Food Safety and Security under Doha WTO Regulations Impact on Americas Southwest - Term Paper Example

Food Safety and Security under Doha WTO Regulations impact on Americas Southwest Summary Relevant information pertaining “The Food Safety and Security under Doha WTO Regulations impact on Americas Southwest” has been developed. Before the implementation of the DOHA, it was noted that certain issues regarding trading were prevailing. This had a negative impact on food security and safety concerns for distinct countries. The issues related to global trading relating to agribusiness are however trade barriers that include both tariff and non- tariff. Export and import duty form the tariff barriers while the subsidy provided by the government to domestic producers and the import and export licenses form the nontariff barriers. In a bid to resolve the barrier shortcomings, strong arguments have emerged among different members in the Doha round of WTO. This led to the member states coming up with an agreement of free trading that finally came to be accepted by all the member countries. The free trade agreement had a positive impact on the southwestern region of the United States as the region`s trading greatly improved. Food shortage within the region has also reduced as the free trade provides more food products that are more affordable compared to the period before free trade was introduced. Though established with the aim of improving trade in the region by providing lower price products, the trade has led to significant cash outflow within the region. The member states have also not been in a position to agree on all matters pertaining food safety and security leading to uncoordinated trade in some instances. 2. OBJECTIVES The main objective of this essay is to give a broad description on ”food safety and security under Doha WTO regulations impact on Americas Southwest region”. The essay also aims at considering the relationship between food safety and the security norms of the Doha WTO regulations. This is inclusive of the food security disputes that arise in the international market and the global trade commodities. The essay will also give details on the trade agreements and disagreements that have arisen in the global market in previous years. This essay, however, concentrates mostly on the southwest region of America. 3. PERSONNEL Personnel refer to individuals who provide labor to a company, an association or an organization. Many personnel are associated with food security and safety. These include representatives of various member states and representatives from various world trade organizations. These personnel play a major role in coming up with agreements that are aimed at improving the quality of trade for the benefit of all the member states. The Doha WTO, however, considers the United States of America government as a very important personnel as its regulations are meant to have an impact mostly on America`s southwest region. Being an active member of WTO, the US government plays a major role in making decisions pertaining agribusiness as it is expected that the decisions made must affect its southwest region. This makes the US government not only very decisive but also a very important member of the organization. The regulations of any agreement made by WTO have a major impact on the Us department of food and security. These qualify this department as the key personnel in the organization: hence their views have to be considered in the organization sittings. Down in the hierarchy are the common people who are affected either directly or indirectly by the implementations of agreements made by WTO. Though the agreements are attained upon reaching a consensus by the member states, they are aimed at making an impact on the lives of common people. This qualifies the common people as very important personnel of WTO. The people affected by this decision are however mostly citizens from the American Southwest region (Smith 150-205). 4. PRODUCT/SERVICE Agribusiness is the business related to agricultural production, either owning or operating large-scale farms or catering to those who do. It involves business related to farm machinery, agrochemicals, crop production, and distribution of agricultural products and processing of agricultural products among others. Agriculture forms the basis for the survival of human beings on earth. Therefore, agribusiness is a very crucial part of any nation. This is evident from the fact that even the countries with low agricultural productivity have to depend on the other nations with a surplus of the same. Agribusiness also serves as a source of income not only to the farmers but also a major source of revenue to an agricultural producing country. Though food and agricultural products serve as important elements in the contemporary world, they also serve as potential threats to its consumers (animals and human beings). The first WTO Doha Round negotiations were launched in 2001 in Doha. During the negotiations, Qatar was viewed as crucial initiative due to its quest for cooperation in several important issues. The most important issues discussed with significant priority during this ministerial conference were food safety and security. Due to the Uruguay round to consider the multilateral idea of food security and quality regulations, the divergent views were brought up during the Doha conference. The Doha round also responded to the then ongoing food crisis witnessed by diverse countries by addressing the issues related to the escalating and ever changing food prices in the global market. Having discussed several issues, many world leaders were of the idea of supporting local food production as the primary means to eliminate the prevalent challenge of the food crisis. The personnel present in the Doha round also concluded that that the increased dependence on the international market increased the risk of food safety and insecurity. This led to the leaders to be highly committed to formulating an innovative means to secure both food safety and security policies (Wright 156-169). 5. INTERNATIONAL MARKET ANALYSIS. 