There’s more to world agricultural trade than rules and regulations.
Sometimes basic economic forces overwhelm trade barriers.
That’s what is happening in the booming markets of southeast Asia, says Rick Barichello, a trade policy expert from the University of British Columbia.
“Domestic economic growth in these countries is more important for export opportunities for countries like Canada than trade agreements,” he said last week. “The WTO agreement increases export prospects, but underlying consumption growth seems to be more important.”
Ironically, Barichello made his remarks in the same week as Asian stock markets took a nosedive, culminating months of economic turmoil in the region that has seen local currencies collapse and interest rates take off.
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He told a conference on world agricultural trade that while the financial crisis will likely dampen investment and slow import demand in the short term, the underlying strength of the economies in the region points to continued growth and expanded trade.
New trade rules negotiated during the Uruguay Round provided for only modest changes in trade policy in southeast Asia, said Barichello. Many non-tariff barriers remain.
Nevertheless, imports of wheat, oilseeds and meat into the region have grown rapidly, reflecting increased food consumption, which in turn reflects overall economic growth.
“There is no evidence of import growth being blocked by import barriers,” said Barichello. “In fact, in some cases imports have grown faster than consumption.”
During the 10-year period ending in 1994, nine countries in the world had annual per capita economic growth greater than five percent. Five of those countries were in Asia, including China, Malaysia, Indonesia, Thailand and Korea.
In the 1990s, consumption of wheat increased by 10 to 15 percent annually in the region, beef by eight to 30 percent, depending on the country, and dairy products by six to 13 percent.
Imports into Indonesia increased by 7.2 percent annually for wheat and 12.7 percent for beef, while in Thailand wheat imports have increased by 7.9 percent annually.
