Professional Documents
Culture Documents
ISSUE
TRADE MEASURES ON FOOD PRODUCTS IN ASEAN COUNTRIES DURING COVID-19
LECTURER’S NAME
PROF. ROKIAH ALAVI
NAME
NABILAH BINTI MOHD ZA’IM
MATRIC NO
1625714
DATE OF SUBMISSION
21ST JULY 2020
Table of Contents
Introduction 3
Literature Review 4
ASEAN Countries’ Trade Policy on Food Products 6
Trade Landscape during COVID-19 6
Cambodia 8
Indonesia 8
Myanmar 9
Philippines 10
Thailand 10
Vietnam 10
Effects 13
Global Supply Chain 13
Food Security 13
Possible Commodity Price Hike 14
Conclusion 15
References 16
2
Introduction
COVID-19 or known as Corona Virus is a global pandemic that had first emerged in December
2019 in Wuhan, China. As of July 14, 2020, the pandemic had reported 13.25 million cases and about half
a million deaths across the globe. This pandemic had shown significant effect on the world economy
especially in terms of world trade. Most government in the world had implemented restrictive movement
order to contain the virus. However, such initiatives had reported to adversely affect the international trade
The primary focus of this paper is on ASEAN Member States which comprises of top exports of
rice in the world namely Vietnam, Thailand, Myanmar, and Cambodia. The ASEAN region also consists
of major rice importers such as Malaysia and the Philippines. Protective trade policy on food and agriculture
such as export bans and export control policies were justified in accord to ensure sufficient domestic supply
and to guarantee food security in respective countries. The concerns of food shortage are not caused by an
actual decline in production but a disruption in the supply chain. According to Asia Nikkei Review in April,
"more than 200,000 to 500,000 tons of rice are now being held up at ports in Vietnam and Cambodia, and
Therefore, the purpose of this paper is to highlight on the importance of trade in food and agriculture
products in Southeast Asia, and the mechanism of trade measures implemented by various ASEAN
countries as a response to COVID-19. The first part of this paper will present on literature works on the
relationship between a pandemic and trade protectionism as well as its impact on world trade. The paper
will then explore on the trade policy landscape focusing on Southeast Asia countries, primarily on countries
imposing trade protectionism measures on food and agriculture. Lastly, this paper will analyze the effect of
such protectionism measures on neighboring countries and conclude with some policy recommendations.
1
Apornrath Phoonphongphiphat & Cliff Venzon (2020, April 15). Coronavirus exposes ASEAN divisions on rice
security. Asia Nikkei Review
3
Literature Review
Prior to the COVID-19 pandemic, the world has seen the plague of the Spanish flu. The Spanish
flu pandemic period started in 1918 and ended at some time around the first half of 1919. Boberg-Fazlic,
Lampe, Pedersen, & Sharp (2020) had studied on the effect of the pandemic on trade openness using import-
weighted average ad valorem tariff (AVE) and excess mortality. The effect of the pandemic was calculated
using excess mortality. The study was conducted using a difference-in-differences strategy to identify the
effect of excess deaths on the tariffs after the Spanish flu pandemic through estimation of the average
treatment effect of excess deaths on tariffs. Boberg-Fazlic, Lampe, Pedersen, & Sharp (2020) hypothesize
that the effect will start after the beginning of the first peak of the outbreak because it is likely that affected
countries took measures against the pandemic which would have led to a less open economy. The study
shows positive correlation between the number of excess deaths and the level of tariffs after 1918. It was
found that a tariff increase equal to 0.017 percent was caused by one percent change in the number of excess
deaths and one standard deviation change corresponded to an increase of 0.33 standard deviation in tariffs.
Boberg-Fazlic, Lampe, Pedersen, & Sharp (2020) concluded that a pandemic had a significant influence on
trade policy.
According to Barua (2020), the effect of the pandemic can be observed through five waves. The
first wave showcases an increase price level as well as level of trade for essential goods in the world market.
