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Tue. December 18, 2018
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Trade Policy is Foreign Policy
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In his book Connectography, Parag Khanna alludes to the idea that the world is no longer facing large-scale military conflicts, or even traditional mercantilist economic competition. Rather, all countries have become interconnected and are now engaged in a tug-of-war for supremacy. This tug-of-war, however, is not about pulling your opponent completely off balance, but instead a slow, calculated strategy to pull supply chains, resources, knowledge, technology, capital and so on, towards oneself.[1] In this new world, the interconnectedness of countries and their economies often becomes the major flashpoints of conflict around the world. Nothing connects countries more than the $18.5 trillion[2] traded annually in international markets. For this reason, trade policy is becoming increasingly synonymous with foreign policy. This has been seen in recent years when countries have engaged in a trade policy of “geo-economics” to take action against one another.[3] Russia banned imports of EU pork as a response to Western sanctions, Saudi Arabia lowered oil prices artificially in efforts to retain its preeminence in the Middle East, and the U.S. pivot to Asia was followed in lock step with a Free Trade Agreement (FTA) larger than any previous agreement. But, when looking at these events and the myriad of options available to each country, why was trade the chosen method of sanction? Suffice it to say that, in each of these circumstances, trade was the most efficient, direct, and low-risk option. In many ways, trade has become the new battlefield: a war by other means.[4]

Not only are trade and foreign policy becoming one in the same, trade policy is also being used to achieve foreign and domestic policy objectives. The Trans-Pacific Partnership (TPP) is an excellent example of utilizing trade policy for multiple reasons. This ambitious, complex, high-standard trade agreement fundamentally encapsulates U.S. foreign policy objectives in Asia in one single agreement. Artfully negotiated, the TPP changes "behind the border" regulations and domestic laws about intellectual property (IP), environment, labor, and cyber security in foreign countries, bringing them more in line with U.S. regulations. It effectively puts pressure on China to raise its own standards to join or compete with a trade group that contains 40% of world GDP. It establishes a stronger presence in the region, with new allies such as Vietnam and Malaysia, while also diversifying U.S. dependence on imports. If passed, U.S. agriculture would be one of the biggest beneficiaries of the TPP, which most closely relates to U.S. objectives for food security. While several trade papers could be written on the policy effects of the TPP, this analysis will focus solely on how the TPP could help achieve known U.S. policy objectives regarding food security.

According to the World Food Summit (1996), food security is defined as people having "...at all times, ...physical and economic access to sufficient safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life."[5] But food security can also be defined through the lens of national security, either domestically or internationally. Johanna Forman of the Stimson Center characterized food security as a “policy issue … evolved to reflect the dynamism of global events. The increasing attention paid to food’s impact on poverty, humanitarian crises, conflicts and climate change all suggest that food security is a national security concern.”[6]  Food security is a national security issue, but developed countries are increasingly viewing international food security as a foreign policy objective for both humanitarian and security reasons. For the U.S., food security is vital to national security in resolving conflicts worldwide (especially those with American interests involved) and helping to increase prosperity around the world. Indeed, it is no surprise that the U.S. government has set objectives to increase food security at home and abroad. 

Stated U.S. Policy Objectives

White House – Founded the “Feed the Future” initiative (Global Food Security Act 2016) aimed to increase agricultural productivity and generate opportunities for trade growth in developed countries, boost harvests and incomes of rural farmers, and improve research and development of proven technologies.[7] [8]

 Department of State – The Office of Global Food Security has created an agenda to gain food security by focusing on advancing agriculture-led growth, reducing under-nutrition, increasing the impact of humanitarian food assistance, and investing in country-led plans.[9]

Department of Agriculture – The USDA aims to establish global food security not only to aid hundreds of millions of hungry people, but to also sustain economic growth of these [AG1] nations and the long-term economic prosperity of the United States.[10]

Case Study: How the TPP helps achieve U.S. policy objectives for food security

According to the Food and Agriculture Organization (FAO), there are four main components of food security: 1) Availability: the "supply side" determined by the level of production, stock, and net trade; 2) Access: individual household access to food with regards to markets and prices; 3) Utilization: nutrition, food preparation, safety, and diversity; and 4) Stability: access to the first three components on a regular basis.[11] The TPP helps achieve each of these dimensions for the U.S. domestically and abroad for member countries.

