Free Trade Agriculture the Issue

Free Trade Agriculture

The issue of agriculture and its free trade attempts has generated a series of divergent opinions around the subject. Some experts consider that free trade in agriculture is a desirable opportunity that would help economies, while other experts state that this would only harm small farmers.

A series of free trade agreements have already been implemented between certain countries. For example, the North American Free Trade Agreement (NAFTA) began in 1994 and was designed in order to remove trade tariff barriers among the United States, Canada, and Mexico. The agreement includes agricultural provisions (USDA, 2008).

The benefits of NAFTA include: it accounted for 55% of the U.S. agricultural export growth, 258,000 U.S. jobs were created, the average annual growth reached $847 million, Canada became the no. 1 U.S. export market, Mexico became the no. 2 U.S. export market, U.S. became the no. 1 export market for Canada and Mexico, exports of food and agricultural products reached record values, producers in these countries benefit from a series of opportunities, agricultural markets in these countries have increased (USDA, 2006).

The effects of agricultural trade liberalization are numerous and diverse. Certain categories of individuals like consumers might receive a series of benefits, while other categories, like small producers, will have to face a series of threats.

Free trade in agriculture would most likely lead to raising economic growth, raise that is estimated at 0.43-0.46% (Fabiosa, 2008). Economic growth will be influenced only in developing and industrialized countries.

Another immediate result of trade liberalization consists in the fact that commodity prices across the world would have to increase by 3-34%. This means that domestic prices would be lower. As a consequence, in low income countries food consumption is likely to increase.

Free trade in agriculture is supported by a number of countries, like Australia, Canada, and the United States mainly. On the other side of the barricade stand the European Union and Japan.

Canada and Bolivia are part of several free trade agreements: Bolivia is part of the Andean Community Free Trade Area, while Canada is part of NAFTA.

The effects of free trade in agriculture in countries like Canada, China, and Bolivia can be quite diverse. Canada is a developed, industrialized country that can better handle the negative aspects implied by trade liberalization in agriculture. The same situation does not apply to China and Bolivia that are low income countries, where free trade can have more significant effects.

The main advantages of free circulation in agriculture consist in the fact that prices would be lower, favoring the consumers. In low income countries like China and Bolivia, this would further lead to increased food consumption. In developed countries like Canada, it would lead to sustained economic growth. Large producers would also benefit from the elimination of tariff barriers. This is why large, developed countries, economic powers, are struggling to eliminate trade taxes.

The disadvantages of free trade in agriculture are also numerous. For example, farm incomes are likely to decrease. Also, consumer prices will tend to rise. This would only help large companies in agriculture to gain enormous profits. Because of these aspects, it would be difficult for domestic agriculture programs to be applied.