China's Competitive Threat to Latin America: An Analysis for 1990–2002

This paper explores China's competitive threat to Latin America in trade in manufactured goods. The direct threat to exports to third country markets appears small: Latin America and the Caribbean's (LAC's) trade structure is largely complementary to that of China. In bilateral trade, several LAC countries are increasing primary and resource-based exports to China. However, the pattern of trade, with LAC specializing increasingly in resource-based products and China in manufactured goods, seems worrying. Given cumulative capability building, China's success in increasingly technology-based products with strong learning externalities can place it on a higher growth path than specialization in “simpler” goods, as in LAC. China may thus affect LAC's technological upgrading in exports and industrial production. The issue is not so much current competition as the “spaces” open for LAC in the emerging technology-based world.     

TRADE REFORM AND THE PROSPECTS FOR PROCESSED FOOD EXPORTS FROM DEVELOPING COUNTRIES

This paper draws attention to the relative neglect of the consequences of barriers to processed food exports from developing countries in the literature examining the effects on these countries of agricultural trade liberalisation. These barriers are of three kinds: trade policy barriers; differing health, food safety and environmental standards; and, barriers arising from the evolving market structure in food processing and distribution in developed country markets. The paper discusses the likely significance of the gains to developing countries from reduction of tariffs on processed food commodities and examines the consequences of the EU single market programme for developing country food exports.     

Linking of U.S. monetary policy and exchange rates to world soybean markets

The linkage between macroeconomic policies and agricultural commodity trade has become an important research issue of agricultural economists. This paper investigates the macroeconomic linkage of soybean trade competition between the exporting countries of the United States, Brazil, and Argentina in the EC-12 and Japan import markets. It is argued that U.S. monetary growth may have important impacts on the competitive position of U.S. soybean exports through exchange rates. Two relationships are investigated: (a) the effects of U.S. monetary growth on the agricultural trade weighted exchange rates, and (b) the responsiveness of agricultural commodity prices and U.S. exports to exchange rate movements. Results indicate that a weak dollar increases imports of soybeans and soymeal significantly which serves to increase the equilibrium world price and increase both U.S. and Brazil/Argentina exports in the long run. However, during periods of more expansionary U.S. monetary policy there is little evidence of significant increases in market share position for U.S. soybeans and soymeal in world markets.     

Structural transformation away from agriculture in growing open economies

Understanding how and why economies structurally transform away from agriculture as they grow is crucial for developing sensible growth strategies and farm and food policies. Typically, analysts who study this and related structural change issues focus on sectoral shares of gross domestic product (GDP) and employment. This article draws on trade theory to focus as well on exports. It also notes that the trade costs of some products are too high at early stages of development to make international trade profitable, so a nontradables sector is recognized. The general equilibrium model presented in the theory section provides hypotheses about structural transformation in differently endowed open economies as they grow. Those hypotheses are tested econometrically with a new annual endowments dataset covering 1995–2018 for more than 130 countries. The results are consistent with long run de-agriculturalization in the course of national economic growth in terms not only of sectoral shares of GDP and employment but also of exports. We find those shares are not significantly affected by either differences across countries in relative factor endowments or relative rates of sectoral assistance from government; but the agricultural GDP and employment shares are higher the higher is the share of agriculture in national exports.     

Trade and agroindustrialization in developing countries: trends and policy impacts

There have been important changes in the international trade of processed and high-value added food products from developing countries over the past several decades. One of them has been the emergence of oilseeds and fruits and vegetables, replacing traditional products such as sugar, coffee, and cocoa as the main exports from developing countries. Another trend has been the collapse of African agroindustrial exports and the increase of exports from Asia. The paper highlights key trends, and explores possible reasons for the trends, focusing on trade policies in less-developed countries (LDCs) and developed countries (DCs). The paper argues that national trade policies and other economic policies appear to have been relatively supportive of agroindustrial production and exports in Asia. In contrast, policies have had more mixed effects in Latin America and the Caribbean (LAC), and seem to have been just one component in a larger array of forces inhibiting economic development in Africa. The performance of agroindustrial production and exports from LDCs may be now more dependent than ever on the completion of reforms in the agricultural trade policies of DCs. For Africa, however, a more supportive international environment and better macroeconomic and trade policies will not be enough to ensure a thriving agroindustrial sector within a broader process of economic development until military confrontations stop.     

