Caribbean (LAC) and the Asia-Pacific region (Monata, 2006; Nayyar, 2006). The trend toward increasing trade relationships and regional cooperation between Asia and Latin America is likely to increase in the near future. It is likely that trade and economic cooperation between LAC and ESAP will increase at the cost of ESAP-EU and ESAP-USA cooperation (Tammen, 2006).
Chinese investments and Chinese and Indian cooperation with African countries is another trend that will increase significantly in the near future, bringing the ESAP region the status of preferred development partner for the African countries. Chinese overseas investments are expected to grow to US$60 billion in 2010-2015 (GIBS Review, 2006).
The call from the EU seeking ASEAN investors to invest in the new EU member States is an example of negotiating stakes for ASEAN in the EU (bilaterals.org, 2007). In today's hierarchy, the U.S. dominance is unchallenged, but U.S. preeminence is declining in relative terms and may in two to four decades eventually dissipate (Tammen, 2006).
It is predicted that smaller trading groups will bring in much greater intra-group gains, though globally their share may not gain much. The projections for SAARC trade are:
• Complete elimination of tariffs will increase intrare-gional trade by 1.6 times the existing levels. The volume of intra-SAARC trade will increase from the present figure of US$5 billion to around 14 billion in 2015. An increase in overall trade does not necessarily represent an increase in the ratio of inter-SAARC trade to total trade by SAARC members.
• Dynamic gains are 25% more than static gains.
• Smaller member countries tend to gain relatively more than larger ones. The latter is stated as an empirical argument, but it is a theoretical one as well and is borne out by the experiences of other FTAs elsewhere in the world (SFG, 2005).
Overall, regional cooperation presents a positive scenario for agriculture for all of ESAP. Major benefits that arise from regional cooperation include the potential for redressing the negative impacts of globalization on small farmers, rural women and other marginal production systems like coastal fisheries.
4.2.4.6 Agricultural trade
Trade in agriculture and allied products grew significantly in the region during 1991-2004 (FAO, 2006a). The ESAP region as a whole will continue to be a net importer of agricultural products (including forestry and fisheries). Current trends in net surplus production and trade surplus in sub-regions such as Southeast Asia and the Pacific islands are likely to continue (FAO, 2006a). South Asia and the developed Asian economies, particularly Japan and Singapore, will continue to be net agricultural trade deficit sub-regions. Many of the developing economies are likely to expend less of their foreign exchange reserves on import of cereals/other agricultural commodities, thus revealing relatively stronger agricultural trade positions. The impact of AKST on agricultural trade is evident in the fact that in ESAP countries in 2002-2004, food/agricultural imports, especially cereal imports, accounted for less than 10% of foreign exchange reserves compared to 1969-71, when cereal imports were |
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40% to 120% of foreign exchange reserves in some countries (FAO, 2006a). If WTO regulations on domestic subsidies in agriculture are accepted or enforced, some of the current agricultural exporters may become importers—of food and of labor to cultivate the food. The strength and resilience of multilateral treaties and multilateral organizations, as well as domestic policies to maintain economic growth and social justice will be tested in the context of agricultural trade in ESAP during the period 2010-2020.
The current trend is towards Preferential Trade Agreements (PTAs). Both India and China have increased their share in global trade and in various bilateral agreements and PTAs within the ESAP region. SAARC, SAFTA, PICTA and several other bilateral agreements have added to the flow of goods—especially agricultural and manufactured goods within the ESAP region. This trend is expected to continue well into the next two decades. China's growth in trade (9% of the global increase in exports and 8% of the global increase in imports during 1995-2004) compares favorably to India's (2% of increase in global exports and imports during the period) (FAO, 2006b; World Bank, 2006a).
The ASEAN + 4 (China, Korea, Japan and India) promises to be a powerful alignment for agricultural trade and economic development (Batra, 2006). In 2003, the intra-block trade for ASEAN+4 was 44% of the total value of trade in these countries, which is significantly higher than the intra-block trade in any other PTA (Batra, 2006). The sharp decline in tariffs and non-tariff barriers has been a major factor fueling this intra-regional trade. Some protection for selected commodities are often negotiated among members, especially among bilateral/preferential trade agreements, e.g., palm oil (Malaysia), rubber (Thailand), fruits and vegetables (Thailand, China), sugarcane, wheat, oil seeds (India).
One of the fears in most ESAP economies is that farmer livelihoods will diminish with increasing imports of critical crops and with removal of tariff barriers. With globalization the domestic and international policies that govern the barriers to economic opportunity for the poor will change (Bardhan et al., 2006). The key question is whether a responsible public sector in the Asia-Pacific countries and regional cooperation will help the rural poor and small-scale farmers weather the crisis and provide investments and incentives for better economic opportunities.
Regional and sub-regional collaboration around environmental concerns should follow increases in agricultural trade in ESAP. Major trade and economic cooperation agreements, environmental, biodiversity and ethnic factors call for sub-regional cooperation in ensuring sustainable development, especially for poor people in small island Pacific countries (UNESCAP, 2006). The Pacific countries are likely to face the greatest threat from climate change, with potentially disastrous consequences (See 4.2.8). The success of agricultural trade and its translation into sustainable economic development depends on how individual Governments handle social security for the rural and urban poor who will face a crisis in production and consumption and how the tradeoffs between agricultural production for trade and environmental costs are addressed in the wake of increasing input prices and decreasing real prices of agricultural commodities. |