After having been unpopular in the 20th century with the rise of protectionism, international trade and liberal ideas have boomed along with Globalization.
Nowadays almost no country remains totally cut off from international trade and discussions on new free trade agreements are constantly ongoing. Agricultural commodities are not an exception. Indeed countries are cooperating and becoming interdependent on each other, especially on the consumption of agricultural goods, as each region have different natural resources available. Most economists agree that the aggregate benefits from trade liberalization in the agricultural sector but in this context, it seems relevant to wonder if every country individually benefited from this opening. That is a common question to the authors of the literature I have used for this work.
The aim of raising this question is not only to answer by yes or no but also to figure out why are some developing countries harmed and whether they should still open up or not. This is what we target at explaining in this paper to then focus on a particular case in my following paper on the Ivory Coast in order to illustrate the following findings. The authors of the literature covering this question address several issues regarding developing countries in agricultural trade liberalization ; should they have a role in restructuring the international policies ? Should they follow the ones imposed by the richer countries and global organizations or should they step out to change their own domestic policies ? Tokarick explained for instance that in the past rounds of liberalization some developing countries were left apart and not forced to open and others were given more time to adapt to the new regulations. However, some developing economies were constrained to open, thus leading to the question; do developing countries have a lot to win in liberalization? The relevant researches exposed in his paper illustrate that the aggregate benefits but it was also found that indeed some countries were individually worsen off. A key element developed was the nature of the terms of trade of these countries; the net importers would lose from this openness whereas the net exporters would be better off. This possible individual harm depends on several other factors mentioned by the authors of the papers I used, namely ; the extent to which their own domestic barriers are reduced already and the nature of this liberalization (whether it as made via tariff elimination or subsidy elimination, the latter being most likely to be harmful). In fact, if all or most of the policies for liberalization of agricultural trade are conducted by high-income countries, then the developing countries would be harmed if they are net-importers as a result of the increase in world prices. In the other hand if only some of these regulations are made by developed countries then the developing countries would benefit to a better access of the market thanks to tariff reduction.
Ataman Beghin emphasized in his 2005 paper why these questions matter by giving striking data; as a matter of example, the poverty effects are much higher in the rural areas of developing countries than in the urban one. He stated that in spite of the rapid expansion of these urban regions the share of the low-income people won’t go down under 50% before at least 2035. As these people are the one working in the agricultural production sectors, their income would be directly affected by changes in subsidies or world prices in general. From 1980 to 2005 there have been only very little reform of the structure in the agricultural sector contrary to the manufacturing one that experienced specialization for instance. An interesting figure, especially for my following work on the Ivory Coast is that the share of traditional products (e.g. cotton, nuts, tea, spices, cocoa or coffee) dramatically decreased and is now representing a smaller share of international agricultural trade.
In opposition seafood, vegetables and processed foods account for over 50% and sugar and dairy products for almost 30%. Thus it suggests that there should be a focus on the global policies on non-traditional products to protect the countries for which export are largely composed of traditional agricultural products. Finally, I would like to address a criticism on the studies made on agricultural trade liberalization benefits; namely the lack of non-economic factors taken into account. Indeed, as developed by Anne M. Fell in her study on Ivory Coast, intern problems of countries might be factors preventing developing countries from really benefiting from this trade liberalization. For example, the liberalization of cocoa sector in Ivory Cost resulted in deplorable working conditions involving children labour.
It also conducted to environmental deterioration and ethnic violence leading the country to be unstable. This last argument could make us wonder whether these countries shall liberalize their agricultural sector. To conclude, we have seen that depending on many factors some developing countries are harmed by trade liberalization while others are better off economically speaking. This shows the complexity of the reality of each countries’ economy even though the aggregate does benefit from it. To answer our guiding question; yes, developing countries can win a lot from globalization and trade liberalization of agricultural goods. Even though some countries have been harmed by the latter for the reasons explained above, staying away from liberalization and globalization would be an ill answer to the challenges they represent. In spite, a solution with well managed and governed domestic policies coupled with a global regulatory framework and international cooperation seems like a -sure harder-, but better and sustainable way to handle this challenge.
Furthermore, the individual and interior conditions and eventual troubles of each country have to be taken into account and tackled efficiently to stop benefiting only the aggregate but also the individual countries. As an opening, we can question whether this is a mission to be accomplished by the individual government of each country which is the best placed to know the conditions of their State or by a global international organization which are more likely to have the means to accomplish it.