The Problem with Export Bans
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At last week's ICTSD dialogue on the needs of agricultural exporting and importing countries, export restrictions received a lot of negative attention. Panelist Joseph Glauber, Visiting Senior Research Fellow at the International Food Policy Research Institute (IFPRI) and former Chief Economist at the United States Department of Agriculture, shared his insights on the matter via email with Food for Thought:
Data from the WTO shows that the value of agricultural trade has more than tripled over the past 15 years. With projected food demand to increase by 70 percent according to some estimates, trade will become increasingly important in meeting food needs. Policies that affect trade thus have important consequences for the ability of governments to ensure food security for their citizens.
Food price surges are particularly pernicious for the poor. Poor households spend a large portion of their income on food, and in many countries, imported foodstuffs account for a large share of household consumption.
The lessons of the food price spikes in 2007-2008 and 2010-2011 are that misguided trade policies can exacerbate and prolong shortages. Export bans and other beggar-thy-neighbor policies may be effective in stabilizing one country's prices but at the expense of others. Moreover, those actions are often contagious as other countries react by imposing similar bans or by stepping up imports, further exacerbating shortages.
The upcoming WTO Ministerial in Nairobi provides an opportunity to discipline and reduce such distortions in global agricultural markets. Limiting export restrictions, in addition to progress on the traditional pillars--improved market access through lower tariffs, elimination of export subsidies, and reduction of trade distorting domestic support--would provide significant benefits to consumers and producers, particularly those most vulnerable to food price shocks.