Availability - Perhaps more than any other component, the TPP will increase the availability of food to much higher levels. Economically speaking, international trade makes more items available to more people. Simple Ricardian trade models show that if one country produces bread, and the other produces fish, trade between the two allows each country to specialize and gain more of each product. International trade creates economies of scale and introduces producers to new, larger markets, which increases production. For food items, increased production obviously benefits the country in which it is produced by creating more food security at home. But, are there benefits for developing countries? The UK Department for Business Innovation and Skills published a report entitled "Can trade improve food security?" It found that international trade increases incomes and the physical availability of food, and lowers prices and can reduce the impact of failed crops.[12] In addition, a study done by the FAO on trade reforms and food security showed that trade reforms (liberalization) was one of several key elements for improving food security in transition (developing) countries.[13] All these benefits can be found in the proposed TPP agreement.

In one of many examples, a study by the USDA made the case for U.S. dairy under the TPP, reporting $1.8 billion in additional exports by 2032.[14] Lower tariffs and better market access allows the U.S. comparative advantage in dairy, allowing it to enter more markets and increase availability, thus expanding production and food availability at home and abroad. This would be especially true in the developing countries of the TPP like Vietnam, Malaysia, and Peru. In 2014, U.S. agriculture exports totaled $150 billion, and the USDA expects exports to increase across the board, from barley to beef, and wine to wheat.[15],[16] The end result is greater food availability for the U.S. and its trading partners in the TPP.

Access - Access is another aspect of food security that is highly influenced by trade. Free trade deals remove barriers to trade to ensure a free flow of goods and services. The removal of tariffs in particular has a direct benefit for consumers. As tariffs are removed, the price of a good becomes cheaper, demand increases, imports expand, and “Dead Weight Social Loss” is eliminated. In fact, the only parties that "lose" from lowering or removing tariffs are the producers, as the additional producer surplus created by the tariff is actually transferred to consumers upon the removal of the tariff. Under the TPP, member countries have agreed to lower or remove tariffs on a large range of food items. This then transfers what was a producer surplus of 34% for beef products in Vietnam, 40% for rice in Malaysia, and 26% for wheat in Japan to consumer surplus in each country respectively.[17] What's more, because the U.S. already has relatively low tariffs on a majority of its agricultural products, expanding imports will not hurt domestic producers, and consumers will still feel the benefits. The surplus transfer and lower prices increase the access of food for all countries involved, importing and exporting, and thereby ensures a better condition of food security for both the U.S. and its trading partners.

Utilization - The main way international trade benefits the utilization of food for food security is the impact it has on diversity. Not only does trade allow producers to specialize, but it also allows consumers a diversity of products to choose from. Diversity is what allows countries with the same comparative advantage for certain products to all sell into the same market. But food diversity has a grander benefit than increasing options: it can have large implications on food security. A study by the International Food Policy Research Institute stated that "dietary diversity appears to show promise as a means of measuring food security and monitoring changes and impact."[18] A diversity of food implies a more nutritious and secure food source for a healthy lifestyle, but also represents a independence from a particular staple. Both of these can be matters of national security. Even the same food item from different origins creates a more secure food environment and achieves higher levels of food security. The TPP would allow the U.S. and its partners to further diversify the countries they import from, ensuring access to multiple suppliers, which would guarantee a diverse and more stable utilization of food. Regulations regarding food safety are not inherent in all free trade, but they have been adopted into the TPP in the SPS Agreement.[19] This agreement would guarantee that all food traded between countries met U.S.-level standards for food safety, a key part of utilization for each country involved. This is obviously a benefit for food security in the U.S., but also benefits developing countries in the TPP as well.

Stability - A continuing cycle of availability, access, and utilization is how stability in food security is defined. The TPP is able to provide a blanket of stability for food security because not all changes go into effect on the first day of implementation.  Because the agreement would not be fully in effect until 16 years after implementation,[20] the TPP's role in food security actually enables the expansion of availability, access, and utilization of food security over time. For example, in Vietnam the tariffs on rice will be eliminated over 8 years, despite being currently as high as 40%. Thus, the benefits of lower prices, competition, market access, and job creation, will not happen only once, but will continue as the agreement is fully implemented over time. Additionally, these effects can or could be compounded as additional states join the agreement.

The TPP is able to meet the four key components for food security and accomplish U.S. policy objectives both domestically and abroad, but there are other factors in which trade can affect food security. The TPP would likely influence these factors as well.