The New Tomato Suspension Agreement: What Are the Implications for Trade Flows?

This paper examines the implications of the new tomato suspension agreement (signed on March 4, 2013, by the U.S. government and Mexican tomato producers) for trade in fresh tomatoes and processed tomato products. The empirical analysis is performed through a gravity model that accounts for vertical linkages between primary and processed goods. The estimated gravity parameters are used to implement suspension agreement scenarios. The results show that the new suspension agreement leads to considerable decreases in Mexico's exports of fresh tomatoes to the United States. These decreases are accompanied with various trade diversion and deflection effects. There are increases in Mexico's exports of processed tomato products to the United States and other countries, and in Mexico's exports of fresh tomatoes to non‐U.S. destinations. These increases do not amount, however, to considerable compensations of the decreases in Mexico's fresh tomato exports to the United States. The results also suggest that the initial 1996‐based suspension agreement has significantly smaller impacts on trade flows over the period that preceded the implementation of the new suspension agreement.     

Will developing country debt forgiveness increase agricultural trade?

Latin American countries are important customers in international agricultural trade. However, between 1981 and 1987, U.S. agricultural exports to these countries declined by almost 50%. One explanation for the above decrease is the change in financial conditions facing many countries in this region. Outstanding debt in the Latin American countries continued to rise through the 1980's, reaching over $120 billion for Brazil and Mexico by 1987. In this paper, we develop an import model which considers the effect of the debt crisis on the ability of developing countries to purchase agricultural commodities in world markets. We estimate the model for four countries: Mexico, Brazil, Chile, and Venezuela. The estimated results are used in a simulation model to obtain the effects of a 50% debt forgiveness scenario. Results indicate only a modest improvement in agricultural imports of the four Latin American countries considered in this study. These four countries would expand agricultural imports by $400 million per annum given the debt reduction.     

Comparative Advantage in Demand: Experimental Evidence of Preferences for Genetically Modified Food in the United States and European Union

The United States (US) exports more than US$6 billion in agricultural commodities to the European Union(EU) each year, but one issue carries the potential to diminish this trade: use of biotechnology in food production. The EU has adopted more stringent policies towards biotechnology than the US. Understanding differences in European and American policies towards genetically modified (GM) foods requires a greater understanding of consumers’ attitudes and preferences. This paper reports results from the first large‐scale, cross‐Atlantic study to analyse consumer demand for genetically modified food in a non‐hypothetical market environment. We strongly reject the frequent if convenient assumption in trade theory that consumer preferences are identical across countries: the median level of compensation demanded by English and French consumers to consume a GM food is found to be more than twice that in any of the US locations. Results have important implications for trade theory, which typically focuses on differences in specialization, comparative advantage and factor endowments across countries, and for on‐going trade disputes at the World Trade Organization.     

AGRICULTURAL EXPORTS OF DEVELOPING COUNTRIES: ESTIMATES OF INCOME AND PRICE ELASTICITIES OF DEMAND AND SUPPLY

This paper provides new evidence on income and price elasticities of demand and supply of agricultural exports from developing countries, on the basis of (a) a consistent and fully specified supply and demand model, and (b) statistical estimation procedures not frequently used in the estimation of agricultural export functions. Estimates of price and income elasticities of demand for aggregate agricultural exports for all developing countries taken together — as distinct from individual exporting countries — are found to be low; moreover, export price as distinguished from non-price factors plays a relatively insignificant role in increasing export supply. Hence, an attempt by all developing countries to expand traditional agricultural exports with low price elasticity of demand may not yield rising earnings for all; but in fact may result in falling export revenues. Insofar as individual exports of all developing countries (not individual countries) are concerned, income and price elasticities of demand for such tropical commodities as tea, coffee, cocoa and bananas are also found to be low, except for new, non-traditional exports like pineapples. This indicates the importance of diversification of agricultural exports as a vehicle for their future growth.     

