Ongoing reforms in most developing countries, little change in industrial and some developing countries

Supply expansion without trade reforms will lead to further price declines and pressures for greater protection

Full liberalization would generate large welfare gains and even larger changes in output, exports and imports

Multilateral and multi-commodity solutions are the key

Key Messages

Protection is Still High and Mostly at the BorderSource: OECD

OECD Protection has not decreased significantlyEstimated nominal rates of agricultural protection in OECD Countries (%)

Source: OECD protection estimates (except ABARE for 1965-1974, Authors calculation for 2000-2002).

Developing Countries Tariffs Have DecreasedSource: TRAINS

Complicated ProtectionDue to Specific DutiesSource: WTO IDB (MFN Applied Duties)

Percentage of Tariff Lines Non Ad-Valorem

Chart1

31.28454826443.0843508438

9.28762325045.6752939897

2.62145657130.0535066667

0.19954389970.4880781464

Agriculture

Manufacturing

Percentage of Tariff Lines

Table 6

Table 6a. Annual Export Growth Rates

(constant 1995 U.S. Dollars)

Excluding EU-EU and US-Canada Intra-trade

World Export Growth RatesDeveloping Countries' Export Growth Rates

TotalDeveloping to DevelopingDeveloping to Industrialized

80/81 - 90/9190/91 - 00/0180/81 - 90/9190/91 - 00/0180/81 - 90/9190/91 - 00/0180/81 - 90/9190/91 - 00/01

Agriculture2.8%4.7%3.5%4.8%3.8%7.9%3.4%3.4%

Manufacturing4.6%5.5%7.6%8.9%7.3%10.0%10.2%9.8%

Source: Comtrade

Table 7

Table 7a. Shares of Developing And Industrialized Countries in World Exports

Excluding EU-EU and US-Canada Intra-trade

Developing CountriesIndustrialized countries

80/8190/9100/0180/8190/9100/01

Agriculture

Total50.0%52.3%54.7%50.0%47.7%45.3%

To Developing13.5%14.4%20.2%22.6%19.8%21.8%

To Industrialized36.5%37.9%34.5%27.4%27.9%23.5%

Manufacturing

Total29.0%35.6%45.8%71.0%64.4%54.2%

To Developing9.9%11.8%16.8%32.7%23.8%26.0%

To Industrialized19.1%23.8%29.0%38.3%40.7%28.2%

Source: COMTRADE

Table 8

Table 8 - Annual Growth of GDP Per Capita

90/91-80/8100/01-90/91

World1.3%1.2%

Industrial Countries2.5%1.8%

Developing Countries0.8%1.9%

Sources: World Bank estimates

Table 9

Table 9 - Annual Import Growth Rates

GroupIndustrial countriesDeveloping countries

80/81-90/9190/91-00/0180/81-90/9190/91-00/01

Traditional products

Coffee, cocoa, and tea, raw and processed-0.6%1.3%2.4%8.4%

Tobacco and Cigarettes6.6%3.3%10.7%4.7%

Nuts and Spices5.1%3.5%2.6%5.4%

Textile fibres1.1%-5.9%6.7%1.6%

Sub-total1.6%0.8%6.4%4.1%

Highly-protected products

Meats, fresh and processed6.1%0.9%3.8%7.0%

Milk and milk products6.3%1.9%2.6%4.3%

Grains, raw and processed2.0%1.6%-0.4%3.7%

Sugar and Confectionery0.5%0.9%-2.4%4.3%

Sub-total4.3%1.3%0.5%4.7%

Other products

Seafood, fresh and processed10.4%3.2%9.9%8.1%

Fruits and Vegetables, fresh and processed8.2%1.6%3.2%7.7%

Beverages, alcoholic and non-alcoholic8.9%4.3%5.9%8.5%

Animal feed3.9%1.0%6.1%9.0%

Other processed food13.8%5.4%7.5%12.8%

Edible oil & oil seeds4.8%2.2%3.5%3.6%

Others3.0%1.5%-1.2%6.5%

Sub-total8.2%2.7%5.0%7.8%

Total5.6%2.0%3.0%5.8%

Source: Comtrade

Table 10

Table 10 - The Structure of Agricultural Exports

(Percent of total world trade)

Group of ProductsIndustrial Country ExportsDeveloping Country ExportsTotal Exports

1980/8190/9100/0180/8190/9100/0180/8190/9100/01

Tropical products

Coffee, cocoa, and tea, raw and processed1.92.22.48.23.93.410.16.15.8

Tobacco and Cigarettes2.23.13.31.11.11.33.34.24.6

Nuts and Spices0.50.50.51.00.91.11.51.41.6

Textile fibres3.32.91.82.82.21.36.15.13.1

Sub-total7.98.78.013.28.17.221.116.915.1

Highly-protected products

Meats, fresh and processed10.311.210.42.72.72.412.913.912.8

Milk and milk products5.65.75.20.10.20.55.86.05.7

Grains, raw and processed14.09.17.71.91.52.615.810.610.3

Sugar and Confectionery2.52.01.73.81.61.76.33.73.4

Sub-total32.428.025.18.56.17.240.834.232.2

Other products

Seafood, fresh and processed4.26.35.63.26.07.97.412.313.4

Fruits and Vegetables, fresh and processed8.010.29.25.77.27.613.817.416.8

Beverages, alcoholic and non-alcoholic5.17.17.90.40.71.65.67.79.4

Animal feed3.43.13.12.02.02.25.55.15.3

Other processed food1.12.12.90.20.30.81.22.43.7

Edible oil & oil seeds1.51.51.41.81.61.73.33.13.1

Others0.90.70.60.30.20.31.30.90.9

Sub-total24.431.030.713.717.922.038.149.052.6

Total64.667.863.735.432.236.3100.0100.0100.0

Source: Comtrade

Table 11

Table 11 - Export Shares by Products and Income Levels

(Percent of total world trade)