Obviously, for countries like the U.S., Japan, and Canada, the technology driving innovation in agriculture is already highly developed. For these countries, FTAs provide little benefit as far a transfer of technology along agricultural lines. However, for LDCs and developing countries, FTAs provide a huge incentive for technology transfers, especially if the trade is North-South.[21] Similar to most industries today, agriculture is now driven by science and technology to keep up with market conditions, competition, and changing climates. The use of high-tech farming techniques is becoming more essential and widespread to be both productive and efficient.[22] One of the many benefits of trade liberalization is the technology transfer that naturally follows. This notion is based in part on the assumption the trade of a good transfers its associated technology as well.[23] The transfer is less direct in agriculture, but the effects are still there.

For many years, agricultural innovation was driven by the public sector. Today, however, most technological innovations in agriculture are a result of private investments. But the public sector can still play a role in advancing the cause of trade liberalization to expand technology and knowledge. Trade liberalization enables the transfer of technology by exposing new markets to advanced corporations and their products, which fuels new and additional private investment in agriculture in developing countries.[24] Obviously, simply trading scientifically grown foodstuffs to a less developed country will not cause farming practices to suddenly change. But over time, that transfer of technology expands and becomes a key factor in creating more food security in developing countries. In this regard, the TPP is no different than other trade liberalization reforms, and will undoubtedly spur the transfer of agricultural technology to those member countries and any future signatories. In doing so it will again be fulfilling U.S. policy objectives aimed at food security abroad.

The correlation between crisis and political instability abroad links trade to food security,[25] which can be seen as a national security issue both domestically and internationally. Countries must have enough food to enable full and active lifestyles for citizens. But it can also be deemed a national security interest since the crises caused by food insecurity in other countries often spill over to other countries. In Egypt, for example, prior to and during the Arab Spring, food prices rose 37%, and protestors in Tahrir Square were chanting not only for social justice, but for bread. Similar correlations have been found in Syria and Iraq, where food insecurity has added to or has even been a catalyst for social unrest.[26] According to research by Collier et al. (2003) cited by the World Food Programme, food insecurity is both a cause and consequence of violence, and is critical for political stability. Food security can also be linked to increased risk of democratic failure, protests, and civil conflict.[27] As discussed previously, FTAs are able to expand the availability and access of traded goods, including agricultural foodstuffs. In so doing, these trade agreements serve to increase national security at home by promoting stability abroad. For the U.S., the TPP would notably expand agricultural exports, increasing food security abroad, which in turn increases food security and national security at home.

Caveats?

Some who oppose the idea that FTAs and the TPP could specifically have an effect on food security will likely point out that TPP members include only a handful of countries, and that these countries do not suffer from food insecurity like those in Africa, for example. Therefore, touting the gains to food security from the TPP is irrelevant. However, while only a few developing countries may be TPP signatories, it should be remembered that food security is not just an LDC or developing country issue, but a global issue. Even G-7 countries are concerned with food security at home and abroad. In addition, the TPP is an open agreement. Any country is allowed to enter the agreement as long as they accept the terms of the deal upon joining. Therefore, future member countries could expand dramatically, and potentially reach food insecure countries. The TPP as a standard setting FTA should be considered an ideological step for continued trade liberalization to hopefully influence future trade deals and negotiations.

In today's globalized word, it is rare to see brute force or sheer economic size used to achieve supremacy, or at least meet policy objectives. Trade policy is increasingly becoming synonymous with foreign policy as more and more countries are able to accomplish policy objectives through trade and economic avenues.  For the U.S., the TPP's ability to achieve policy objectives, both foreign and domestically, is just one of many areas targeted by the TPP. Food security is a clear and necessary objective of the U.S., described by at least three different government departments. The TPP would meet each of these objectives by not only fulfilling the four components of food security at home and abroad, but by facilitating technology transfer in agriculture and helping to create political stability abroad. The future of the TPP may be hard to see, but its effects and utility in advancing U.S. policy objectives cannot be underestimated.              

Benjamin Jones earned his Bachelor of Arts in Chinese from Brigham Young University and recently graduated with a Master of Arts in International Trade and Economic Diplomacy from the Middlebury Institute of International Studies at Monterey.   His studies focused on Trade Policy and the TPP and included time working in the U.S. Department of Commerce at the International Trade Administration.

 


[1] Khanna, Parag. "Chapter 6: World War III or Tug-of-War?" Connectography. New York, NY: Random House, 2016.

[2] International Trade Statistics 2015. Report. World Trade Organization. 42.

https://www.wto.org/english/res_e/statis_e/its2015_e/its2015_e.pdf.

