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Market Access and Liberalization in Fish Trade - Implications for Aquaculture Development in Developing Countries". Mahfuzuddin Ahmed (WorldFish Center). FAME Workshop, University of Southern Denmark, 8-10 June 2005. Outline. Globalization and Fisheries Trade Market Access
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Market Access and Liberalization in Fish Trade - Implications for Aquaculture Development in Developing Countries" Mahfuzuddin Ahmed (WorldFish Center) FAME Workshop, University of Southern Denmark, 8-10 June 2005
Outline • Globalization and Fisheries Trade • Market Access • - Market Constraints • - Domestic Constraints • - South-South Trade 3. Impacts of Liberalization • - Consequences on fish resources • - Implications for fisheries and aquaculture management 4. Discussion and Policy Recommendation
Globalization: Some Welcome Developments • Growth in world trade has outpaced growth in world output • Fish trade is in the frontier of economic globalization • Rapid rise in fish exports a major developing country trade story (Asian) • Aggregate value of net fisheries exports from developing countries surpassed traditional agricultural exports • Prospects of huge gains - alternative source of fish supply to domestic consumers, favourable terms of trade, higher export earnings
Fisheries Globalization: Some Worrisome Consequences for Fisheries • Risk to domestic nutritional security and consumer welfare • Threats to sustainability of fisheries – selective and heavy exploitation • Massive implications for fisheries management • Overdependence on exports and price volatility • Newer forms of barriers to trade –market access constraints
Understood as rising economic, political, social and cultural linkages among people, organizations and countries at the global level Interpreted as a tendency toward wider application of economic, political, social, cultural, institutional, and legal practices Perceived as dominance of fewer cultures and economies The question is: Who gets included and who gets excluded in the globalization process? Globalization - Different Things to Different People
Globalization in Earlier Periods in History • 1700s to early 1900s - modern economic growth • Brought world integration to a peak • Ended in pain and disintegration • Two world wars and a global economic depression • Politically and militarily divided post-war world • New process to begin soon with generation, adoption and diffusion of technology • End of cold war
Fish in the Frontier of Economic Globalization Technology Policy Market
FISH ONE OF THE BIGGEST TRADE STORY • Net export of fish greater than all other food crops in developing countries • Net export of fish for food from developing countries ~USD18 billion Net exports of food commodities in developing countries in 2000 (source, FAO)
International Trade, MDGs and WTO • Improved market access and terms of trade for poor countries • Improved performance in fish trade and positive net export to help Millennium Development Goals (MDG) • Help trade flow smoothly, freely, fairly and predictably • Reduce tariffs and remove NTBs • Transparent trade policies • Trade concessions for developing country exports
Market Access – State of Play • Early efforts toward liberalization • Fish and fisheries products are not covered by the Agreement on Agriculture (AoA). • Instead, it is linked to the negotiations on Non-Agricultural Products Market Access (NAMA) • Some success in reduction of average tariff • Average tariff rate for fish reduced by 25% • Average tariff rates • 4.5% for developed countries • Below 20% for developing countries
Market Access – State of Play • Early success in reduction of tariff barriers soon followed with tariff peaks, tariff escalation and countervailing duties and proliferation of NTBs • Constraints to market access – • Demand side constraints (Tariff and Non-Tariff Barriers - NTBs) • Supply side constraints (Institutional constraints, capacity and affordability, sustainability)
Tariff and Non-Tariff Barriers Presently Applied in Fisheries
1. Market Constraints – Tariff • Differential approach to tariff reduction on imports – • Many bi- and multi-lateral agreements • reciprocal tariff concessions and access agreements • fishing license agreements • Increase in bound tariffs for developing country exports (21% to 73% in the Uruguay Round) • Tariff escalation : Tariffs on processed fish generally higher and discourages value-addition in developing countries (tuna loins, 24%) • Countervailing and anti-dumping measures – Example: Case of Vietnamese catfish exported to US – ban on use of the name ‘catfish’ for non-US native species.
