Impact of Wto Aoa Toward Indonesia's Food Security

Topics: International trade, Tariff, Agriculture Pages: 7 (1860 words) Published: May 10, 2013
Impact of WTO Agreement on Agriculture (AoA) Toward Indonesia’s Food Security: The Import Soybean Case


Food and Agriculture Organization (FAO) reported the world has greatly developed in providing food for civilization the past 30 years. However, food shortages rate remain high. FAO estimated 840 million people were malnutrition in 1998 – 2000, 11 millions of them were in developed countries, 30 millions were in economy transition countries, the rest 799 millions were in developing countries (FAO 2002). Food shortage is no longer simply a matter of food availability, it become more complex because it is closely related with trade liberalization. Hence, a nation’s domestic trade policy is also affected by international market.

Since the establishment in 1995, WTO covers 3 areas, namely goods trades (including agriculture), service trades, and copyright related trades. The aim of Agreement on Agriculture (AoA) is reforming trade policy in agriculture to create a fair and market – oriented system. The reformation program is committed to reduce domestic subsidies, export subsidies, and develop market access through effective and discipline rules. One of the strategic food commodities provided in the AoA is soy.

The rise of soy price in Indonesia is a shock for the Indonesian communities. In early January of 2007, soy is Rp 3.450 per kilogram, in January 2008; it has risen to Rp 7.500 per kilogram (110% raise).

Expert actually predicted the uncontrolled increase in soybean prices since 1990’s. Rising soybean prices is a reflection of the crisis in Indonesia food security. History proved that food security is closely associated with social resistance, economic stability, political stability, and national defense.

This paper understands AoA agreement as a product of trade liberalization derived from the principles of neoliberalism. Economists believe that neoliberalism economic growth will only be optimal if it is allowed to run without interfering hands of the government. The author believes that the AoA is the implementation of these principles. AoA agreement contains three core pillars: 1. Improving market access by reducing agricultural barriers trade in the form of reduction in import tariff barriers and non-tariff barriers; 2. The reduction of export subsidies;

3. Reduction in aid to farmers in the country

The author think: in its application, AoA will relate closely to a nation’s food security condition. Food endurance demonstrates a nation’s ability to meet the needs of food security.

Different Application of Agreement on Agriculture

Market Access

Key mechanisms in this commitment are to build trade with the regime of tariffs, reduction of tariffs, and binding respective tariffs of agricultural products. Comprehensive tariff is mechanic tariff collecting without exception, it is done by changing all forms of non-tariff to equivalent tariff policy. This means protection in agriculture sector is still allowed, as long as it is in tariff forms without reducing the level of protection. In developing countries, tariff reduction rate reaches 24%, the target of tariff reduction is non – tariff barriers.

Domestic Help

This commitment is manifested in the form of subsidy reduction policy for production or in the form of diversion / transfer funds to producers. In developing countries, not all subsidy cut is necessary. They can be classified in a particular category. These categories can be classified in the Green Box, Blue Box and Amber Box. Green box is indirect subsidies to support agriculture products, this subsidy is considered not overly disrupting the market. Blue box is a subsidy in direct payment form for farmers to limit production quantities. Amber box is a direct subsidy, but is considered disorganized.

Export Subsidy

This commitment is intended to discipline policies and actions of government in export subsidy form. The reduction of export...
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