5.1 Industry: in time memorial, agribusiness has played a major role in maintaining a growing population and ensuring the survival of both human beings and animals. This qualifies agribusiness as the oldest and most popular trade in the word. 5.2 Competitors: the thriving of extensive agribusiness is dependent on the production of insufficient agricultural products buy some countries. On the other hand, some countries are favored by climatic conditions and good soils making them produce more than they require. This in turn causes the countries with insufficient production to rely on those with sufficient production (Valdés and Foster 2-33). 5.3 Customers: several countries such as those in the Middle East region are covered mostly with the infertile land while those in the Polar Regions have low productivity. The need for food as a basic need qualifies non-productive countries as potential buyers to the productive nations. This then makes the citizens of such nations rely on imported food for survival. 5.4 Suppliers: Good climatic conditions support high agricultural productivity. This is also favored by good soils and a favorable environment to conduct agriculture. Countries such as China and India are in a position to produce enough agricultural products to feed not only their citizens but also to export to other countries. The excess production forms the basis of export to other countries making such countries the main great agricultural suppliers. However despite having unfavorable climatic conditions, advancement in technology in the field of agriculture makes some countries to be termed as efficient agricultural producers. United States of America, for example, doesn`t have favorable climatic conditions, their technological advancement makes the produce sufficient agricultural products (Smith 150-205; Wright 156-169). 6. MARKETING STRATEGY Lack of a defined marketing strategy was a major cause for the launching of the Doha round of WTO. The continued insecurity and lack of safety for food products globally played a major disadvantage to several countries as it was a major cause for lack of sufficient food supply. This was also impacting negatively on international trade as the countries supplying their surplus products were not in a position to deliver them to their destinations efficiently. The beginning of the Doha round of WTO negotiations had a major concern on agriculture-related cases and the solving of the international trade barriers created by tariff and non-tariff barriers. Though the removal of trade barriers was aimed at improving trade in the region, strong arguments have emerged for a long period. The US, Japan and the member states of the European Union were the major personnel playing a part in the active part in the arguments. Developing nations represented by China, India, Brazil, South Korea, South Africa and Brazil also played a major part in the active arguments (Smith 150-205). The arguments began in the first round of Doha in 2001 hence this round is mostly associated with the argument on fair trading. The idea of fair trading was aimed at creating negotiations among member states in a bid to come up with a fair trade policy that would benefit the developing nations mostly. Following the previous history of food insecurity, negotiations began under the main topic of security and safety of food products. The idea of benefiting the developing nations did not, however, auger well with the developed nations causing them to argue that this was a plan to spearhead the fall of some nations and provide an opportunity for the growth of others. Having come up with no clear agreement in the 2001 round, several other attempts were made in a bid to come up with a clearer solution. These are evident by the successive WTO meetings held in Cancun in 2003, Geneva 2004, Paris and Hong Kong in 2005, Geneva 2006, Potsdam in 2007 and Geneva, 2008. These attempts led to a successive removal of trade barriers in several nations. However, this did not take place immediately as sudden removal of tariff rates risked the fall of economies of the involved nations. The tariff barriers removed included all the possible cases (import tariffs and export tariffs). The successful removal of tariff barriers induced attempts to remove the non-tariff barriers also. Successful removal of non-tariff barriers demanded the removal of import and export license restrictions in trading. This was inclusive of the government subsidies made by different nations in a bid to domesticate its traders. Another important achievement of the Doha round of WTO regulations was the attempt to remove the import quota from different countries in which the producers would be able to enjoy the privilege of unlimited production of agricultural products and be in a position to sell it not only in the domestic and national markets but also in the global markets. Though the removal of both the tariff and nontariff barriers was achieved, the time had to be considered as a major factor in the implementation of the regulations. The implementation of the regulations of the Doha round of WTO brought many benefits with it. With the removal of the pre-existing trade barriers, significant increase of the global income was noted. Actually it was estimated that if the trade barriers of all the participating nations were reduced to one-third rate, a global income of above US $500 billion would have been realized. The implementation of the regulations served to the advantage of developing nations as it was noted that their income from agribusiness significantly increased. A country like Kenya for example was able to amass significant profits from its locally produced products such as tea, coffee, oil seeds, pyrethrum and many more. 6.1 Customers: the unfavorable climatic conditions of the South-Western region of the United States of America make it a poor producer of agricultural products. The characteristic lower level of rainfall and infertile soil in the region makes it unsuitable for farming hence the low productivity of agricultural products. The insufficiency in crop production makes the region a potential buyer of products from the other regions as food is a basic need hence the citizens of that area can`t survive without it. 6.2 How to deliver products/services to customers: despite the poor farming conditions in the southwestern part of America the advancement in agricultural technology has enabled some parts to be able to produce agricultural products. However due to the unfavorable conditions, the harvest made is not sufficient to feed the entire population. The country, however, enjoys a great advantage as their advanced technology enables them to store food products for a longer period hence they suffer fewer losses in with regards to food spoilage (Broussard 28-61; Frost 51-63). 