Malaysia’s agricultural trade in the post-WTO era

1

Tengku Mohd. Ariff Tengku AhmadEconomic and Technology Management Review. Vol. 1 No. 1 (June) 2006: 0111

*Economic and Technology Management Research Centre, MARDI Headquarters, Serdang, P.O. Box 12301, 50774Kuala LumpurE-mail: [email protected]

Malaysias agricultural trade in the post-WTO era(Perdagangan produk pertanian Malaysia dalam era pasca WTO)

Tengku Mohd. Ariff Tengku Ahmad*

Key words: World Trade Organization, agricultural trade, Balance of Trade

AbstractThis paper analyzed Malaysias trade in agricultural products for the 19852004period. Comparative analysis between two periods, 19851995 and 19962004 wasused in evaluating the effects of the trade liberalization initiatives of the WorldTrade Organization (WTO) and ASEAN on Malaysias agricultural trade. Resultsof the analysis showed no distinct differences in the pattern and composition ofproducts traded between the two periods. The effect on the overall balance ofagricultural trade was positive with the Balance of Trade (BOT) increasing byalmost 2 folds between the periods. However, this increase in surplus was attributedto increase in the exports of vegetable oils in which the significant component waspalm oil. Malaysias BOT in the other product categories was worse off. The paperconcluded that more likely than not, the enhancement in the international trade ofagricultural products for Malaysia resulted from a combination of traditional pulland supply-push economic factors such as rising incomes, changing tastes andpreferences, increase in population as well as technological advancements ratherthan trade liberalization per se.

IntroductionIn the early decades that followed after WorldWar II, it was observed that countries thatpractised outward looking policies seemed tobe experiencing better economic growthrelative to those that practised inwards lookingpolicies. Relatively more open economies inAsia such as the Republic of Korea, Taiwan,Malaysia, Singapore, Hong Kong and Thailandperformed better than less-open economies likeBurma, China, India, Vietnam and Cambodia.The years that followed after the Cold Warsaw the international community increasinglyfocusing their initiatives in trade andcommerce, propagating the idea of freer tradeworld-wide, that freer trade is the answer tobetter economic growth, better incomes andhigher standards of living. The proponents offree trade also lobbied both developed and

developing countries that all would benefitfrom freer agricultural trade as well as thenotion that trade liberalization of agriculturalproducts would enhance food, livelihood andincome security for the poor of the world.

Subsequently, under the auspices of theGeneral Agreement on Tariffs and Trade(GATT), the United States of America andother major world agricultural exportersinitiated a new round of multilateral tradenegotiations, called the Uruguay Round (UR)in 1986 where agricultural trade became itsmain agenda. Eager for the potential economicbenefits that could be gained from a moreliberalized international trading environment,governments from all over welcomed this newinitiative to work out a freer trading system.

In 1995, the Uruguay Round Agreementwas signed leading to the formation of the

2

Malaysias agricultural trade in the post-WTO era

WTO which replaced GATT. Concurrently,during the years leading to the formation ofthe WTO, further initiatives for freer tradegained momentum as countries within a regionentered into trade pacts and formed free tradeand investment areas to exploit economiccomplementarities among them and enjoy thebenefits that freer trade had to offer. Suchinitiatives include the formation of the NorthAmerican Free Trade Area (NAFTA), CentralAmerica Free Trade Area (CAFTA), AsiaPacific Economic Cooperation (APEC) andASEAN Free Trade Area (AFTA). Now theestablishment of free trade areas (FTAs) isnot only confined to countries within ageographical region and among neighbours,but has extended far beyond regionalboundaries. It is now not uncommon to hearof bi-country FTAs from distant regions,for example the FTA between the U.S.A. andSingapore.

Being a trading nation that believes andpractices an open market system, Malaysia isalso a strong proponent of freer trade. Malaysiais a founding member of the WTO and is alsoa signatory to the Common EffectivePreferential Tariff (CEPT) of AFTA as wellas a member of APEC. It is also a member ofthe Cairns Group (CG), a grouping ofagricultural exporters formed during the URRound that calls for the elimination of all formsdistorted support to the agricultural sector.The CG also played a prominent role in gettingagriculture into the Multilateral Trade Talksin the UR Round. The question now is that,how has Malaysia fared in its agricultural tradeunder this environment of increasinglyliberalized trade brought about by the WTO,AFTA and other free trade initiatives? Thisarticle will attempt to answer this question.Specifically, the objective of this paper is toreview, examine and assess the developmentsand performance of Malaysias internationaltrade in agriculture over the last two and thehalf decades or so.

