Highlights

The global food and agricultural market has become more resilient, but many countries remain vulnerable to trade shocks and should diversify their import sources to safeguard their food security.

THE FUNDAMENTAL DRIVERS OF TRADE IN FOOD AND AGRICULTURE

Differences in agricultural productivity between developed and developing countries can be very large, with low-income economies facing significant constraints in adopting better technologies.

In the global market, the higher the heterogeneity in relative productivities across countries, the stronger the influence of comparative advantage.

The role of comparative advantage in shaping global food and agricultural trade can be weakened by trade policies and the costs of trade.

Trade costs can be significant – for low-income countries high trade costs can hinder trade integration and affect the structural transformation of the economy.

Increasing productivity, lowering tariff barriers and reducing trade costs can increase the gains from trade but complementary policies are necessary to reduce inequalities that may arise.

THE ENVIRONMENTAL IMPACTS OF FOOD AND AGRICULTURAL TRADE

Globally, food and agricultural trade can enhance the efficiency of land and water use but can also result in negative environmental impacts.

Most of trade’s environmental externalities arise due to local conditions, and trade policies will have to be complemented by specific environmental measures to address them.

Multilateral trade rules and increasingly regional trade agreements allow for environment-related provisions, which, when legally binding, can help tackle the environmental impacts of trade.

MULTILATERAL AND REGIONAL TRADE POLICIES FOR SUSTAINABLE GROWTH

Multilateral trade negotiations are in a deadlock, while extensive regional trade agreements, which increasingly include food and agriculture, are on the rise.

Regional trade agreements promote participation in regional value chains and growth, but may exclude low-income countries.

Multilateral trade liberalization and multilateral cooperation in addressing global environmental externalities can bring growth, ensure food security and better nutrition for all, and make trade work for sustainable development.