6.3 Cost analysis: the low agricultural productivity in the south western region of America translates to dependence on imported food products from other states and other countries. Though the country has a high degree of development in the production of agricultural food products, the cost of the final products must be greatly influenced by the import duty as in most cases the raw materials are not produced by the native residents. In a bid to meet the expected food demand in the region, large amounts of food products have to be imported into the US south-western part. 7. RISK FACTORS Though the Doha round was aimed at improving the international trade in agribusiness, several issues have emerged that are not in support of the fair trade agreement. These issues have mostly arisen due to some countries interest in taking political advantage over others by creating significant trade barriers. Economic conditions have also played a major role as some countries find it advantageous to limit their neighbor`s power of trade by creating significant barriers to agribusiness. Political and economic interests have played significant roles in the creation of barriers that limit the power to trade in many nations. 7.1 Tariff barriers Tariffs are government imposed duties levied on imported or exported goods in a particular country or a region. The inclusion of tariffs in agribusiness has played a major role in the creation of significant barriers in agribusiness. Levying of duties on agricultural products has a negative effect has it not only limits agribusiness on national borders but also increases the prices of food products making them more expensive(Smith 150-245). 7.1a Export tariff barriers These are duties levied on exported goods with an aim of discouraging the export of the same. The government`s main aim of imposing export duties is to reduce the export of a certain product so as to increase it`s availability in a nation in a bid to make it available to the citizens at a reduced price. In agribusiness, these serves to the advantage of some nations as food products are availed to the citizens and the need to import food from other nations is reduced. Imposing of export tariff barriers also serves as an opportunity cost of a nation as the overall effect is an increase in national income though the export cost is incurred. In most cases, governments employ the use of export tariffs as a means to earn political sovereignty as these puts their counterparts depending on imports from the same country at an economic disadvantage. This in turn serves to earn countries with export tariffs a political advantage. 7.1b Import tariff barriers This is the levying of tariff duties on imported products. Most governments employ import tariff duties with the aim of gaining political advantage by limiting the economic growth of other nations. Imposition of import tariff duties makes imported products more expensive. This in turn makes them more costly compared to domestic products hence putting their market at risk. Import duties are aimed at discouraging the importers of food products while at the same time support the domestic producers. Low prices of domestic products translate to a high preference by citizens hence the domestic producers enjoy the advantage of high profits. The domestic producers face little or no competition from outside nations hence the country with the import tariff duties enjoys attains a high economic benefit. Import tariff barriers also reduce profits to the exporting nation hence the exporting nation faces the risk of economic loss. 7.2 Nontariff barriers Besides the tariff barriers where countries control their imports and exports to earn political advantages, other nontariff barriers also play a significant role in controlling the trade of food products globally. These are mostly created by the governments of various nations in a bid to control trade within the countries. The nontariff barriers include export subsidies, import licensing requirements, and standard disparities among others (Smith 150-205). 7 .2a Import license This refers to the restriction in providing a license for importing food products from other parts of the world. Apart from limiting importing of food products into a country, import licenses also play a major part in limiting cross-border trade in several countries as some countries power to sell their products in other countries is curtailed. This serves to the advantage of domestic producers as they participate in a market with no foreign competition. On the negative side, import licenses deny the country the money earned through import duties hence the national income is reduced. Continued importing of products into a nation causes the domestic currency of a nation to reduce hence a significant trade deficit is witnessed in a nation. This also has an impact on the fall of valuation of domestic currency thus risking the fall of a country`s economy. Import license impacts negatively on exporting countries as they have to incur losses due to the import regulations of the licenses. The countries supposed to import the food, on the other hand, suffer inadequate supply of food products as the regulations discourage the potential sellers. This posses the risk of high inflation within a country and hence famine is the most likely effect. 7.2b Export license Apart from the import license, an export license is also imposed on food products. An export license is a nontariff barrier in which restrictions are put in providing the license for exporting food products to other countries. This licensing is also mostly used by countries to gain political and economic advantages over other countries. By restricting producers from selling their products outside the country, the government aims at availing locally produced food products into the country. This, however, does not auger well with importing countries as they risk a shortage of food hence a high inflation rate is expected (Smith 150-205). Countries depending on imported food face a risk of economic devastation due to lack of food and important tools for the trade. The overall effect, however, is the rise in the fiscal and current account deficit of the importing nation. 