, thus leaving them in a weakened and more dependent position. What has often happened is that exports have gone up in volume, but prices have dropped so much that developing countries are selling more to