Surveillance of Agricultural Price and Trade Policy in Latin America during Major Policy Reforms

Since approximately 1990, most countries in Latin America have embarked on a multilateral process of trade liberalization for agricultural and non-agricultural products, effectively putting an end to four decades of import-substitution policies. Most countries adopted tariffication, with bound tariffs, eliminating quota restriction and removing export taxes. This study examines how agricultural protection has changed since the reforms, what has happened with real farm prices during trade reform, and the present status regarding tariffs and quantitative restrictions in the various countries. The analysis identifies areas where additional reforms are needed. The report presents a quantitative assessment of trade and price interventions involving seven commodities per country for eight Latin American and Caribbean countries during 1984-95. The study includes a discussion on the current trade policies of these countries in the context of the Uruguay Round Agreement. Four policy indicators are used, namely the nominal and effective rates of protection, the producer subsidy equivalent, and the effective rate of assistance. Gauged annually, these indicators expose implicit subsidies and taxes in specific commodity markets and the resulting (implicit) income transfers. Quantification of these instruments and the resulting transparency in policy-making, can be an effective deterrent against discriminatory treatment in pricing and trade.