7.2c Subsidies A subsidy is a form of financial assistance such as a grant offered by a particular government. Several countries have used subsidies as one of the methods to cause trade barriers across different nations. By providing subsidies to domestic producers, thus government aims at supporting them to produce low-cost products. This in turn provides a competitive advantage to the local traders as they can keep their prices low compared to the prices of imported products. This serves to their advantage as they dominate the local market with low competition from the imported products. Subsidies are hence considered unfair to importing nations as they support local producers. The Doha round of WTO came up with negotiations on issues that were related to food regulation either directly or indirectly. The personnel represented were able to conclude the negotiations on a positive note where they agreed to implement the Sanitary/Phyto-Sanitary (SPS) and Technical Barriers to Trade (TBT) Agreements related to further negotiations of developing countries into the international food system. The agricultural discussions were inclusive of “non-trade concerns” that were mostly issued pertaining food safety, labeling, and animal welfare. During this period, the trade and environmental group also discussed the implementation of WTO rules that they concluded were to apply to all WTO members. The WTO members are also members of the environmental agreements such as the parties to Cartegena Protocol, which is responsible for the authorization of the precautionary principle in risk management. These precautionary principles were however discussed in the Doha round where the role of the government in restricting trade to protect the environment and public health was specified. During the Doha round, negotiations to clarify and develop WTO disciplines on subsidies imposed on fisheries and the significance of this sector on to developing countries was also developed. A wide range of subsidies was ruled out while the need for flexibility in the imposition of subsidies in small-scale and labor-intensive fishing in developing countries was identified. A similar case was also noted in the negotiations aimed at removing trade barriers in environmental goods, and services were also noted (Valdés and Foster 2-33). Though the Doha round was aimed at bringing an improvement on GATS, gaps on the proposed policy can be identified. Similarly, the represented personnel were unable to agree on trade facilitation and agriculture during the Doha round. Concerning the price benchmark pertaining the volume of food stock in countries different points of view was noted. Development of agricultural and industrial markets across different countries by reducing farm subsidies on affluent nations appeared to be a major point of disagreement. The idea of offering special protection to farmers in countries like India and China and the suggestion on taking banana imports from Africa and the Caribbean countries to the European Union also appeared to be a major point of disagreement. There also evolved a seemingly unsolvable argument between United States of America and India during the Doha round on the special safeguard mechanism (SSM) that has the duty of dealing with protecting the interests of the financially inferior farmers by allowing countries to levy special tariffs on agricultural goods in the instances of price fall or import surge (Valdés and William 505-530). SWOT ANALYSIS Strength: having witnessed free trade in member countries, the Doha round of WTO has influenced many countries and regions with the south-western part of the US serving as a good example. With the incapability to produce enough agricultural products, the region depends on trade by importing agricultural products to meet its needs. The implementation of the Doha round of WTO regulations, the region has experienced tremendous benefits. One of the major positive impacts in the region is the availability of food products in the region which has ruled out the possibility of the expected food scarcity due to the regions climatic conditions and soils. This implies that famine is unheard of in the region as the population is sustained by the imported food products from trade. The implementation of the Doha round of WTO regulations has also heard a significant impact on the maintenance of food security and safety in the region. The WTO initiative of removing both tariff and nontariff barrier on agribusiness has also had a major positive impact in the region as the food products can not only be imported but also are bought at a lower price. The removal of these barriers provides cheap foodstuffs, and hence the domestic market ends up selling them at a pocket-friendly cost. Availability of foodstuffs at a low price to the local consumers in turn plays a major role in decreasing the inflation levels within the region. The decrease in inflation levels has a major benefit to the country`s economy as a whole as it faces a lower risk of falling. The implementation of the WTO regulations has also played a major part in increasing a countrys purchasing power. This is due to the reduced prices of food products in the local market. Weakness: though the implementation of the Doha regulations was aimed at achieving a free and fair trade by maintaining high levels of food safety and security, its negative impact cannot be overlooked. With the removal of trade barriers trade has been made easy hence raising the interest of potential exporters. This in turn has led to the southwestern region of the US witnessing challenges pertaining the risk of competitiveness of traders with efficient selling potential. The free trade agreement has raised concerns not only in the US but also other parts of the world as foreign traders with a high production capacity