Free fair agricultural trade
Key points of free and fair trade of agricultural products.
- Trade is continuing to globalize. International trade with agricultural products has been one of the most complicated part of enhancing trade and making it more liberal.
- The WTO is trying since its establishment during 20 years of its existence to facilitate enhancement of trade via multilateral agreements. So far the most common way has been agreeing on trade conditions bilaterally.
- Now we witness attempts to liberalize trade between large customs areas like European Union and NAFTA or European Union and MERCOSUR.
- In parallel WTO is continuing efforts started in Doha in 2001 to get out of the preparations. The most recent successful effort was made in 2013 on Bali but this was not about all from Doha.
- In the meantime another important milestone was reached – trade between developing countries exceeded the trade between developing and developed countries.
- We might believe that free trade agreements are really about completely free trade. Completely free trade with agricultural products is very rear and usually possible only within customs areas like within of the European Union, within the Free Trade Area of North America, within the customs union of independent states.
- The term free trade agreement is rather a diplomatic expression reflecting the attempt to move towards freer trade. We should be aware that in agriculture still customs tariffs are reaching as high as several hundred percent or even one thousand.
- There are other obstacles for trade like technical barriers to trade (TBT) which could impede trade substantially. Health of population and animals is often a shield to brake flows of trade with sanitary and phyto-sanitary (SPS) measures.
- For developing countries is often an impediment the voluntary requirements of sales chains which are going beyond internationally agreed standards.
- We hope that the trade is fair. Apart of being in accordance with all legal requirements it is expected that the price paid by consumer will be in reasonable manner transferred to primary producer and all chain participants get a reasonable share of the price.
- The price paid by consumer should help to be fair to the trader, to the processor and to the primary producer but also to the environment. It should include all environmental and social costs related to the production of food. Of course talking about costs in the chain, we assume an efficient production and in general an efficient performance throughout the chain.
- Trade is expected to bring wealth to countries and countryside. At the same time we feel the power of trade, even terror. Its terrorizing both producers and consumers. The producers experience hard pressure from retail chains which concentrate more and more and get more power.
- The consumers are exposed to increasing pressure of advertising and imposture of unnecessary needs of purchase. Simultaneously enormous amounts of wastes are produced via produced and unused food.
- However consumers are getting more and more aware of the food they are eating, their expectations are more and more sophisticated. They care increasingly of their health and are interested of nutritional information. They want to know where the products are produced and from where the raw materials are coming.
- The origin has to be made transparent and packages don’t have so much place to expose all those information. But consumers can obtain much more information using their phones and open the QR codes on packages.
- Apart of retail chains another possibility for producers to reach consumers is the shortest possible chain – direct sales. However we should not be over optimistic and should realize that there should be a lot of efforts to keep/achieve the share of 10-15% of total retail trade. Here of course the governments can help with well-targeted support measures.
- It’s very important to keep consumers informed about possibilities of direct purchase. A new possibility here internet sales with fast growing volumes.
- In the overall understanding of trends the international organizations contribute valuably with gathering and exposing data about prices and volumes but also analyses trends. FAO and OECD are working jointly on prognozing prices for decade ahead.
- WTO and OECD measure distortions of trade caused by government interventions into the free trade and making them transparent and compatible.
- There are many more aspects of trade. Consumers are worried about trade with GMO products, for some consumer groups cloning is not acceptable. Codex Alimentarius is continuously renewing the thresholds for additives and residues in food.
- But trade should be profitable for all stakeholders. There is an understandable interest in trade in value added. OECD is suggesting to measure the shares in trade with value added and convince countries about profitability of trade in value added.