[3] Blackwill, Robert D., and Jennifer M. Harris. War by Other Means: Geoeconomics and Statecraft. Cambridge, MA: Belknap Press of Harvard University Press, 2016. 19-21.

[4] Blackwill and Harris at Chapter 2. In this chapter, the authors present a more in depth analysis of how geo-economics and the international system has become a "war by other means."

[5] "An Introduction to the Basic Concepts of Food Security." Food and Agricultural Organization of the United Nations. 2008. (pg.1). http://www.fao.org/docrep/013/al936e/al936e00.pdf.

[6] Forman, Johanna M., and Levi Maxey. "Should Food Security Be a National Security Issue?" Stimson Center. April 22, 2015. http://www.stimson.org/content/should-food-security-be-national-security-issue.

[7] "Feed the Future." The White House. https://www.feedthefuture.gov/about.

[8] "Food Security Fact Sheet." The White House

https://www.whitehouse.gov/sites/default/files/Food_Security_Fact_Sheet.pdf

[9] "Office of Global Food Security." U.S. Department of State. https://www.state.gov/s/globalfoodsecurity/.

[10] "Food Security." U.S. Department of Agriculture. http://www.usda.gov/wps/portal/usda/usdahome?navid=food-security.

[11] Basic Concepts of Food Security (pg.1-3).

[12] United Kingdom. Department for Business Innovation and Skills. Can Trade Improve Food Security? 2013. 6-9.

[13] "Trade Reforms and Food Security: Conceptualizing Linkages." Food and Agriculture Organization of the United Nations, 2008, 221-229. ftp://ftp.fao.org/docrep/fao/005/y4671e/y4671e00.pdf.

[14] United States. U.S. Department of Agriculture. Office of Chief Economist. Why Trade Agreements Matter: The Case for U.S. Dairy. 2016. 2-3.

[15] "Benefits for U.S. Agriculture." U.S. Trade Representative. October 2015. https://ustr.gov/sites/default/files/TPP-Benefits-for-US-Agriculture-Fact-Sheet.pdf.

[16] "Detailed Benefits for US Agriculture by Sector." USDA: Foreign Agricultural Service. Barley and Barley Products to Wheat. https://ustr.gov/sites/default/files/TPP-Detailed-Benefits-for-US-Agriculture-by-Sector.pdf. (Benefits by Sector)

[17] Benefits by Sector at beef, rice and wheat.

[18] Hoddinott, Jonh, and Yisehac Yohannes. "Dietary Diversity as a Food Security Indicator." Food Consumption and Nutrition Division of the International Food Policy Research Institute Discussion Paper 136: (2002).

[19] Trans-Pacific Partnership, Chapter 7, Sanitary and Phytosanitary Measures. Can be accessed electronically at https://ustr.gov/sites/default/files/TPP-Final-Text-Sanitary-and-Phytosanitary-Measures.pdf.

[20] Petri, Peter A., and Michael G. Plummer. "The Economic Effects of the Trans-Pacific Partnership: New Estimates." Peterson Institute for International Economics, Working Paper 16-2 (January 2016).

[21] "Transfer of Technology and Knowledge Sharing for Development: Science, Technology and Innovation Issues for Developing Countries." United Nations Conference on Trade and Development (UNCTAD): Current Studies on Science, Technology and Innovation, no. 8 (2014): 15-16.

[22] "The Future of Agriculture." The Economist Technology Quarterly.

http://www.economist.com/technology-quarterly/2016-06-09/factory-fresh.

[23] UNCTAD at 15-16.

[24] Piñeiro, Martín. "Agricultural Technology Transfer to Developing Countries and the Public Sector." SciDev.Net. January 1, 2007. http://www.scidev.net/global/policy-brief/agricultural-technology-transfer-to-developing-cou.html.

[25] Verstandig, Tonl. "Food Security Is National Security." The World Post, June 29, 2014. http://www.huffingtonpost.com/toni-verstandig/food-security-is-national_b_5540015.html.

[26] Food Security Is National Security.

[27] Brinkman, Henk-Jan, and Cullen S. Hendrix. "Food Insecurity and Violent Conflict: Causes, Consequences, and Addressing the Challenges." World Food Programme Occasional Paper, no. 24 (July 2011): 20.


 

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Fri, December 23, 2016 11:14 AM (about 17398 hours ago)
Nice article exploring the dimensions of food security and TPP pity the TPP is dead for all practical purposes. Maybe you can analyze and propose som
 
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