mahfuzuddin ahmed (worldfish center)
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Mahfuzuddin Ahmed (WorldFish Center)
Market Access and Liberalization in Fish Trade - Implications for Aquaculture Development in Developing Countries"
FAME Workshop, University of Southern Denmark, 8-10 June 2005
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Outline1. Globalization and Fisheries Trade
2. Market Access - Market Constraints - Domestic Constraints- South-South Trade
3. Impacts of Liberalization
- Consequences on fish resources- Implications for fisheries and aquaculture
management4. Discussion and Policy Recommendation
people Ÿ science Ÿ environment Ÿ partners Globalization: Some Welcome Developments
Growth in world trade has outpaced growth in world output
Fish trade is in the frontier of economic globalization
Rapid rise in fish exports a major developing country trade story (Asian)
Aggregate value of net fisheries exports from developing countries surpassed traditional agricultural exports
Prospects of huge gains - alternative source of fish supply to domestic consumers, favourable terms of trade, higher export earnings
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Fisheries Globalization: Some Worrisome Consequences for Fisheries
Risk to domestic nutritional security and consumer welfare
Threats to sustainability of fisheries – selective and heavy exploitation
Massive implications for fisheries management Overdependence on exports and price volatility Newer forms of barriers to trade –market access
constraints
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Globalization - Different Things to Different People
Understood as rising economic, political, social and cultural linkages among people, organizations and countries at the global level
Interpreted as a tendency toward wider application of economic, political, social, cultural, institutional, and legal practices
Perceived as dominance of fewer cultures and economies
The question is: Who gets included and who gets excluded in the globalization process?
people Ÿ science Ÿ environment Ÿ partners Globalization in Earlier Periods in History
1700s to early 1900s - modern economic growth Brought world integration to a peak Ended in pain and disintegration Two world wars and a global economic depression Politically and militarily divided post-war world New process to begin soon with generation,
adoption and diffusion of technology End of cold war
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Technology
Policy
Market
Fish in the Frontier of Economic Globalization
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FISH ONE OF THE BIGGEST TRADE STORY
Net export of fish greater than all other food crops in developing countries
Net export of fish for food from developing countries ~USD18 billion
Net exports of food commodities in developing countries in 2000 (source, FAO)
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2. MARKET ACCESS
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International Trade, MDGs and WTO
Improved market access and terms of trade for poor countries
Improved performance in fish trade and positive net export to help Millennium Development Goals (MDG)
Help trade flow smoothly, freely, fairly and predictably
Reduce tariffs and remove NTBs
Transparent trade policies
Trade concessions for developing country exports
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Market Access – State of Play
Early efforts toward liberalization
Fish and fisheries products are not covered by the Agreement on Agriculture (AoA).
Instead, it is linked to the negotiations on Non-Agricultural Products Market Access (NAMA)
Some success in reduction of average tariff
Average tariff rate for fish reduced by 25%
Average tariff rates
- 4.5% for developed countries
- Below 20% for developing countries
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Market Access – State of Play
Early success in reduction of tariff barriers soon followed with tariff peaks, tariff escalation and countervailing duties and proliferation of NTBs
Constraints to market access –
(i) Demand side constraints (Tariff and Non-Tariff Barriers - NTBs)
(ii) Supply side constraints (Institutional constraints, capacity and affordability, sustainability)
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Tariff and Non-Tariff Barriers Presently Applied in Fisheries
Type of barriers Examples of instruments
Tariffs Differential import tariffs Tariff escalation Tariff peaks Countervailing duties
Non-tariffs Technical Barriers to Trade (TBT) and Standards – (Sanitary and phyto-sanitary – SPS and HACCP)
Rules of origin Labeling related to environmental management
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1. Market Constraints – TariffDifferential approach to tariff reduction on imports –
Many bi- and multi-lateral agreements- reciprocal tariff concessions and access agreements
- fishing license agreements
Increase in bound tariffs for developing country exports (21% to 73% in the Uruguay Round)
Tariff escalation : Tariffs on processed fish generally higher and discourages value-addition in developing countries (tuna loins, 24%)
Countervailing and anti-dumping measures – Example: Case of Vietnamese catfish exported to US – ban on use of the name ‘catfish’ for non-US native species.
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1. Market Constraints – NTBs
TBT, SPS, labeling, quality standards present barriers to trade for developing countries
Frequent rejection of exports
Damage to national economy (eg. Five month ban on shrimp imports from Bangladesh by EU resulted in at least USD 14.7 million in short-term losses)
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2. Domestic constraints related to international fish trade
- How to meet the standards?
High costs and lack of resources to implement safety standards
Weighing costs against benefits of food safety standards and regulatory measures (short term pains versus long term gains)
• Differences in economies of scale at both country level and individual processors or exporters level
Post-harvest and processing – methods and technical capacity
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(…continued)Unaffordable adjustment costs and longer gestation gap
in restructuring government revenue sources
Customs tariff contribute significantly to government revenue
Tariff-revenue dependence in least developed countries
Institutional framework and policy environment to vertically integrate the supply chain to face the challenges of globalization.
