Food for thought

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: The Uruguay Round of the General Agreement on Tariffs and Trade (GATT) resulted in a decline in the tariffs imposed by developed countries to negligible levels. This was a matter of considerable jubilation for developing countries as their exports could now enter developed country markets more easily. Indeed experts reasoned that in the new era of almost complete openness in trade, countries could now specialise in areas of their comparative advantage to maximise productivity and then use the exchange mechanism underlying trade to augment welfare.

Thus, it was pointed out that self-sufficiency in food grains was no longer required by a country as it could meet its food grain deficits through resources generated from exports. The only people that emphasised self-reliance in food grains were stoic nationalists, who did not want to depend on other countries for their daily bread or bow to the cold logic offered by economists. The subsequent turn of events has vindicated the stand taken by such nationalists and defeated the cold logical arguments offered by pedants.

The above developments can be explained in the following manner. When developing countries pulled at and demolished the traditional system of tariff barriers to trade, they expected easier entry of their primary products into developed countries. Instead, most developed countries came up with an even more deadly and sophisticated set of barriers to agricultural trade which were promoted under the garb of national self interest. These were termed as Technical Barriers to Trade (TBT) and Sanitary and Phyto-Sanitary (SPS) Measures. TBT were linked to product and process specifications. For example, using such restrictions an export consignment of mangoes can be returned if they are not of a certain hue or size or if the processes used for cultivation have not met certain requirements.

SPS measures on the other hand try to anticipate the danger caused to human, plant and animal health by export consignments through tests for concentrations of chemicals and pesticide residues. A ceiling is set for concentrations of residues in consignments. Consignments which exhibit concentrations exceeding this ceiling are returned to the country of origin by the importing country. These barriers have become so important that in a single year from August 2002 to July 2003, the US Food and Drug Administration rejected 630 Chinese shipments of agricultural and aquatic products. These barriers can therefore be a source of considerable loss for the exporting country.