1. Market Constraints – NTBs • TBT, SPS, labeling, quality standards present barriers to trade for developing countries • Frequent rejection of exports • Damage to national economy (eg. Five month ban on shrimp imports from Bangladesh by EU resulted in at least USD 14.7 million in short-term losses)
2. Domestic constraints related to international fish trade - How to meet the standards? • High costs and lack of resources to implement safety standards • Weighing costs against benefits of food safety standards and regulatory measures (short term pains versus long term gains) • Differences in economies of scale at both country level and individual processors or exporters level • Post-harvest and processing – methods and technical capacity
(…continued) • Unaffordable adjustment costs and longer gestation gap in restructuring government revenue sources • Customs tariff contribute significantly to government revenue • Tariff-revenue dependence in least developed countries • Institutional framework and policy environment to vertically integrate the supply chain to face the challenges of globalization. • Special characteristics of production, supply chain, trade policy processes and policy environments in developing countries • Capacity of developing countries in assessing fisheries trade policies
(…continued) • Resource management and governance issues • Weaknesses in property rights • Lack of strong institutional setups • Rent dissipation • Fisheries – can become exhaustible resource if over harvested
3. South-south trade Net imports of food fish (1997 and 2020) • Growing south-south trade
Growing south-south trade Net imports of fish meal (1997 and 2020)
South-south Trade (…continued) • Structural and institutional rigidities for trade within developing countries • Domestic trade policies (eg. Philippines – milkfish fry trade) • Export restrictions/tax versus import duty liberalizations • Role of food safety regulations in south-south trade – consumer preferences and increasing importance of food safety concerns
Impacts of Liberalization • Poverty, livelihoods and food security of poorer fishers and farmers • No clear evidence of negative impact on the poor (Kurien, 2004); More comprehensive studies needed • Impacts on producers and consumers in exporting countries • Greater incentives for commercial fishing operations, threatening livelihoods of fishing-dependent poor • Excess demand situation leading to sharp increase in price
Inequity at the micro-level Compounding effects of regulatory barriers Market Barriers to Small-scale Operators • Lack of access to land, water, capital, credit and technology • Lack of access to market/ lack of competitive advantage • Women being cut-off from the marketing and processing chain • High costs to exclude small producers and processors from export supply chain • Long supply/market chains affecting and adding costs • Lack of a uniform standard adding to risks and uncertainty
Impact of Liberalization(…continued) • Impacts on natural resource sustainability in fish exporting developing countries • Little provision to charge user-cost in developing countries for un-priced resource stocks • High price and high demand reduced stocks for number of species <20% of pre-fishing level • Increase in illegal, unregulated and unreported (IUU) fishing • Ecosystem impacts of excessive removal of target species through by-catch
Consequences on Fish Resources • Overexploitation -IUU • Emphasis on fish farming • Selective harvesting -LRFF Increasing demand Increasing prices Increasing trade
Implications for Fisheries Management Characteristics that may determine impacts of trade liberalization Developed countries have an advantage.
IMPLICATIONS FOR FISHERIES AND AQUACULTURE • Trade - a magnifier of existing environmental practices in both directions • - lack of effective management regime - trade is double-edged sword • - good management practice – trade is a Win-Win • High demand and high price will encourage aquaculture • Trade can lead to emergence of effective management regime • - at higher prices protection is afforded to resource • - higher incentive for good management
How fisheries should be taken up into WTO process Discussion and Policy Recommendations • General principals • Different international policies for different issues • Securing institutions • Bundling – Sectoral approach / Vertical approach • Horizontal Approach / Simultaneous agreement on all issue • Major issues to be addressed – Tariff, NTBs, capacity and costs • Special and Differential Treatment • Credit for autonomous liberalization • Less than reciprocal reduction • Export importance to developing countries
(… continued) • Related discussions of country positions on NAMA • Cautionary approach (eg. Japan, Korea, Taiwan) • Full and complete liberalization (eg. USA, Canada, Singapore) • ‘Less than full reciprocity’ (eg. India)
Policy Issues • Harmonizing international trade policies in developing countries • South-south trade • Ensuring sustainability • Fisheries to be treated as exhaustible resource (Japan, Korea, Taiwan) • Trade liberalization to be integrated within the framework of sustainable fisheries management • Role of effective management • FAO Code of Conduct for Responsible Fisheries
(… continued) • Special and differential treatment • Trade related technical and financial assistance • Longer implementation period • Less than full reciprocity in reduction commitment • Preference for tariff reduction on products of export interest to developing countries • Increasing the capacity of developing countries in trade negotiations • Technical capacity • Resources to participate and represent views in trade negotiations
Summary - Needed Actions • Tariff Barriers • Harmonization of tariffs • Tariff escalation is a significant barrier – accelerated reduction of tariff escalation • Tariff reduction have positive impact on south-south trade • Non-tariff Barriers (TBT and Standards) • Tendency to shift from one instrument to another – Instrument shift shouldn’t be allowed • Country of origin labels • Traceability and bioterrorism measures pose huge challenge as a non-tariff barrier • Lack of an agreed standard and lack of transparency in the implementation and verification are much bigger concerns than ability and willingness to comply with standards • Agreement on standards among exporter and importer Members • A subset of programme to deal with implementation of technical measures • Role of and access to technical knowledge (information, research and training
Needed Actions • Social Sustainability • How to handle adjustment costs? • Poor mobility of fishers and participation of small-scale operators • Environmental Sustainability • Will tariff reduction create pressure on stock? Lower price higher exploitation? • need for total agreement on effective management • fisheries to be treated as exhaustible resource (Japan, Korea, Taiwan) • capture-culture links be part of effective management • Should sustainable management be integrated into framework of trade liberalization • Agreement and enforcement on effective management and property rights • FAO Code of Conduct for Responsible Fisheries and Aquaculture
Business Security Consumer Benefit Environment Security Needed Action - Three Prong Strategy • Complete and Full Removal of Tariffs – ensure full access to markets • Many of the agreed principles for NAMA will apply • Invest in area of standards and safety as part of development investment • Total commitment to technical, institutional and infrastructure • Public-private partnerships • Development / technical assistance • Regional cooperation • Global agreement on management of fisheries and transboundary marine resources • Orbit agreement in WTO • Separate body in alliance with FAO, UNEP to handle management