Hi.I have a interview Running on the FT news page with Ngozi Okonjo-Iweala, who has just been director general of the World Trade Organization for just over a year, let’s face it, it’s not sailing completely calm. In the interview, she discussed the vaccine patent exemption agreement, on which she impassionedly called on WTO member governments to remember the value of compromise, the difficulty in containing geopolitical tensions over the Ukraine war in the WTO, and supply chains possibility. The crunches will take longer than she expected. But her biggest concern is the looming global food crisis.

In today’s main article, in addition to trying to convince their trading partners not to impose export bans, I’ll explore how food-importing countries are responding to rising prices. Chartered Waters This week focuses on a Dutch think tank’s assessment of the post-Brexit trade performance of the United Kingdom.

As usual, if you have any ideas for the newsletter, or more generally dealing, I would like to [email protected].

build buffer

Almost 15 years have passed since the last major global food crisis began in 2007, as Okonjo-Iweala Today’s FT interview, we learned a lot that wasn’t entirely clear. Export bans continued, food and energy prices rose, but there was little sign of international cooperation to stop the vicious cycle. The EU is working to increase production in the short term and oppose export curbs, but it’s relatively easy to say if you’re unlikely to suffer food shortages anyway.

For example, Egypt is a densely populated country with limited farmland and irrigation facilities, and which import More than half of the staple food is wheat.Egypt convened by the International Monetary Fund Last week helped it address the inevitable balance of payments problems when prices of irreplaceable imports suddenly spike. They will undoubtedly get the money: that’s pretty much what the IMF is for. But if high food prices persist, Egypt will have to start seeing the problem as more than just a short-term liquidity issue and make some serious long-term adjustments.

This is especially difficult for Africa, which generally relies on imported food, especially wheat from Russia and Ukraine. Okonjo-Iweala noted that 35 African countries depend on wheat and 22 depend on fertilizers in the Black Sea region.Beyond aid – Okonjo-Iweala helped build agriculture and food security when she worked at the World Bank fund As a response to the 2007-08 food crisis – the seemingly logical solution was for countries to have sufficient buffer stocks to weather the crisis, and often relatedly aim to achieve more agricultural self-sufficiency. (Okonjo-Iweala also advises Africans to eat more locally grown foods like maize or cassava and less imported wheat left over from colonialism, but I’m not sure her advice on “yams for breakfast” is official WTO policy. )

At this point, we enter a highly debated topic in development and trade: whether it is wise to consider self-sufficiency and/or large buffer stocks as a path to food security. This vastly underestimated the numbers and sparked a small amount of academic and political debate.

development economists still remember argument A famine in Malawi in 2002 killed at least hundreds of people. Some development campaigners have tried to accuse the IMF of telling the government to sell its food reserves in the years before the famine.International Monetary Fund retort The problem is that officials are selling far more than experts (not just funds) recommend.

Reserve stock is not free insurance. Storing grain and keeping it safe from mold and rats is expensive.As happened in Malawi, it is also an invitation corrupt officials Sell ??stocks and bag money when prices are rising.

It’s usually not really needed either. A global food crisis like the one we are about to fall into is unusual. Most food shortages are localized, and produce can be purchased nearby. (Relatedly, most shocks to production and poor harvests are also fairly local, meaning self-sufficiency creates risks.)

Often, it is more efficient to have a crisis fund to buy food quickly when needed rather than maintain expensive permanent stocks.It’s definitely more effective than relying on painful slowness In-kind food aid Across the Atlantic from the US, this is how the US dumps its agricultural surplus abroad in the name of charity.

Here, we stumbled upon “public shareholding”, a policy argument that has stalled for years in the WTO. The problem is that India and some other developing countries want the right to buy large grain reserves as a safety buffer. Rich economies like the US (not averse to doing a little bit of Subsidies) claiming this is an excuse to pay for trade-distorting government relief by effectively setting minimum prices above market levels for domestic producers.

As it happens, India currently has some wheat surplus Export. (Expect the chorus of “I Told You” from Delhi.) But if it starts selling its public assets, it will be seen as a trade-distorting subsidy, and may Violating WTO Agreements.

There is a difficult balancing act here. Incentives for production and de facto export subsidies may be all you need in a crisis. But dumping food abroad reduces the ability of the importing country to produce it for itself. It is difficult to focus on the long term when the short term is so urgent, but if countries do this, it will improve food security over time. If you’re a net importer of food, now you’re probably grateful for any produce from anywhere, regardless of funding. But locking countries into dependency mode is exactly what makes them vulnerable in the first place.

Chartered Waters

The Brexit debate is back – will it go away? — follow Global Trade Report Presented by the Dutch think tank the Netherlands Bureau for Economic Policy Analysis (CPB).

The analysis, which combined data from the Office for National Statistics, found the UK was the only country in the study whose merchandise exports remained below the 2010 average.

Leaving the EU has been cited as a factor, but other issues are happening. Days before the release of the CPB analysis, the UK’s Office for Budget Responsibility warned that UK trade was “lagging behind the domestic economic recovery” and “missing the bulk of the recovery in global trade”. . . suggesting that Brexit could be a factor”.

This means the UK has become a less trade-intensive economy, with the OBR forecast to reduce the country’s productivity by 4% over the next 15 years. Whether the UK should leave the EU or not, it is undeniable that it needs more trade now.

trade link

big investor Betting is being made that the Ukraine war will spark a wave of onshore production by companies.

Adam Posen of the Peterson Institute debate In Foreign Policy, the war in Ukraine will further corrode a globalization already suffering from populist politicians and tensions between China and the West.

Even in the absence of formal sanctions, Russia’s software, media and online services ties to the EU and US are degrading, researchers say In the think tank Bruegel.

Germany Announce With plans to quickly wean itself off Russian oil and gas, the U.S. has said it will boost LNG exports to Europe.