Exports to Industrial CountriesExports to Developing CountriesTotal Exports

Group of ProductsIncome80/8190/9100/0180/8190/9100/0180/8190/9100/01

Tropical ProductsHigh Income*6.16.45.61.82.42.47.98.78.0

Middle Income7.34.23.01.41.41.68.85.64.6

Low Income3.71.81.50.70.71.04.42.62.5

o.w.LDC1.20.50.30.30.20.21.50.70.5

Total17.212.410.13.94.55.021.116.915.1

Highly-Protected ProductsHigh Income22.221.718.510.26.46.632.428.025.1

Middle Income4.33.22.83.52.54.07.75.86.8

Low Income0.20.10.10.50.20.20.70.40.4

o.w.LDC0.10.00.00.30.10.10.40.10.1

Total26.725.021.414.19.110.940.834.232.2

Other ProductsHigh Income20.327.625.24.03.55.524.431.030.7

Middle Income9.212.613.83.33.75.812.516.319.6

Low Income1.11.31.70.20.30.71.21.62.4

o.w.LDC0.30.30.30.10.10.20.30.40.5

Total30.641.540.77.57.512.038.149.052.6

Total Food and AgricultureHigh Income48.655.649.316.012.214.564.667.863.7

Middle Income20.820.019.58.27.611.429.027.731.0

Low Income5.03.33.31.31.32.06.44.65.3

o.w.LDC1.50.80.70.70.40.42.21.21.1

Total74.578.972.125.521.127.9100.0100.0100.0

Source Comtrade: * High income is industrial countrires

Table X

Table X - Proportion of Tariff Lines Non Ad-Valorem

%RawIntermediateFinal

Canada212533

Norway485969

Russia121053

Turkey0621

US404344

EU224558

Source: World Bank estimates

Tariff Peaks Are Very HighSource: WTO IDB (MFN Applied Duties)

Tariffs Escalate in Final Products Source: WTO IDB (MFN Applied Duties)

ProtectionDairyHighest OECD support ($42.1 billion), with tariffs of 30% and higher worldwideMyriad of instruments used (tariff, TRQ, export subsidy, price discrimination)Dynamic market fueled by fast-growing trade in components and foreign direct investment

ProtectionRiceMature but important marketWorld average tariffs of 43% (217% for short/medium grain rice). Total OECD support of $24.3 billionProhibitive tariffs in Japan, Korea, Taiwan, EUTariff escalation by stage of milling in EU and LACHigh tariffs in Indonesia, India, and many net importing countries outside Middle East

ProtectionCottonLow tariffs, significant US and EU production subsidies of $4.4 billion in $20 billion SugarWorld average tariff: 26.6 percent (sugar and confectionery); OECD support $5.2 billion

High domestic support and trade policies in EU, US, Japan, including TRQs, and export subsidies

80% of production & 60% of trade at prices higher than the world price

Stagnating Trade Share of Developing Countries in Agriculture(percent) 62.1 47.6 Source: COMTRADE

Developing Country Exports have Surged in Non-Traditional Products with Low ProtectionTropical Products include: Coffee, cocoa,,tea, nuts, spices, textile fibers, sugar and confectionery;Temperate Products include: Meats, milk, dairy, grains, animal feed, edible oil and oil seedsOther Processed Products include: Tobacco and cigarettes, alcoholic and non-alcoholic beverages and other processed food

Percent of developing country exports

1981

1991

2001

Reforms would deliver large welfare gains and structural changesMost global gains are due to agriculture and food processing

Without reforms trade surpluses will increase for industrial countries

Predicted changes in output, imports and exports are many times the welfare gains

Results are robust to changes in key assumptions

Reform Effects

CottonRemoving US and EU production subsidies is key for growthEliminating distortions would increase world prices by 10-20%Expansion expected in West Africa, Central Asia, and Australia, contraction in EU, USDairyRemoving distortions would increase world prices by 20-40% and welfare by $3.5 billion

Reform Effects

SugarRemoving all support would increase world prices by 20 to 40 percent, with aggregate welfare gains of $4.7 billion and up

Gainers: Producers in Brazil, Thailand, Latin America, Africa and Australia; consumers in US, Japan, EU, and beet producers

Adjusters: Producers in US, EU, Japan, and all northern developing countries, and import quota license holders

Decoupling Support

Move to reduce tariffs and replace production linked subsidies with decoupled support payments

Little effect on output so farNot all support replacedNo time limit and reversalsRequire land to be in agricultural use

Preferences for Low Income Countries

Small number of products have large benefits (sugar, bananas)

Products and rules by major industrial countries are very different

No major diversification has taken place as a result of preferences

In Caribbean the preferences have held back diversification

Agro-Food Standards

Proliferation and tightening of standards, both official and private sector

New demands are manageable for middle-income countries and organized industries in poorer ones

20 low and 28 lower middle countries export fish to EU with reduced inspections

Implications

Difficult to initiate reforms in developing countries without global reform

The Uruguay Round, NAFTA, and EBA, are bringing some discipline, but much deeper multilateral reform needed

Significant reduction of border protection is a crucial first step

Border reforms alone are not sufficient. Real reductions of domestic support needednot just the color box game

www.worldbank.org/prospects/globalag