Food crisis and export taxation: the cost of non-cooperative trade policies
- 528 Downloads
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.
KeywordsExport taxes Food crisis Optimum tariff Computable general equilibrium
JEL ClassificationF13 F15
The authors would like to thank the participants of a workshop organized at OECD on October 30, 2009 and of a seminar organized at IFPRIMTID in Washington DC on April 10, 2010, and in particular Jeonghoi Kim, David Tarr, Franck Von Tongeren, and Maximo Torero for useful comments on an earlier version. Two anonymous reviewers have been also very helpful. The usual disclaimer applies.
- Amiruddin, M. N. (2003). Palm oil products exports, prices and export duties: Malaysia and Indonesia compared. Oil Palm Industry Economic Journal, 3(2), 15–20.Google Scholar
- Bautista, R. M. (1996). Export tax as income stabiliser under alternative policy regimes: The case of Philippine copra. In E. de Dios & R. V. Fabella (Eds.), Choice, growth and development: Emerging and enduring issues. Quezon City, The Philippines: University of the Philippines Press.Google Scholar
- 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.Google Scholar
- 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.Google Scholar
- 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.Google Scholar
- Broda, C., Limao, N., & Weinstein, D. (2006). Optimal tariffs: The evidence. (NBER Working Paper 12033). Cambridge, MA: National Bureau of Economic Research.Google Scholar
- Corden, W. M. (1971). The theory of protection. Oxford: Clarendon Press.Google Scholar
- Crosby, D. (2008). WTO legal status and evolving practice of export taxes. Bridges, 12(5), 3–4.Google Scholar
- 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.Google Scholar
- 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.Google Scholar
- Headey, D. (2010). Rethinking the global food crisis: The role of trade shocks. (IFPRI Discussion Paper 00958). Washington, DC: International Food Policy Research Institute.Google Scholar
- 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? Washington, DC: International Food Policy Research Institute.Google Scholar
- 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.Google Scholar
- 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.Google Scholar
- 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.Google Scholar
- Narayanan, B. G., & Walmsley, T. L. (Eds.) (2008). Global trade, assistance, and production: The GTAP 7 data base. West Lafayette, IN: Center for Global Trade Analysis, Purdue University.Google Scholar
- OECD (2010). Policy responses in emerging economies to international agricultural commodity price changes, TAD/CA/APM/WP(2010)13.Google Scholar
- Piermartini, R. (2004). The role of export taxes in the field of primary commodities. (WTO Discussion Paper 4). Geneva: World Trade Organization.Google Scholar
- 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.