set food product the prices low than the prices of the domestic market in a bid to increase the scope of their markets. This impacts negatively on the low producing regions such as the southwest region of the US as they are faced with the challenge of competing with international traders. In most cases, this leads to disappointing results as the foreign traders end up grasping the available customers. Opportunity: the countries in which the Doha round of WTO regulations has been implemented have a high chance of growth due to the free trade. The southwestern region of the US, for example, has witnessed tremendous growth after the implementation of the trade regulations. Improved trade activities have resulted in the growth of the region`s economy to a commendable level. The trade on food products in the region has been boosted to a higher level offering significant income opportunities to several people who got engaged in food products trading in the region. Availability of sufficient food products in the region has also led to business competition among the local traders. Despite the external competition from the foreign countries, the domestic businessmen have risen to positions of buying the food products and competing among themselves to supply the local market. This has however played a big role in promoting the growth of domestic traders who supply the local markets. The US being a first world country has advanced technology in food production and storage. The existence of these technologies has offered a good opportunity for the country to compete effectively with the competitors from other regions. The country has applied the technology to improve their agricultural production and trading of the same despite their natural shortcomings making them qualified competitors. The local traders also have not been left out in the application of the same hence increasing the business competition in the area. The highly improving trade efficiency has played a major role in regional growth. Fair trading has also been witnessed not only in the south western region of the US but also in the other parts of the world concerning the implementation of the regulations of the Doha round of WTO. Being granted equal trading opportunities, the traders have been motivated to involve themselves actively in the global market. The fair trade policy has also resulted in a healthy trading environment that is being enjoyed by member states up to date. With high expectations due to the provision of an equal platform, the domestic traders have been highly motivated to compete with the external traders (Smith 150-245). Threat: the free trading policy has enabled the US to import actively foodstuffs to feed its growing population. This, however, translates to a significant cash outflow out of the region to other countries in the world. The cash outflow poses a threat of significant economic loss to the region that could, however, lead to a significant revenue loss. The free trade policy can then be concluded to be a major contributor of a country`s trade deficit. This can be proved by regions that depend more on food products import than export such as the US southwestern region. This region has also experienced a major disparity on trade values due to an import high value compared to the export low value explained by the unfavorable agricultural conditions. 8. FINANCIAL STATEMENT AND PROFORMA. The below diagram depicts the economic forecast of Arizona, one of the states of the Southwest America. Arizona Forecast (Statewide) (Source: The University of Arizona, “Economic Forecast Data”) The below diagram shows the real GDP of several parts of the US and further, depicts the higher real GDP in the South-western region. 9. SUMMARY Due to the continued emergence of issues concerning food security and safety over the past decades, the World Trade Organization has taken the initiative to solve the prevailing concerns in the prevailing food system. The launching of negations in Doha in 2001 is one of the evident methods employed by WTO to maintain efficiency in international trade on agricultural products. These negotiations were aimed at addressing the challenges inhibiting the growth of trade and in turn promote the trade capabilities internationally. Food safety and security formed one of the main agendas of the convention as this needed to be addressed urgently due to the emerging food crisis witnessed by many countries. From then on, significant attention has been shifted to agribusiness when it comes to matters pertaining international trade. Despite coming up with solutions pertaining the escalating food prices, the highly flexible prices have provided a major challenge in the international market as leaders are unable to come into a consensus on the same. Though the WTO main aim was to come up with a free trade policy some countries have not been able to implement fully the regulations agreed on. Increased tariff rates in some countries have impacted negatively on the growth of agribusiness as it has significantly discouraged trade in some countries. Provision of subsidies by the government has also had a negative impact to trade as it makes importing of food products hard by outside countries. The southwestern region of the US has highly benefited from the trade regulations. Due to its poor soils and unfavorable climate, the region depends mostly on imported food for the survival of its citizens. The policy that aims at maintaining food security around the globe has worked to the advantage of the region as it as been able to get imported food products at a reasonable price. On the negative side, however, the policy creates a challenge to the farmers in the region as it welcomes sellers from the overseas markets who are a threat as they cause competition in the region. It was also during the Doha round that the agreements on sanitary/Phyto sanitary (SPS) and technical barriers to trade (TBT) were made. Disagreements were also observed during the convention as the discussions on trade facilitation, and agriculture were not completed. They were also not able to agree on the importation of bananas from African and Caribbean nations to the European Union. 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