Special characteristics of production, supply chain, trade policy processes and policy environments in developing countries
Capacity of developing countries in assessing fisheries trade policies
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(…continued) Resource management and governance issues
Weaknesses in property rights
Lack of strong institutional setups
Rent dissipation
Fisheries – can become exhaustible resource if over harvested
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1997
1%
99%
Sub Saharan Africa Developed World
2020
4% 12%
13%
71%
Other South Asia Sub Saharan Africa
West Asia & North Africa Developed World
Growing south-south trade
Net imports of food fish (1997 and 2020)
3. South-south trade
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Net imports of fish meal (1997 and 2020)
Growing south-south trade
1997
43%
11%1%6%
39%
China SEA India & Other South Asia W.Asia & N.Africa Developed World
2020
44%
19%
2%
8%
27%
China SEA India & Other SA WANA Developed World
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Structural and institutional rigidities for trade within developing countries
Domestic trade policies (eg. Philippines – milkfish fry trade)
Export restrictions/tax versus import duty liberalizations
• Role of food safety regulations in south-south trade – consumer preferences and increasing importance of food safety concerns
South-south Trade (…continued)
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3. IMPACT OF LIBERALIZATION
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Impacts of Liberalization
Poverty, livelihoods and food security of poorer fishers and farmers
No clear evidence of negative impact on the poor (Kurien, 2004); More comprehensive studies needed
Impacts on producers and consumers in exporting countries
Greater incentives for commercial fishing operations, threatening livelihoods of fishing-dependent poor
Excess demand situation leading to sharp increase in price
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Lack of access to land, water, capital, credit and technology
Lack of access to market/ lack of competitive advantage
Women being cut-off from the marketing and processing chain
High costs to exclude small producers and
processors from export supply chain Long supply/market chains affecting and
adding costs Lack of a uniform standard adding to risks
and uncertainty
Inequity at the micro-level
Compounding effects of
regulatory barriers
Market Barriers to Small-scale Operators
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Impact of Liberalization(…continued)
• Impacts on natural resource sustainability in fish exporting developing countries
Little provision to charge user-cost in developing countries for un-priced resource stocks
High price and high demand reduced stocks for number of species <20% of pre-fishing level
Increase in illegal, unregulated and unreported (IUU) fishing
Ecosystem impacts of excessive removal of target species through by-catch
Consequences on Fish Resources
Increasing demand
Increasing trade
Increasing prices
•Overexploitation -IUU
•Emphasis on fish farming
•Selective harvesting -LRFF
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Characteristics that may determine impacts of trade liberalization
Negative Positive
Nature of fish population
Slow growing, long-lived
Fast growing, short-lived
Number of people with access to fisheries
Large Small
State of harvesting technology
Modern Traditional
Discount rate of harvesters
High Low
Monitoring system Poor Effective
Developed countries have an advantage.
Implications for Fisheries Management
people Ÿ science Ÿ environment Ÿ partners IMPLICATIONS FOR FISHERIES AND AQUACULTURE
• Trade - a magnifier of existing environmental practices in both directions
- lack of effective management regime - trade is double-edged sword
- good management practice – trade is a Win-Win
• High demand and high price will encourage aquaculture
• Trade can lead to emergence of effective management regime
- at higher prices protection is afforded to resource
- higher incentive for good management
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4. DISCUSSIONN AND POLICY RECOMMENDATIONS
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Discussion and Policy Recommendations
General principals
(i) Different international policies for different issues• Securing institutions
(ii) Bundling – Sectoral approach / Vertical approach
(iii) Horizontal Approach / Simultaneous agreement on all issue• Major issues to be addressed – Tariff, NTBs, capacity
and costs
(iv) Special and Differential Treatment• Credit for autonomous liberalization• Less than reciprocal reduction • Export importance to developing countries
How fisheries should be taken up into WTO process
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(… continued)
Related discussions of country positions on NAMA
Cautionary approach (eg. Japan, Korea, Taiwan)
Full and complete liberalization (eg. USA, Canada, Singapore)
‘Less than full reciprocity’ (eg. India)
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Harmonizing international trade policies in developing countries
South-south trade
Ensuring sustainability
Fisheries to be treated as exhaustible resource (Japan, Korea, Taiwan)
Trade liberalization to be integrated within the framework of sustainable fisheries management
Role of effective management
FAO Code of Conduct for Responsible Fisheries
Policy Issues
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Special and differential treatment
Trade related technical and financial assistance
Longer implementation period
Less than full reciprocity in reduction commitment
Preference for tariff reduction on products of export interest to developing countries
Increasing the capacity of developing countries in trade negotiations
Technical capacity
Resources to participate and represent views in trade negotiations
(… continued)
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Tariff Barriers Harmonization of tariffs
Tariff escalation is a significant barrier – accelerated reduction of tariff escalation
Tariff reduction have positive impact on south-south trade
Non-tariff Barriers (TBT and Standards) Tendency to shift from one instrument to another – Instrument shift shouldn’t be
allowed
Country of origin labels
Traceability and bioterrorism measures pose huge challenge as a non-tariff barrier
Lack of an agreed standard and lack of transparency in the implementation and verification are much bigger concerns than ability and willingness to comply with standards
Agreement on standards among exporter and importer Members
A subset of programme to deal with implementation of technical measures
Role of and access to technical knowledge (information, research and training
Summary - Needed Actions
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Social Sustainability
How to handle adjustment costs?
Poor mobility of fishers and participation of small-scale operators
Environmental Sustainability Will tariff reduction create pressure on stock? Lower price
higher exploitation?
need for total agreement on effective management fisheries to be treated as exhaustible resource (Japan, Korea, Taiwan)
capture-culture links be part of effective management
Should sustainable management be integrated into framework of trade liberalization
Agreement and enforcement on effective management and property rights
FAO Code of Conduct for Responsible Fisheries and Aquaculture
Needed Actions
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Invest in area of standards and safety as part of development investment
Total commitment to technical, institutional and infrastructure Public-private partnerships Development / technical assistance Regional cooperation
Global agreement on management of fisheries and transboundary marine resources
Orbit agreement in WTO Separate body in alliance with FAO, UNEP to handle management
Needed Action - Three Prong Strategy
Business Security
Environment Security
Consumer Benefit
Complete and Full Removal of Tariffs – ensure full access to markets
Many of the agreed principles for NAMA will apply
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