Food crisis and export taxation: the cost of non-cooperative trade policies
Rent the article at a discountRent now
* Final gross prices may vary according to local VAT.Get Access
This paper aims to assess the rationales for export taxes in the context of a food crisis. First, we summarize the effects of export taxes using both partial and general equilibrium theoretical models. When large countries aim to maintain constant domestic food prices, in the event of an increase in world agricultural prices, the optimal response is to decrease import tariffs in net food-importing countries and to increase export tariffs in net food-exporting countries. The latter decision improves national welfare, while the former reduces national welfare: this is the price that must be paid to keep domestic food prices constant. Small net food-importing countries are harmed by both decisions, while small net food-exporting countries gain from both. Second, we illustrate the costs of a lack of regulation and cooperation surrounding such policies in a time of crisis using a global computable general equilibrium (CGE) model, mimicking the mechanisms that appeared during the recent food price surge (2006–2008). This model illustrates the interdependence of trade policies, as well as how a process of retaliation and counter-retaliation (increased export taxes in large net food-exporting countries and reduced import tariffs in large net food-importing countries) can contribute to successive augmentations of world agricultural prices and harm small net food-importing countries. We conclude with a call for international regulation, in particular because small net food-importing countries may be substantially harmed by those policies that amplify the already negative impact of a food crisis.
- Amiruddin, MN (2003) Palm oil products exports, prices and export duties: Malaysia and Indonesia compared. Oil Palm Industry Economic Journal 3: pp. 15-20
- Bautista, RM Export tax as income stabiliser under alternative policy regimes: The case of Philippine copra. In: Dios, E, Fabella, RV eds. (1996) Choice, growth and development: Emerging and enduring issues. University of the Philippines Press, Quezon City, The Philippines
- Bchir, H., Decreux, Y., Guerin, J.-L., & Jean, S. (2002). MIRAGE, a computable general equilibrium model for trade policy analysis. (CEPII Discussion Papers 2002-17). Paris: Centre d’Etudes Prospectives et d’Informations Internationales.
- Bickerdike, CF (1906) The theory of incipient taxes. Economic Journal 16: pp. 529-535 CrossRef
- Bouët, A., & Laborde Debucquet, D. (2010). The economics of export taxation in the context of a food crisis: A theoretical and CGE-approach contribution. (IFPRI Discussion Paper 00994). Washington, DC: International Food Policy Research Institute.
- Boumellassa, H., Laborde Debucquet, D., & Mitaritonna, C. (2009). A consistent picture of the protection across the world in 2004: MAcMapHS6 version 2. (IFPRI Discussion Paper 903). Washington, DC: International Food Policy Research Institute.
- Broda, C., Limao, N., & Weinstein, D. (2006). Optimal tariffs: The evidence. (NBER Working Paper 12033). Cambridge, MA: National Bureau of Economic Research.
- Corden, WM (1971) The theory of protection. Clarendon Press, Oxford
- Crosby, D (2008) WTO legal status and evolving practice of export taxes. Bridges 12: pp. 3-4
- Deardorff, A. V., & Rajaraman, I. (2005). Can export taxation counter monopsony power? (RSIE Discussion Paper 541). Ann Arbor, MI: Research Seminar in International Economics, University of Michigan.
- Decreux, Y., & Valin, H. (2007). MIRAGE, updated version of the model for trade policy analysis: Focus on agriculture and dynamics. (CEPII Discussion Papers 15). Paris: Centre d’Etudes Prospectives et d’Informations Internationales.
- Diamond, PA (1975) A many-person Ramsey rule. Journal of Public Economics 4: pp. 335-342 CrossRef
- Headey, D. (2010). Rethinking the global food crisis: The role of trade shocks. (IFPRI Discussion Paper 00958). Washington, DC: International Food Policy Research Institute.
- Headey, D, Fan, S (2010) Reflections on the global food crisis: How did it happen? How has it hurt? And how can we prevent the next one?. International Food Policy Research Institute, Washington, DC
- Hertel, T, Hummels, D, Ivanic, M, Keeney, R (2007) How confident can we be of CGE-based assessments of free trade agreements?. Economic Modelling 24: pp. 611-635 CrossRef
- Hoddinott, J, Maluccio, JA, Behrman, JR, Flores, R, Martorell, R (2008) Effect of a nutrition intervention during early childhood on economic productivity in Guatemalan adults. The Lancet 371: pp. 411-416 CrossRef
- Johnson, HG (1953) Optimum tariffs and retaliation. Review of Economic Studies 21: pp. 142-153 CrossRef
- Kim, J. (2010). Recent trends in export restrictions on raw materials. In The economic impact of export restrictions on raw materials. (Trade Policy Studies, 13–57). Paris: OECD.
- Lerner, AP (1936) The symmetry between import and export taxes. Economica 3: pp. 306-313 CrossRef
- Martin, W., & Anderson, K. (2010). Trade distortions and food price surges. Paper for the World Bank-UC Berkeley conference on agriculture for development—revisited, Berkeley, 1–2 October, 2010.
- Mitra, S., & Josling, T. (2009). Agricultural export restrictions: Welfare implications and trade disciplines. IPC position paper, agricultural and rural development series. Washington, DC: International Food and Agricultural Trade Policy Council.
- Narayanan, BG, Walmsley, TL eds. (2008) Global trade, assistance, and production: The GTAP 7 data base. Center for Global Trade Analysis, Purdue University, West Lafayette, IN
- OECD (2010). Policy responses in emerging economies to international agricultural commodity price changes, TAD/CA/APM/WP(2010)13.
- Piermartini, R. (2004). The role of export taxes in the field of primary commodities. (WTO Discussion Paper 4). Geneva: World Trade Organization.
- Polovinkin, S. (2010). Food crisis and food security policies in West Africa: An inventory of West African countries’ policy responses during the 2008 food crisis [internet]. Version 9. Knol. May 3, 2010. Available from: http://www.knol.google.com/k/sergey-polovinkin/food-crisis-and-food-security-policies/cju5lr97z6h4/32.
- Raja, K. (2006). Clash in NAMA talks on proposed export-tax rules. SUNS, June 1, http://www.twnside.org.sg/title2/twninfo418.htm.
- Ramsey, FP (1927) A contribution to the theory of taxation. Economic Journal 37: pp. 47-61 CrossRef
- Warr, PG (2001) Welfare effects of an export tax: Thailand’s rice premium. American Journal of Agricultural Economics 83: pp. 903-920 CrossRef
- Food crisis and export taxation: the cost of non-cooperative trade policies
Review of World Economics
Volume 148, Issue 1 , pp 209-233
- Cover Date
- Print ISSN
- Online ISSN
- Additional Links
- Export taxes
- Food crisis
- Optimum tariff
- Computable general equilibrium
- Industry Sectors
- Author Affiliations
- 1. LAREFI, Université de Montesquieu-Bordeaux IV, LAREFI Avenue Leon Duguit, 33608, Pessac Cedex, France
- 2. Markets, Trade and Institutions Division, International Food Policy Research Institute, 2033 K Street NW, Washington, DC, 20006, US