This is because an economy’s production and the global supply chain is highly correlated due to massive
globalization of production. The second wave reported limited or restricted international trade routes due
to port closures. The third wave reveals interruptions in international trade flows regarding fluctuations in
the volume of trade flows, changes in international trade prices and the divergence of trade flows from one
path or region to another. The next wave forecasts changes in global sourcing and production trends,
standard trade restrictions, and global trade competition. Some countries may place higher restrictions on
exports of goods that is crucial to COVID-19 while several countries may lift existing barriers to tariffs and
non-tariffs on imports of these products. Lastly, the last wave predicts an alteration in trade relation between
4
countries. Barua (2020) concluded that the pandemic is likely to introduce new patterns of world trade and
5
ASEAN Countries’ Trade Policy on Food Products
At the beginning of the pandemic, many countries started to introduce trade restrictions, particularly
on exports to ensure domestic demand is sufficiently catered to. The trade measures were mostly
complemented by relaxing of restriction on imports of highly demanded goods, such as medicines, medical
supplies, and food. Trade measures implemented include liberalizing and restrictive measures. Amongst
ASEAN countries, Indonesia, Thailand, Malaysia, and Viet Nam issued more than five trade measures,
followed by Myanmar and Philippines with four measures and Cambodia, Singapore, and Laos with at most
three measures.
6
AMS 2 have imposed ten measures in terms of trade and trade-related measures targeted on food
products so far. Most of the measures are intended to avoid food insecurity in respective countries imposing
such restrictions, such as suspending the issuance of rice export permits or rice quantity export control.
There are also specific measures aimed at preventing the spread of COVID-19, such as a temporary ban on
Total food exports from ASEAN reached USD 55.6 billion in 2018 while food imports rose to USD
43.2 billion, representing 9.2 percent and 7.3 percent of total world food exports and imports, respectively.
Figure 1 shows the share of agriculture products on exports and imports of ASEAN countries in 2018.
Myanmar exports on agriculture products accounted for 28% of its total exports. Vietnam also reported a
share of 11.1% agricultural exports compared to 6.2% of its imports. More than half of ASEAN countries
2
AMS stands for ASEAN Member States
7
Figure 1: Share of Agriculture Products to Total Exports and Total Imports (%) in AMS, 2018
Share of Agriculture Products to Total Exports and Total Imports (%) in AMS, 2018
30 28
25
19.3 18.4
20
13.3 14
15 12.3 12.5 11.6
10.5 11.1
8.9 Export
10 7.5 8.4 7.4
5.5 6.1 6.2 Import
5 3.3 3.6
0.2
0
Cambodia
The Prime Minister of Cambodia announced in a press conference on 30 March 2020 that the
country is suspending exports of white rice and milled price. The regulation was to come into force a week
later, on 5 April 2020. Cambodia’s government also imposed an export ban on fish on the same date.
According to some sources, no specific date was announced on the imposition on the ban of fish exports.
These measures were adopted as a mechanism to ensure local food security during the pandemic. On 13
May, Cambodia announced the resumption of rice exports and withdrew both exports ban of rice and fish
Indonesia
Indonesia had reported a price hike in food staples such as sugar, onions, and garlic due to the
COVID-19 pandemic. The price doubled and tripled for garlic and onion respectively. As a measure to
stabilize the price and ensure sufficient supply of these commodities, Indonesia’s Trade Ministry had
announced elimination of import certification requirements on imports of onion and garlic temporarily to
maintain the supply of these products. The liberalising measure was put into effect on 18 March 2020 and
8
lasted until 31 May 2020. The Jakarta Post reported that Trade Ministry Domestic Trade Director General
Suhanto said “up until 30 June, local companies can import without a permit according to Trade Ministerial
Regulation No. 27/2020” 3. This regulation allows firms to import garlic from foreign market without the
Myanmar
The Government of the Republic of the Union of Myanmar through Ministry of Commerce
imposed a temporary suspension on issuance of rice export permits due to COVID-19 on 3 April 2020. The
export prohibition lasted for 28 days starting from 3 April 2020 until 1 May 2020. In May, the government
had announced the lifting of the export ban and replaced it with an export quota.
Date Description
April 3 Ministry of Commerce temporarily suspend the issuance of new rice export permits.
