Chapter 3

TRADE

The Free Flow of Goods and Food Security and Nutrition

Trade can contribute to the four key requirements of food security—food availability, access, utilization, and stability of supply.
By encouraging production in areas with a comparative advantage in agriculture, trade raises countries’ incomes and provides access to better prices on the world market.
Limiting trade would result in high prices in land-scarce countries, depressed food prices in land-abundant countries, and lower real incomes in both.
Trade in inputs, commodities, and ideas can boost agricultural productivity and increase sustainability by facilitating diffusion of technology and spurring innovation.

The institutional framework for international trade has helped countries take advantage of opportunities for food exports and imports.
Nutrition can be improved by open trade, which can provide better access to a diversified food basket, including greater diversity of products and suppliers and reduced volatility of supply.
Real risks associated with trade opening include increases in inequality, negative impacts on health, increased energy use, and environmental damage.

Support trade opening with active policies and strong institutions to guarantee cooperative behavior
and coordination.
Design policies to address challenges or externalities associated with trade using the assignment principle—targeting the policy to the immediate source of the problem.
Address inequality and price volatility with safety nets and investment in human capital. Smart policy solutions will protect consumers and producers with direct support.

Address environmental impacts with resource management policies. Overexploitation of resources or loss of biodiversity are best managed by mainstreaming good management into production, rather than limiting trade.
Address overnutrition with education and other policies directly targeting consumption. These are more effective than banning or limiting trade in calorie-dense foods.