Phasing out tariffs and other government policies that distort international farm and food trade would boost global income about $265 billion by 2015, the World Bank said in a new book.
But unless both rich and poor countries show more willingness to make the required cuts, current world trade talks will deliver far less than that, said Uri Dadush, director of the bank’s International Trade Department.
“Unfortunately, I’m not that optimistic at the moment,” Dadush said at a news conference. “What is currently being envisaged as agricultural trade reform would yield only a small portion of the kind of gains we are looking for.”
The new World Bank book, “Global Agricultural Trade and Developing Countries,” assesses the impact a comprehensive farm and food trade deal would have on global income and on individual sectors like sugar, dairy, rice and wheat.
The estimated $265 billion in income gains from sweeping away farm tariffs, subsidies and other government support represents about 70% of the $385 billion expected from total merchandise trade reform, the bank said.
That’s because agricultural and the process food sector enjoy much higher level of protections around the world than manufactured goods, bank officials said.
Although developing countries would benefit the most from a comprehensive farm and food deal, both rich and poor countries would share about equally in the gains, the bank said.
Farmers in Japan, Europe, Korea, Taiwan and China would be the biggest losers on a percentage basis, while those in Australia, New Zealand, Canada, Argentina, Southern Africa, Latin American and the United States would gain the most.
Chinese farmers would suffer the biggest overall loss, or an estimated $75 billion in 2015, while the country’s annual food deficit would swell to “somewhere around $120 billion,” compared to $8 billion in 1997, the report said.
Those figures incorporate reforms Beijing has already agreed to make as a result of joining the WTO in 2001.
In addition, China would benefit from increased access to manufacturing and service industry markets, Dadush said.
The report notes that both rich and poor countries benefit more from reforming their own farm and food policies than from actions that other countries take. (Reuters)