Until the era of free trade and globalisation got started in earnest, protectionism was common in the food sector and there was no reason to disguise it. Legislators in each nation set the level of import taxes in accordance with their perception of the national interest. Associations representing food processors and growers used their political influence to push for import taxes at levels convenient to them. Under this system it was relatively easy for developing nations to restrict access of competing products from developing countries.
The advent of free trade blocs such as the EU, MERCOSUR, and NAFTA limited the ability of legislators to make unilateral moves which adversely affect trade partners. This has led them to implement trade bans rather than simply manipulate import taxes.
The high stakes of protectionism
Disguised protectionism is exercised by leading consumer nations and developing nations alike. For example, the 2000 potato harvest of Canada’s Prince Edward Island was at risk when it was discovered by US growers and agricultural authorities that part of one potato field was infested with potato wart fungus. A generalised ban was placed on the import of potatoes from that region. The ban persisted in spite of the fact that there was no trace of the fungus in any other field and that it poses no harm to humans.
Another recent incident involving the US was the well publicised Boxer ban on Argentinean lemons. Fearing strong competition from the world’s leading lemon producing nation, California growers convinced their senator to sponsor a lemon ban which nullified years of bilateral negotiations between agricultural and trade authorities of both nations. The ban was based on unconfirmed accusations that imports of Argentinean lemons would put growers in the US at risk of plant disease.
Environmental and animal welfare issues can easily be manipulated for protectionist purposes. EU animal welfare requirements are viewed as disguised protectionism in many developing nations that are hard put to meet the imposed standards. Animal welfare restrictions, although well intentioned, lend themselves to varying interpretations due to the lack of an internationally accepted standard. The majority of livestock producers in developing nations lack the resources necessary to comply with such regulations.
Producers of fresh fruit and vegetables are particularly vulnerable to the effects of disguised protectionism. A problem limited to one box of fruit or one vegetable field can have immediate and serious repercussions for growers in an entire region or nation. Producers in developing nations often lack the materials, equipment, and knowledge needed to consistently meet international standards.
The need for clear guidelines
This cloaked protectionism thrives on ambiguity when emotional issues are involved. Concerns over genetically modified (GM) crops are so emotionally charged that even suspected traces of GM substances can cause trade barriers to rise. The potential threat posed by GM crops to the environment and humans has not yet been defined, making it very difficult to counter any related trade bans. For example, over the past year Brazil turned back two shiploads of corn from Argentina on the grounds that the grain was genetically modified. The rejection came in spite of the fact that the corn was destined for use as chicken feed.
Until more is known, it is virtually impossible to credit or discredit claims regarding the GM risk. For this reason, a set of international criteria must be established for deciding whether a threat is real or imagined. Lack of such a GM standard invites special interests to sound the GM alarm whenever foreign competition looks particularly threatening.
The tools for combating protectionism have changed. In the past, trade representatives of the nations involved worked out their disputes in bilateral negotiations. Food industry trade disputes are now more frequently resolved by the tribunals of trade blocs of the World Trade Organisation (WTO). Activists openly ridicule the role that the WTO has played in resolving some disputes, yet the WTO remains one of the most viable institutions for clearing up ambiguity in food trade issues.
Over the next decade it should become easier to identify and resolve cases of disguised protectionism because most nations of the world will be parts of major trade blocs with clearly defined trade regulations. In 2005 the Free Trade Area of the Americas is scheduled to encompass all of the Americas. The EU continues to expand and consolidation of Asian nations is likely. As these blocs evolve, national legislators will find it harder to erect protectionist barriers, no matter how well disguised they might be.
By Steven Lewis, just-food.com correspondent