Trade Liberalization, Competition and the WTO
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Trade Liberalization, Competition and the WTO

Edited by Chris Milner and Robert Read

The prospective WTO Millennium Round of negotiations will highlight critical economic issues regarding the application and implementation of the WTO rules to international trade in goods and services. In this book, a distinguished group of academic experts considers the agenda and areas of interest for the next Round in light of Seattle, the functions of the WTO and competition policy issues arising from trade liberalization.
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Chapter 3: Agricultural Trade Reform after the Asian Recession: A Bridge Too Far?

Rod Tyers and Yongzheng Yang

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3. Agricultural trade reform after the Asian recession: a bridge too far? Rod Tyers and Yongzheng Yang* Since 1997, Asian growth has stalled following a combined financial and currency crisis that brought on what is referred to here as the ‘Asian recession’.1 Several of the developing economies that had earlier been major contributors to both Asian growth and commodity imports experienced very substantial contractions associated with a surge of insolvencies following capital flight and unexpectedly large currency depreciations. This saw their capital accounts shift from surplus to deficit and necessitated dramatic contractions in imports. Accordingly, global demand for agricultural commodities contracted and international commodity prices fell. In the North, that is, the older industrial economies of Europe, North America and Australasia, some governments did not pass these price declines through to farmers and so the level of agricultural protection rose. The bridge to reforms envisaged during the Uruguay Round has therefore grown longer. Even in countries whose governments have allowed the effects of the Asian recession to pass through to their farmers, further trade reform will have to come on top of already costly adjustment. Moreover, the effects of the Asian recession are unlikely to be fully reversed by the now ongoing recovery. Although output and asset prices in Asia have begun to recover, the crisis-induced reversals in Asian capital accounts remain. This redistribution of global investment could well extend well into the negotiation period of the Millennium Round (Krugman, 1999a). This chapter first explores why the...

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