April 16 Department of Trade at Ministry of Commerce announced the requirement for rice and
broken rice exporters to return expired and unused export licenses by April 25.
April 28 The government set the rice export quota at 150,000 tonnes for May:
• 100,000 tonnes is for the overseas markets and 50,000 tonnes through border
trade to China.
• Exporters must sell 10% of export volumes to the government for food assistance.
• Includes head rice, broken rice, and sticky rice, but excludes parboiled rice.
3
Dzulfiqar Fathur Rahman (2020, April 20). Agriculture Ministry recommends importing more garlic as demand
surges. The Jakarta Post.
9
Philippines
The Governor of Bukidnon, Jose Maria Zubiri Jr. had prohibited exports of rice from sellers and
producer to parties outside the Bukidnon province. This measure was put into effect to ensure food security
within the province and was called “Bukidnon First” policy by prioritizing the supply for their own people.
The export ban was implemented on 27 March 2020 and was lifted on the same day. The lifting of the ban
was justified through commitments of the suppliers and producers to meet the demand of other provincial
governments.
Thailand
COVID 19 had induced panic buying of essential goods in Thailand. The country initially had been
supplying around 40 million of chicken eggs per day, mostly intended for domestic consumption. However,
due to the pandemic, the demand for chicken eggs had doubled and tripled causing shortage problems. As
a safeguard measure, the government had announced an export ban for seven days on bird eggs of fowls of
the species Gallus Domesticus starting from 26 March 2020 until 1 April 2020. The seven-day period was
deemed as the trial period to further observe and comprehend on the situation at that time. The ban was
subjected to an extension if the shortage problem continues to persist. Deputy Prime Minister and
Commerce Minister Jurin Laksanawisit later announced that the export ban had to be extended for another
30 days commencing from 2 April 2020 to 30 April 2020. The Ministry of Agriculture and Cooperatives
and Department of Livestock Development was instructed to suspend all export permit for chicken eggs
Vietnam
With the concern of national food security during the pandemic, the Vietnamese Government had
started to halt signing of new rice exports contracts starting from 24 March 2020 until the end of the month.
The measure implemented was justified as a means to assess the sufficiency of domestic supplies. At the
end of March, the Ministry of Industry and Trade had proposed to lift the export ban but to replace it with
10
an export quota of 400,000 tonnes for the month of April and May to be effective on 11 April. Vietnam has
allowed the export of an additional 100,000 tonnes of rice for the month of April 2020 on 21 April which
accounts for exports prior to the implementation of the export ban. The government had agreed to resume
rice exports starting from 1 May 2020, thus lifting the imposition of rice export quota. The timeline of the
Date Description
10 April The government lifted the export ban on rice and announced an export quota for rice of
400,000 tonnes for the month of April 2020 to be effective on 11 April 2020.
21 April For the month of April 2020, Vietnam has allowed additional exports of 100,000
tonnes of rice.
ASEAN as a region accounts for a large share of exporters in agriculture products primarily in rice
commodities. The pandemic had caused some uncertainties and instability in the supplies of these
commodities. The summary of the main details of the trade measures adopted by ASEAN Member States
11
Fish live, fresh or chilled for
human consumption
Live fish
Fish, fresh or chilled,
excluding fish fillets and
other fish meat of heading
0304
Vegetables Certification
Indonesia Onions and shallots requirements Liberalising Terminated
Garlic suspension
Rice
Rice in the husk (paddy or
rough) Export
Husked (brown) rice prohibition
Myanmar Restrictive Terminated
Broken rice
Semi-milled or wholly Export quota
milled rice, whether
polished or glazed
Export
Philippines Rice Restrictive Terminated
prohibition
Birds' eggs, in shell, fresh,
preserved, or cooked Export
Thailand Restrictive Terminated
Of fowls of the species prohibition
Gallus domesticus
Rice
Rice in the husk (paddy or
rough) Export
Husked (brown) rice prohibition
Vietnam Restrictive Terminated
Broken rice
Semi-milled or wholly Export quota
milled rice, whether or not
polished or glazed
Source: ITC Market Map Access, WTO Secretariat, GTA
12
Effects
Movement restrictions within and across countries can impede food-related logistic services,
interrupt entire food supply chain and impact food availability. The pandemic is already altering the entire
food system. Effects on the movement of agricultural labour and on the supply of inputs will soon present
significant challenges to food production, hence risking food security for all, especially those living in the
poor countries. Access to food will be negatively affected as the pandemic slows down economies, mostly
through income reductions and increase unemployment as well as availability of food in domestic markets.
