The issue of subsidized acquisition of food stocks for food security purposes has become a contentious issue at the World Trade Organization (WTO) due to their potential impact on international trade. The purpose of this paper is to provide estimates of the effects on trade of stockholding programs designed specifically to meet a food security objective.
A spatial-temporal trade model is developed and then the effects of stockholding policies which satisfy food security goals are simulated and compared to the case where stockholdings are not allowed.
The results suggest that if stockholding policies that satisfy food security goals are allowed in the case of all importing countries and all G-33 developing countries trade will increase significantly during the stock acquisition phase but will have a negative impact on trade during stock disposal. If stockholding policies are restricted to small high food security risk countries, however, the impacts on trade would not be large enough to be of international concern.
The results suggests that a permanent solution at the WTO might lie in exemptions for small high food security risk countries rather than a one size fits all rule applied to all developing countries. Trade policy makers have been charged with finding a permanent solution to the issue of subsidized public stockholdings for food security purposes but have been hampered, in part, by a dearth of empirical estimates of the effect of such stockholdings on trade. This paper informs the negotiations.
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