Food Crisis and Export Taxation:
the Cost of Non-Cooperative Trade
Policies
Antoine Bouët– IFPRI and University of Bordeaux
David Laborde Debucquet – IFPRI
ZEF-IFPRI Workshop – Bonn, July, 8-9 2014
Food Crisis and Export Taxation
• Export restrictions
• Trade measures permanently adopted
• Multiplication of these measures during the food crisis
• What are the effects of such policy measures?
• Why do governments restrict exports in times of
food crisis?
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Food Crisis and Export Taxation
• Theoretical and empirical background of the
implementation of export taxes during food
crises.
• Stabilization of domestic food prices
• Amplification of world price surges
• Same effect as reduction of import duties by
large net-food importing countries
• … except on public revenues
• Impact on small net-food importing countries
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Food Crisis and Export Taxation
• 1. The economics of export taxation in the
context of a food crisis: partial and general
equilibrium analysis
• 2. Use of the MIRAGE model: world price
shock on agri-food products and countries’
reaction through increased export taxes and
reduced import duties
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1. The economics of export taxation
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1. The economics of export taxation
• Impact of export taxes on food products
•
•
•
•
•
Terms of trade
Food security and final consumption price
Intermediate consumption price
Public revenues
Income redistribution
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1. The economics of export taxation
• GE model of international trade
• 4 countries: two are large (1 and 2), two are small (3 and 4).
• 2 commodities: an agricultural commodity (A) and an industrial
commodity (I).
• Countries 1 and 4 have a comparative advantage in A
• Countries 2 and 3 have a comparative advantage in I
• Well-behaved production and consumption functions
• Policy issue: either an import tariff or an export tax on good A
• Governments either maximize national welfare or stabilize domestic
food price
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1. The economics of export taxation
•
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1. The economics of export taxation
• If the objective of a government is a stable
domestic price of the agricultural good, in case
of food crisis
• Decrease of the import tax in the large food-importing
country
• Increase in the export tax in the large food-exporting
country.
• Both policies increase the world price of the
agricultural good
• and hurt country 3,
• while increasing country 4’s real income.
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2. An illustration with MIRAGE
• Use of the MIRAGE model of the world economy
• Simulation of a demand shock = 10 % increase
of the world price of wheat
• …+ various trade policies implemented to
stabilize domestic price of wheat
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2. An illustration with MIRAGE
MIRAGE label
MIRAGE Label
Australia
Paddy and processed rice
Rest of Asia
Wheat
China
Other grains
Thailand
Vegetable and fruits
Vietnam
Oilseeds
Bangladesh
Sugar
India
Plant fiber
Pakistan
Other crops
Rest South Asia
Livestock
Canada
Other natural resources
United States
Other food
Mexico
Fossil fuels
Rest of Europe
Meat
Argentina
Vegetal oil
Rest of LAC [Latin American and Caribbean]
Dairy products
Brazil
Textile
Oil exporters
Wearing and apparel
EU-27 [European Union]
Leather
Rest of CIS [Commonwealth of Independent
Other manufacturing products
• Geographic and
sectoral aggregation
States]
Russia
Chemical products
Ukraine
Motor vehicles and transport equipment
MENA [Middle East and North Africa]
Capital goods
Egypt
Services
West Africa
Construction
East Africa
Transportation
Southern Africa
South Africa
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2. An illustration with MIRAGE Scenarios
Scenario
Description
Base
Base demand shock.
ET
Implementation of export taxes in countries that are net wheat exporters, such that the real domestic price of
wheat is constant.
IT
Implementation of import taxes (or import subsidies) in countries that are net wheat importers, such that the real
domestic price of wheat is constant.
IT0
Implementation of import taxes (import subsidies are forbidden) in countries that are net wheat importers such
that the real domestic price of wheat is constant; the domestic price is not constant if the strategic rigidity (no
import subsidies) is binding.
ETIT
Implementation of IT import taxes in countries that are net wheat importers and of export taxes in countries that
are net wheat exporters, such that the real domestic price of wheat is constant.
ETIT0
Implementation of IT0 import taxes in countries that are net wheat importers and of export taxes in countries
that are net wheat exporters, such that the real domestic price of wheat is constant (import subsidies are
forbidden).
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2. An illustration with MIRAGE
Country/region
IT
Rest of Asia
-20
China
-30
Thailand
-28
Vietnam
-13
Bangladesh
-19
Pakistan
-29
Rest of South Asia
-19
Mexico
-27
Rest of Europe
-32
Rest of Latin America
-30
Brazil
-25
Rest of Commonwealth of
-30
• Variation in import
duties following the
world price shock
(%)
Independent States
Middle East and North Africa
-42
Egypt
-26
West Africa
-21
East Africa
-24
Southern Africa
-19
South Africa
-28
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2. An illustration with MIRAGE
Country
ET
ETIT
ETIT0
Australia
16
47
19
India
19
46
21
Canada
18
52
25
United
20
52
27
Argentina
19
50
25
Russia
25
57
37
Ukraine
20
50
50
• Additional export taxes
(%)
States
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2. An illustration with MIRAGE
World prices (% changes compared to baseline)
Sector
Base
ET
IT
IT0
ETIT
ETIT0
Wheat
10.84
16.76
27.31
12.62
41.10
20.58
Dairy products
0.04
0.05
0.00
0.02
0.03
0.04
Livestock
0.19
0.21
0.18
0.13
0.24
0.17
Meat
0.07
0.08
0.06
0.06
0.07
0.07
Oilseeds
0.09
0.06
0.09
0.08
0.05
0.04
Other crops
0.16
0.17
0.18
0.12
0.18
0.13
Other food
0.04
0.08
-0.04
0.00
0.04
0.04
Paddy and processed rice
0.21
0.13
0.32
0.20
0.10
0.11
Plant fiber
0.13
0.11
0.14
0.10
0.13
0.09
Sugar
0.14
0.12
0.20
0.12
0.16
0.10
Vegetable and fruits
0.20
0.21
0.25
0.14
0.27
0.14
Vegetal oil
0.01
0.01
-0.01
0.00
0.00
0.00
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2. An illustration with MIRAGE
Welfare impact of various scenarios (% changes compared to baseline)
•
•
For each country/region the columns represent successively the following scenarios:
1 - Base; 2 - ET; 3 - IT ; 4 – IT0; 5 – ETIT; 6 – ETIT0
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Food Crisis and Export Taxation
• Export taxes = Stabilization of domestic
prices
• Export taxes = beggar-thy-neighbor
policies (deteriorate trading partners’ real
incomes).
• Process of retaliation and counterretaliation
• Reduction of import duties
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Food Crisis and Export Taxation
• Asymmetry between exporters and
importers of agricultural/food commodities
• Need for international cooperation
• Why do policymakers choose to use trade
policy instruments to pursue their
objective?
• The WTO does not prohibit export
restrictions
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Food Crisis and Export Taxation
• Cardwell and Kerr, 2014, Can Export Restrictions be
Disciplined Through the World Trade Organization? The
World Economy
• Pessimistic view on this perspective
• A discipline on export taxes will not be effective (not deterrent)
• Timelines are different from usual disputes: a dispute over export
restrictions during a period of high food prices is unlikely to be
resolved before the prohibited restriction is removed
• Retaliation are difficult to design:
• it should be retaliation in another sector
• It should amount to the same value as lost exports: difficult to
implement in the case of trade between poor NFIC and
countries having imposed export restrictions
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