The effect of disruptions in food supply caused by COVID-19 will be potentially greater for imports of
food dependent countries, with high levels of imports concentration is sourced from the top 50 most affected
countries. Developing countries which are heavily dependent on food imports would be particularly
susceptible to supply shocks in key staples such as cereals, meat, and fresh fruits, where most imports
Food Security
Individuals were reported to start hoarding food and panic-buying essential supplies in many cities
around the world since the news of the pandemic broke. In view of the global food supply status, export
controls are unjustified and could possibly harm food security in importing countries. Export restrictions in
importer nations created anxiety among rice-importing ASEAN countries. The biggest rice importer in the
ASEAN region imported 2.9 million tonnes in 2019 and is predicted to import around 2.5 million tonnes
this year, mostly from Vietnam 4. The main threat to food security lies at the country level as the coronavirus
crisis worsens, interruptions in domestic food supply chains, shocks affecting food production, and loss of
earnings and remittances are causing high tensions and risks food security in many countries. The United
4
Apornrath Phoonphongphiphat & Cliff Venzon (2020, April 15). Coronavirus exposes ASEAN divisions on rice
security. Asia Nikkei Review
13
Nations World Food Programme has predicted that by the end of 2020, an estimated of 265 million people
could face serious food insecurity, an increase from 135 million people before the crisis, due to losses in
income and remittance. 5 Naturally, export restrictions eases burdens on domestic food markets but
In April, more than 20 governments have implemented some sort of food export restrictions (EUI-
GTA-WB, 2020). Fear of a prolonged stay-at-home order drove consumers to hoard food supplies. Even
though the demand curve for food supplies shifts, supply curve in the world market is inelastic since almost
all countries of the world are affected by the pandemic and the demand for essential goods is showing an
increase trend within every country. The world market foresees an increased level of trade for essential
goods at a higher price. As such, the price increase seems to have been attributable to export restrictions
imposed by multiple countries. According to Reuters, the price of rice rose from under $500 per tonne last
week to an average quote of $570 per tonne, the highest level since late April 2013. In the events of decrease
in global supply of food and decline in inventories, world prices would eventually rise as the gap with
5
Paul Anthem (2020, April 16). Risk of hunger pandemic as coronavirus set to almost double acute hunger by end
of 2020. World Food Programme Insight.
14
Conclusion
It is evident that trade policies had been widely used in ASEAN Member States during the COVID-
19 pandemic as a protective measure to ensure food security. Trade policies in these countries primarily
focuses on restrictions on exports of food commodities to prioritize and protect the welfare of their citizens.
It was found that controls were mainly targeted on food staples. In this era of globalization, interdependence
between countries is has become increasingly prominent. The implementation of trade measures in
countries justifying it as a mechanism to safeguard domestic market may impose additional harm to
ASEAN was envisioned to constitute as a single market in the ASEAN Economic Community
(AEC). Therefore, we need to reassess and review non-tariff barriers on food products imposed within the
region because these commodities are considered as a necessity. Trade preferential agreements in the
ASEAN region such as ASEAN Free Trade Agreements (AFTA) had resulted in low to zero tariff rates but
are futile when such barriers like export bans and export quotas are implemented. The issue that lies with
non-tariff measures is on the uncertainty in period of implementations which further creates harm on
importing countries in search for alternative trading partners to cover for their supply shortage.
Other than that, countries are recommended to explore possible opportunities to trade and engage
with new trading partners in addition to existing ones. This helps to diversify a country’s trading portfolio
and create alternate path of supply chain. In relation this, countries are advised not to be too dependent on
a specific commodity in specific countries. This is because highly importing dependent countries tend to
be more vulnerable towards any changes in the trade policy implemented by these exporting countries
15
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