Short- and long-run exchange rate effects on forest product trade: Evidence from panel data

Impacts of exchange rates on international forest products trade are widely debated, but the empirical evidence regarding this issue is still inconclusive. Here, we report findings of the impacts of the exchange rates on the main forest product imports and exports of the US, from January 1989 to November 2004. Export data consisted of monthly series of the main products exported by the US to different countries. For imports we used monthly series of the principal products imported by the US from Canada, the major source of imports. The strongest evidence was obtained by pooling the data across countries and products. In the short run, exports were very elastic with respect to the exchange rate (−2.6), while imports were moderately elastic (1.2). In the long run, the elasticity decreased but remained significant (0.5 for both exports and imports). Appreciation of the US dollar tended to matter more than depreciation, but the hypothesis that the effect of exchange rate was symmetric could not be rejected.     

Labor issues and COVID-19

The COVID-19 pandemic has prompted Canada and several other countries to impose an economic shutdown to prevent a deadly public health crisis from becoming much deadlier. In the agriculture and food sector, several hundred thousand restaurant workers have lost their jobs. The rise in unemployment, the closing of restaurants and schools, and social distancing have triggered demand reductions for certain commodities and foods and demand increases for others, bringing along changes in demand for inputs including labor. Canadian employers of temporary foreign workers (TFWs) are facing delays and additional constraints in recruiting, but so have US and European employers of TFWs. Rising food security concerns are making protectionist trade policies popular. Domestic and foreign firms may export less and do more foreign direct investment, inducing trade in jobs.     

The Doha Round of the World Trade Organization and Agricultural Markets Liberalization: Impacts on Developing Economies

We investigate the impacts of multilateral removal of all border taxes and farm programs and their distortions on developing economies, using a world agriculture partial equilibrium model. We quantify changes in prices, trade flows, and production locations. Border measures and farm programs both affect world trade, but trade barriers have the largest impact. Following removal, trade expansion is substantial for most commodities, especially dairy, meats, and vegetable oils. Net agricultural and food exporters emerge with expanded exports; net importing countries with limited distortions before liberalization are penalized by higher world prices and reduced imports. We draw implications for current World Trade Organization negotiations.     

Dairy disaggregation and joint production in an economy‐wide model*‡

We examine the impact of dairy disaggregation and joint production on trade liberalisation outcomes in an economy‐wide model. Depending on parameterisation, our model includes either (i) a single dairy commodity, (ii) several dairy commodities without joint production or (iii) several dairy commodities with joint production. In a numerical application, we consider the removal of US tariffs on dairy exports from New Zealand (the world’s largest dairy exporter). We show that failing to account for joint production when dairy commodities are disaggregated leads to misleading results. Our preferred dairy production function differs from those used in other applied trade models. Our analysis can be used to determine when accounting for joint production in other sectors is important.     

China and Taiwan access to the World Trade Organization: implications for U.S. agriculture and trade

This paper investigates the impact of China's and Taiwan's accession to the World Trade Organization (WTO) on U.S. and world agricultural trade by means of a 12-region, 14-sector Computable General Equilibrium model for world trade and production. The simulation results show that integrating China and Taiwan into the global trading system could induce more competition on labor-intensive Products and reduce their prices. It could drive up the demand for capital and skill-intensive manufactured goods, thus further improving industrial countries' terms of trade. The expansion of labor-intensive sectors in China could also induce contraction in agricultural exports from China and increase its net agricultural imports by as much as US$9 billion annually, causing food and agricultural exports from other regions to increase. Total U.S. food and agricultural exports could increase by about US$2.4 billion annually, with the non-grain crop sectors gaining the most. The biggest winner from China's WTO accession is China itself. WTO membership could bring a net welfare gain of about US$30 billion a year for China, a substantial benefit compared with the gains for the USA (US$8.5 billion).     

中国经济发展必须直面输入型金融危机

中国大宗商品进出口价格的巨大背离、中国国内价格的背离将导致企业整体利润下降或亏损增加。由于我国融资体系以间接融资为主且数家国有银行占主导。因此企业经营风险将集中转移至银行体系，直接表现为银行呆坏账提高。这种风险积聚到一定程度将可能以金融危机形式表现出来，而这种金融危机不同于传统意义的金融危机，而是由于中国对外经济依存度过高、国际市场大宗商品和制成品不合理的定价体系所造成的。     

The Technological Structure and Performance of Developing Country Manufactured Exports, 1985‐98

This paper maps out the recent manufactured export patterns of developing countries, using a new and detailed classification by technological levels. It argues that export structures, being path-dependent and difficult to change, have important implications for growth and development. Low-technology products (which have the least beneficial learning and spillover effects) tend to grow the slowest, and technology-intensive products (which have the most beneficial effects) the fastest in world trade. East Asia dominates the developing country scene, with 70% of total manufactured exports, and its role rises over time. There is also high and rising concentration at the national level. The technological specialization of different regions and the leading exporters differ greatly, as do the strategies used to achieve competitiveness. Received trade theory cannot explain these patterns without considering learning processes and the policies used to promote them.     

