II - Co-operation Within the Global Institutional Framework

Summary

World exports of agricultural commodities have been growing at a slow pace while such exports by all developing countries have been rather stagnant. According to FAO estimates, world exports of agricultural commodities, excluding fisheries and forestry products, had risen from US$233 billion in 1980 to US$251 billion in 1987 while such exports from developing countries had increased only marginally from US$72 billion to US$73 billion during this period though dropping to as low as US$64 billion in 1982. Economic upheavals in developed markets, availability of substitutes, protectionism, and fluctuations in the supply of primary commodities are the main factors contributing to this situation. Developing countries of the region could strive to use their combined market power and the resultant bargaining power for the dual objectives of obtaining better prices for primary commodities and increasing their export volumes. The strategy should be to co-operate with developed countries within the international institutional framework as they are the more powerful and financially dominant group today.

Barriers

The biggest obstacle to efforts to enhance export earnings from primary commodities today is the protectionism practised in the major markets. Protectionist measures practised by the European Community (EC) are the most disruptive. High tariff barriers for agricultural commodities make those originating from ASEAN-South Asia region less competitive. This is especially true of commodities that compete with EC produce such as sugar, vegetable oils, and wheat. The heavily-protected, high-cost agricultural commodities of the EC countries are sold in world markets at subsidized prices, thus adversely affecting the more efficient producers of the developing world. Similar tariff barriers exist in the United States, Japan and other developed countries.

Of late, the developed countries have been concentrating on non-tariff barriers (NTBs). The General Agreement on Trade and Tariff (GATT) has identified more than 30 of the most commonly used of those NTBs among which are import quotas, minimum import prices, countervailing duties, customs valuation systems, sanitary requirements, licensing schemes and voluntary export restraints (VERs).