10 Given the dominance of trade-distorting policy instruments, what does the World Bank panel data reveal with respect to policy reforms? Figure 10(a) shows the phasing out of export taxes by most developing countries. This reform has been particularly striking, although it has been reversed in a few developing countries—most notably, in Argentina following a major devaluation in late 2001 (Sturzenegger and Salazni 2008). In sharp contrast, as assistance to import-competing agricultural subsectors of developing countries has grown (Figure 10[a]), the relative importance of import taxes has increased dramatically (Figure 11). In Western Europe, the growth of decoupled, more-direct income-support measures, along with the virtual abolition of all support measures in Australia and New Zealand, reveals a far different pattern than in high-income countries in East Asia, where border-measure supports continue to dominate (Figure 12).

Input subsidies are a relatively minor component of most countries’ assistance to farmers. But they lingered on in Australia and New Zealand when most other forms of assistance were being phased out, and such subsidies have also remained about one-fifth of the total NRA in the United States (Anderson 2009, Chaps. 4–5). With two notable exceptions, input subsidies are even less common in developing countries, where funds for such direct subsidies are scarcer. The important exceptions are India and Indonesia. In India, input subsidies contributed 7 to 9 percentage points to the agricultural NRA in the 1990s and 10 points in 2000–04. In Indonesia, such subsidies have contributed 2 to 4 percentage points to the agricultural NRA since 1990. (They also contributed from 5 to 9 points in the 1970s and 1980s—even at times when the overall agricultural sector of those countries had a negative NRA.) Up to the 1980s—and in some cases the early 1990s—it was quite common for developing-country governments to intervene in the market for foreign exchange. Such interventions added to the anti-trade biases that were targeted at tradable sectors, including agriculture. However, these interventions largely disappeared by the mid-1990s, as initiatives took hold to reform overall macroeconomic policy. In China, for example, trade taxation associated with the country’s dual-exchange-rate system accounted for almost one-fifth of the (negative) RRA in the 1980s. However, since the mid-1990s, that system has been abolished (Huang et al. 2009).

As governments seek to prevent domestic prices from being affected by periodic spikes in international prices, large changes in the relative importance of different policy instruments occur. This is evident when we examine the estimated contributions to total agricultural TRIs of various policy instruments during the upward price spikes around 1974 and 2008 and the downward spike around 1986. In some cases, trade taxes even temporarily disappeared; in other cases, trade subsidies emerged or expanded. Table 7 reveals that even when aggregated over all developing or high-income countries, the contribution of export taxes and import subsidies to the overall TRI rises and falls with international prices, while the opposite is true of import taxes and export subsidies.

# **_2.6. Summary_**

From the analysis of the data, it is clear that major differences in public-policy distortions in food and agricultural markets exist among countries, among agricultural subsectors within countries, among policy-instrument choices, and over time within a particular country. We observe important changes in sectoral distortions over time. Developing countries, on average, are gradually phasing out anti-agricultural policies, and some are increasingly protecting their import-competing farmers. The evolution in high-income countries is mixed: some high-income countries are reducing assistance to farmers, while Australia and New Zealand have also greatly reduced manufacturing protections that had been indirectly