The effects of the Yuan‐dollar exchange rate on agricultural commodity trade between the United States,China, and their competitors

The United States claims that the undervaluation of Chinese currency, the Yuan, causes U.S. exports to China to decrease and imports from China to increase. Furthermore, because the Yuan is undervalued only against the dollar, U.S. competitors have an advantage in exporting to China and China has an advantage over its competitors in exporting to the United States. This study develops a theoretical model to analyze the effect of the Yuan undervaluation on prices, supply, demand, and trade in the United States, China, and their competitors. This study applies a cointegration/error‐correction model to empirically quantify the short‐run and long‐run effects of the devaluation of the Yuan on important agricultural commodities traded between the United States, China, and their competitors. These commodities include Chinese imports of milk, soybeans, and cotton from the United States and U.S. imports of beans, fruit juice, and fruit from China. The results show that Yuan devaluation causes Chinese imports of U.S. milk, soybeans, and cotton to decline and U.S. imports of beans, fruit juice, and fruit from China to increase in the short run and in the long run.     

Russian Roulette at the Trade Table: A Specific Factors CGE Analysis of an Agri‐food Import Ban

In the summer of 2014 Russia imposed a ban on most agri‐food products from countries enforcing Ukraine‐related sanctions against Russia. We use a specific factors computable general equilibrium (CGE) model to simulate the short‐run impact of this retaliatory policy. The baseline is carefully designed to isolate the impacts of the ban on the European Union (EU), Russia itself and a selection of key trade partners. The modelling of the ban follows a novel approach, where it is treated as a loss of established trade preferences via reductions in consumer utility in the Armington import function. Not surprisingly, the results indicate that Russia bears the highest income loss (about €3.4 billion) while the EU recovers part of its lost trade through expansion of exports to other markets. An ex‐post comparison between simulation results and observed trade data reveals the model predictions to be broadly accurate, thereby validating the robustness of the modelling approach.     

Exports and governance: the role of private voluntary agrifood standards

The empirical evidence that institutional differences across countries affect bilateral trade is robust. The crucial question remains how countries can enhance trade amid these differences. In this article, we measure the degree to which governance and institutions differ between countries as “governance distance.” Using a sample of EU/EFTA imports, we examine how adopting private agrifood safety standards modify the effect of governance distance on exports of fruits and vegetables, in particular apples, bananas, and grapes, within a structural gravity framework. Our results show that while increasing governance distance hinders bilateral trade, the interaction of standards and the governance distance is positively associated with exports, hence partially offsetting the direct trade‐inhibiting effects of the latter. GlobalGAP certified countries see the trade‐inhibiting effects of governance distance on their exports reduced by about 50%, ceteris paribus.     

The effects of China's growth on the food prices and the food exports of other developing countries

This article explores the impacts of China's growth in the international markets of agricultural products along two dimensions: food price inflation and export growth in other developing countries. China's food imports of vegetable oils have grown dramatically over the last decade, linking China's economic growth to the recent increases in global food prices. If China is a source of global food price inflation, exporting countries will benefit whether they sell directly to China or not. These direct and indirect linkages are explored using a short‐run, partial‐equilibrium model of international trade in agricultural products in which consumer prices and trade costs are derived from bilateral trade flows. China's effects on food prices and exports are estimated by reducing Chinese food expenditures in 2007 by half, roughly China's level of expenditures in 1995. Results indicate that food prices as measured by CES price indexes in developing Asia, Africa, and Latin America would have been reduced by 1.27%, 0.32%, and 0.22%, respectively. China has been an important source of growth for exporters selling directly to China. There is no evidence of export growth due to an overall increase in food prices caused by China's growth.