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Dr Sushil Mohan Head of Economics Brighton Business School s.mohan@brighton.ac.uk

How important are tariffs and nontariff measures for developing countries’ agricultural processed products exports?. Dr Sushil Mohan Head of Economics Brighton Business School s.mohan@brighton.ac.uk. Motivation. Agriculture important for developing countries (DCs) 50-70% of their GDP

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Dr Sushil Mohan Head of Economics Brighton Business School s.mohan@brighton.ac.uk

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  1. How important are tariffs and nontariff measures for developing countries’ agricultural processed products exports? Dr Sushil Mohan Head of Economics Brighton Business School s.mohan@brighton.ac.uk

  2. Motivation Agriculture important for developing countries (DCs) 50-70% of their GDP DCs main producers of agri-products 2/3rd of world production (FAOSTAT, 2016) Yet developed countries main exporters of agricultural products

  3. Primary vs Processed DCs low share because of low exports of agricultural processed/final products

  4. Objective Why have DCs failed to increase their agri processed exports? To what extent due to trade barriers in agriculture Use case study of selected agri products important for DCs

  5. Tariff escalation (TE) TE often blamed for this Provides effective protection for developed countries’ processing sector Inhibits their expansion in DCs Look at tariff & TE faced by these products

  6. Applied tariffs • Low to zero in all developed countries except • Tobacco & cocoa products (chocolates) • Tea & coffee in Japan • High in DCs • Motive • protect domestic producers and domestic processing industry • earn revenue for the government • restrict imports to save valuable foreign exchange

  7. TE • Zero to very low in most developed economies except • Japan for most products • Sugar & cocoa in the EU • Tobacco in the US • Low in DCs • apply same tariffs irrespective of level of processing • Maybe high in earlier years? • Can’t blame now

  8. Non-tariff measures (NTMs) • Measures other than tariffs that distort trade • Sanitary and phytosanitary measures (SPS) • Protect human, animal & plant health • Technical barriers to trade (TBT) • norms for size, quality, labelling, marketing, traceability (EU), conformity certification • Heterogeneity of standards • Other technical measures • Rules of origin, customs, private standards

  9. NTMs data • NTMs coverage & extent not easy to quantify • Deduced from • TRAINS database of NTMs notified • Self reporting? • WTO complaints & disputes • EU list of import requirements • Surveys of firms

  10. Overall level of trade restrictiveness faced by exports (UNCTAD 2013)

  11. Evidence • ITC (2015) survey of 11500 firms in DCs • agro-food particularly impacted by NTM • Fresh food followed by processed foods • NTMs higher in developed • 48% relate to control & admin procedures • Disdier & Marette; Fontagne et al. (2010) • SPS & TBT severe for processed food • Diverging & higher standards in OECD • OECD exporters not affected • Exports of DCs to OECD reduced • OECD exporters benefit over DCs

  12. Domestic NTMs • Host of admin formalities affects export competitiveness of DCs • excessive customs documentation • import and export requirements • Regional/local authorities regulatory discretion • lack of cooperation among export agencies • Lack of transparency • Important but not highlighted

  13. Ease of trading (World Bank 2015)

  14. Ease of trading (World Bank 2015)

  15. Domestic NTMs • Impact high for agricultural processed exports from DCs • DCs compete with developed for their export • Not the case for many agricultural primary products exports • DCs usually compete with other DCs that face similar levels of domestic NTMs

  16. Conclusion • Widespread prevalence of NTMs • Deserve more attention • Domestic NTMs too important • DCs need to set their own house in order!! • Supply-side constraints in DCs • Does not justify NTMs • Some NTMs can facilitate trade • Separate protectionist & non-protectionist • International collaboration to identify those less onerous for DCs agri trade

  17. Thank You Questions?

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