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Pig Industry Insider

New trade agreements will affect pork exports

June 29, 2013
Pork prices are dictated fundamentally by the balance between the demand for the meat in the main markets where it is consumed and the ability to supply it. Exports, therefore, can have a considerable effect on the producer price, both in the home country where the pork was produced and in the place to which it has been sold.

The impact of this influence is much greater than might be imagined from the calculation that only 6 percent of the pork produced worldwide is traded internationally. It means that access to key markets is an important consideration for all producers. With this in mind, everyone should be aware of the changes in access that may come from the rapid development of new trading agreements between countries.

Go back 20 years and the thinking on access for commerce still rotated mainly around big global deals or multi-lateral accords. Think of the General Agreement on Tariffs and Trade (GATT) with its Uruguay Round, or the World Trade Organization (WTO) initiative and its Doha edition. Even then, however, countries or regions were starting local or bi-lateral agreements. 

You may have heard of Mercosur as a pact uniting certain countries in South America, for example. The names of other trading blocs have often been made more difficult to remember by being reduced to a set of initials. So we have NAFTA as the North American Free Trade Agreement, while there was also CAFTA for Central America and SAFTA for southern Asia. 

The forest of initials continues even now. By 2015, we are promised an Asean Economic Community or AEC. Similarly in the planning stage is a proposed Trans-Pacific Partnership or TPP, which would be a free-trade bloc potentially involving members from the Americas (USA, Canada, Chile, Mexico, Peru) and Asia (Brunei, Japan, Malaysia, Singapore, Vietnam) as well as Australia and New Zealand.

Confusingly, the Latin American members of this grouping are also in talks with Columbia --- observed by representatives from Spain, Guatamala and Costa Rica – about forming a separate Pacific Alliance to extend their trading links with Asia. Another cause of confusion is the vast number of bi-lateral deals agreed by countries with their neighbors of trading partners around the world.

More initials have been added recently to identify a new form of bi-lateral agreement under negotiation between the European Union and the USA. Step forward and TTIP, otherwise known as the Transatlantic Trade & Investment Partnership, intended to lower barriers for commerce between the territories that are reckoned to represent some 47 percent of the world’s total output and one-third of all trade. 

Two points in particular need to be made about the creation of any more trading blocs. First, the negotiators will almost certainly have focused more attention on securing better market access for high-value products and services than for food items such as pork. Secondly, the trade advantage within the bloc will always go to the country that has the lowest cost of production. 

Free trade agreements will continue to change the possibilities for exporting pork, therefore, but they will not be equally beneficial for every producer.
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