Impact of trade liberalization on agriculture in the Near East and North Africa
Key findings include:
- the link between trade liberalisation and agricultural price changes is ambiguous, and the effect of the latter on poverty is weak
- benefits of regional integration are limited as these agreements tend to be flexible
- gains from bilateral agreements would be greater if they included liberalisation in the agricultural sector
- independently reducing import protection, or unilateral liberalization, and domestic support of agriculture will increase aggregate income.
Authors propose policies and programmes that would enhance the positive effects and alleviate the negative effects of liberalisation:
- flexible factor markets that allow land, labour and capital to be reallocated from formerly protected sectors to newly profitable sectors
- trade facilitation measures that reduce the transaction costs related to trade
- support for the agricultural sector through a variety of green box programmes, such as agricultural research and extension, pest and disease control, inspection services and marketing infrastructure
- decoupled payments to farmers that are based on some fixed basis such as production or area planted in a base year, rather than on current production
- safety net programmes to assist poor and vulnerable households regardless of their occupation.
The study concludes that trade policy by itself is an imprecise and costly instrument for addressing poverty.