Emerging Trade-Related Threats to Food Security: Evidence From China

Emerging Trade-Related Threats to Food Security: Evidence From China

Vasilii Erokhin (Harbin Engineering University, China)
DOI: 10.4018/978-1-7998-1042-1.ch016

Abstract

It is generally believed that free trade plays a vital role in stabilizing food supplies and food prices since abundant foods stocks in some countries coexist with shortages in some others. Contemporary global trade system, however, is becoming increasingly distorted by unfair and inefficient policies in many countries, creating both winners and losers among not only small developing economies, but also largest producers of food and agricultural products. One of the recent examples of such distortion is US-China trade tensions and potential tariff escalations where the agricultural sector is the most vulnerable. By raising import tariffs on food and agricultural products in response to protectionist policies, the countries may face a situation of rising prices for consumers, limited market access for producers, and increasing pressures on food security. In this chapter, the author develops the theme of the effects of globalized agricultural trade on food security with a critical focus on the importance of balancing trade liberalization and protectionism.
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Introduction

The majority of scholars agree that liberalized trade plays a vital role in stabilizing food supplies and food prices since abundant foods stocks in some countries coexist with shortages in some others (Erokhin, 2017, 2018). Unforeseen price surges can push millions of people in developing countries into poverty, aggravating income inequalities and threatening social cohesion. Malnutrition can result in maternal mortality and stunted growth of children, reducing their learning ability and lowering their productivity in adulthood. Government are pursuing various policy options for ensuring food security: expanding investment in agriculture; encouraging climate-friendly technology; restoring degraded farmland; improving post-harvest storage and supply chains; and even indulging in the promotion of niche products. They face special challenges as their growing middle class shifts from traditional staples to more nutritious products such as meat, fish and dairy whose higher resource intensity requires expansion of domestic agricultural capacity or greater reliance on imports. But importing countries also worry about unreliability of world markets in times of need and promote self-sufficiency in food along with trade policy restrictions.

Liberalization of international trade in food and agricultural products can affect the availability of certain foods by removal of barriers to imports, but also to foreign investments in the development of domestic production (Erokhin & Ivolga, 2012; Erokhin, Ivolga, & Heijman, 2014). Thow and Hawkes (2009) found that availability of processed food has risen in developing countries after foreign direct investment by multinational food companies. Thus, changes in trade policies have facilitated the rising availability and consumption of foods. Dorosh (2004) found the positive contribution of trade liberalization to food security and stabilization of supply and food market. Protection policies, including administrative restrictions of food imports with a view to increasing food self-sufficiency of the country, on the contrary, may cause unnecessary social costs and place food self-sufficiency into conflict with the goals of food security and poverty reduction. Warr (2011) studied the effects of an import ban on rice introduced in Indonesia and concluded that it let to achieve the required level of food self-sufficiency, but at the expense of reducing food security.

Despite a generally accepted belief that free trade plays a vital role in stabilizing food supplies and food prices since abundant foods stocks in some countries coexist with shortages in some others, liberalization of international trade has become a significant source of tension in contemporary agricultural change (Lee, 2007). In the conditions of globalization, where liberalization of food trade and the reduction of administrative protection of food producers are mandated by the rules of the World Trade Organization (WTO), many countries have lost a part of their sovereignty over food policies (Lawrence & McMichael, 2012). Some of them (primarily, developing ones) have become food dependent, others managed to benefit from easier access to foreign markets and unified framework of global trade in food. In general, globalization has refocused attention from trade-based food self-sufficiency to availability-based food security. According to Ghosh and Ghoshal (2017), structural changes in global food market have put in place concerns and challenges related to food prices, stability of food supply, and trade-economic aspects of food accessibility and affordability.

Key Terms in this Chapter

Food Market: The supply and demand of agricultural commodities and food products within a single country (domestic) or between countries (international).

Trade Liberalization: A process of reduction or elimination of constraints in the sphere of international trade, including reduction or removal of customs tariffs, import quotas, abolishment of multiple exchange rates, and simplification of administrative requirements to import and export operations.

Food Security: A condition when people have access to sufficient amounts of safe and nutritious food and are therefore consuming the food required for normal growth and development, and for an active and healthy life.

Foreign Trade: The system of international commodity-money relations composed of foreign trade activities of all countries worldwide.

Food Self-Sufficiency: An extent to which a country can satisfy its food needs from its own domestic production.

Trade War: A practice to counterbalance tariff rates in retaliation for the tariff rates of another country in an effort to gain trade advantages.

Tariff Escalation: A situation where the import duties on components or raw materials are lowest and move progressively higher on semi-finished goods upwards to the finished goods.

Belt and Road Initiative: A development strategy proposed by the Chinese government in 2013 and focused on the improvement of connectivity and collaboration among the countries of Eurasia through the increase of China’s role in global affairs.

Trade Protectionism: A set of measures to limit imports or promote exports by putting up barriers to trade that countries use to limit unfair competition from foreign industries.

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