| Agro-Food Trade Strategies under Changing Patterns of Global Trade: A Study on Non-tariff Measures | |||
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| Author | Cho, Sungju | ||
| Views | 62247 | Publication Date | 2018.02.14 |
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Backgrounds of Research The world economy has grown rapidly, and international trade has expanded as the trade barriers have lowered during the past 70 years of pursuing ‘free trade.’ However, as global economic growth has slowed in recent years, the trade protectionism has become intense in order to protect the poor industries in each country. Under the circumstances, non-tariff measures have been used as a means of protecting their industries rather than direct tariff barriers. Non-tariff measures are expected to continue in line with the strengthening of protectionism among the world's major countries, including the Trump administration in the United States. In addition, if the tariff reduction effect of Free Trade Agreements (FTAs) takes place, it is expected that the major agenda in future international organizations and trade negotiations will be centered on non-tariff measures. In particular, agricultural products are subject to trade barriers due to non-tariff measures pertaining to different food safety and certification schemes in different countries. Accordingly, it is an important policy task to analyze the non-tariff measures of each country and to prepare strategies that will respond to the measures. Therefore, this study aims to derive the direction of agricultural trade policies in Korea by analyzing the determinants of non-tariff measures and the effects of non-tariff measures on agricultural trade. Method of Research The research method of this study is composed of literature reviews and quantitative analysis. Through the literature and data review, the status of non-tariff measures by types, major countries, and items and the characteristics of each are analyzed. To this end, the non-tariff measures database is processed around the WTO’s Integrated Trade Intelligence Portal data, and data from UNCTAD, the World Bank, WITS, and UN Comtrade are utilized. For econometric analysis, first, we analyze the determinants of the non-tariff measures considering domestic and foreign factors such as macroeconomic factors, trade structure and agricultural structure of each country. Second, we analyze the effect of non-tariff measures on the exports of our agricultural products using the gravity model. Research Results and Implications In general, non-tariff measures tend to be expanded. In recent years, they are concentrated on technical non-tariff measures such as SPS and TBT although various measures have been applied in the past. We examined the major non-tariff measures issues in Korea's primary trading partners such as Japan’s revised list of pesticide standards and food labeling, China’s regulations on food safety, the US’s revision of the food safety modernization act, the EU’s mandatory inspection and revision of the food labeling law, and Vietnam's pest risk analysis. Although there is a difference depending on the partners, most cases of border rejections for Korean agricultural products pertain to ingredient nonconformity and labeling. The analysis of the impacts of economic, political and social factors on non-tariff measures shows that increases in import penetration rates, decreases in tariff rates, increases in the relative price level and increases in agricultural value added significantly affect non-tariff measures upward. The results show that the level of non-tariff measures is expected to be prolonged, the level of technological measures may increase and non-technical measures may vary from one continent to another. The results of analyzing the effect of non-tariff measures in importing countries on Korean agricultural exports show that technical measures such as SPS and TBT have had negative effects on agricultural exports in Korea. Specifically, when exporting to OECD countries, both SPS and TBT significantly hindered the export of fresh agricultural products, and processed agricultural products were more influenced by TBT. When exporting to Korea’s primary trading partners, the SPS and TBT measures of these countries significantly inhibited the export of fresh agricultural products and processed agricultural products. Based on the results of analyzing the determinants of non-tariff measures and the effects of non-tariff measures on Korean agricultural trade, it is possible to intervene in two directions. First, the internal and external factors of each country affect the increase and decrease of non-tariff measures, but it is very difficult to directly intervene in the internal and external factors of other countries. The fact that the non-tariff measures are different from country to country also suggests that countermeasures are needed at the national level. Therefore, it is necessary to anticipate and respond to non-tariff measures in the future by strengthening monitoring, focusing on major countries and major factors, and identifying changes in the international economic and political environment. Next, the analysis of the effects of non-tariff measures on Korea’s exports suggests that countermeasures for each item and country are necessary. Therefore, in order to respond to non-tariff measures, it is first necessary to make efforts to improve the trust level of Korean agricultural products. Second, it is advised to enhance support for identifying and observing related systems for technical non-tariff measures and to specify procedures for resolving disputes in trade agreements. Third, non-tariff measures of importing countries do not necessarily have negative effects on the export of agro-food products in Korea and thus non-tariff measures can be used as an opportunity for agricultural exports. This study focuses on suggesting research projects rather than suggesting concrete policies. Although existing studies on non-tariff measures in the agricultural sector have largely focused on identifying the current status of non-tariff measures and presenting countermeasures, this study has provided a comprehensive analysis of the effects of non-tariff measures on trade and the factors influencing non-tariff measures. The results obtained from the current study would help to grasp more objective situations and develop specific strategies for further research projects. Researchers: Cho Sungju, Oh Saera, Kim Seungae Research period: 2017. 1. ~ 2017. 10. E-mail address: sungjucho@krei.re.kr |
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