Elements of the free trade initiativesFor this paper, two trade liberalizationagreements are discussed namely the

Agreement on Agriculture (AoA) of the WTOand the CEPT of AFTA. There are other FTAsthat Malaysia is party to but these are the twotrade agreements which are more extensive innature compared to the bilateral FTAs.Additionally, under APEC in which Malaysiais a member, countries are required only toundertake voluntary tariff cuts on sectors thatthey are willing to liberalized.

The AoA of the WTOUnder the AoA, members agreed to undertakereform in the three pillars of market access,export subsidies and domestic support. Thissection briefly describes the main elements ofthe reforms required in the three respectivepillars.

Market access In market access, membersagreed for all non-tariff border measures to beconverted into tariffs. These tariffs togetherwith existing tariffs were to be reduced by anaverage of 24% over 10 years with a minimumreduction of 10% per tariff line for developingcountries while developed countries were toreduce them by an average of 36% and aminimum of 15% per tariff line over six years.Least-developed countries were not requiredto reduce their tariffs. Countries were alsorequired to open up minimum market accessof up to 5% of domestic consumption ofproducts previously covered under import bansdue to national sensitivities.

Export subsidies For export subsidies,developing countries are required to reducethe volume on subsidized exports andexpenditures of subsidies by 14% and 24%respectively over 10 years while developedcountries have to do so by 21% and 36%respectively over six years. No new exportsubsidies are allowed.

Domestic support The AoA is distinguishedbetween two categories of domestic supporti.e. support with no or minimal distortiveeffects on trade and support with trade-distorting effects. For example, governmentsupport on R&D is considered to have no or at

3

Tengku Mohd. Ariff Tengku Ahmad

most minimal trade distorting effects(Green Box support measures) whilegovernment support in buying products atguaranteed prices were considered tradedistorting (Amber Box support measures). Theaggregate trade distorting support in monetaryterms is called the Aggregate Measure ofSupport (AMS) and this AMS, with certainexceptions, is subjected to reductioncommitments.

Developing countries were committed toreduce their AMS by 13.3% in 10 years whiledeveloped countries were to reduce the AMSby 20% in 6 years. Another form of supportthat was excluded from reductioncommitments is direct payments underproduction limiting programmes (Blue Boxsupport measures). This exclusion was oncondition that such payments were made onfixed areas and yield or a fixed number oflivestock.

The CEPT of AFTAThe CEPT of AFTA was signed by theEconomic Ministers of ASEAN in 1992.Basically, this Agreement requires membercountries of ASEAN to reduce import tariffson all products (except those covered bygeneral exceptions) to the 05% range withina specified time period, depending on thecategory of products declared by members.Quantitative restrictions (QRs) were also tobe dismantled. Agricultural products were notoriginally covered under the agreement.However, in 1994, member governmentsdecided to include agricultural products[termed as unprocessed agricultural products(UAPs) under the Agreement] in theagreement.

Under the scheme worked out foragriculture in the CEPT Agreement,agricultural products [termed as unprocessedagricultural products (UAPs) under theAgreement] were categorized into four majorlists: immediate inclusion list, temporaryexclusion list, sensitive list and highly sensitivelist. All products except those in the sensitive(SL) and highly sensitive lists (HSL) were tohave their tariffs reduced to 05% by 2003

while those in the SL and the HSL by 2010.HSL, which was only assigned to paddy, wasgiven further flexibility of having an endingtariff of 20%.

General assessment of the WTO and AFTAIt is known that the agricultural sector is themost protected sector in most economies andis considered as sensitive to governments allover the world. This explains why theMultilateral Trade Negotiations (MTNs) underGATT included agriculture only in the URRound in 1986, after eight rounds of tradetalks. Many developed and wealthy economiessuch as the United States of America (U.S.A.)and the European Union (EU) supported theiragriculture through instruments of domesticsupport and various forms of exportssubsidization.

Despite the commitments to cutdistortive support (AMS), developedcountries such as the EU and the U.S.A. werestill able to maintain high levels of currentsupport. This is because in the WTO, membersare only required to cut from bound levelsand not applied or current levels. These boundlevels were set by member countries for theAoA. Members can thus increase their appliedlevels as long as they are within the boundlevels that were set in the agreement. Thedifference between the bound and the actualor applied is termed as water. For the U.S.A.,actual levels of AMS support actuallyincreased instead of decreased during the URimplementation period. The level of actualAMS support in 1996 for the U.S.A amountedabout US$6 billion. This went up to US$16billion in year 2000 (the final year ofimplementation of the UR Agreement fordeveloped countries). For the EU, althoughthe level of AMS was reduced by about 18billion for the same time period, its currentAMS support at about 44 billion was stillextremely high. Table 1 shows the level ofagricultural assistance that is still currently inplace in selected OECD countries. Totalproducer support in the OECD economies stillamounted to a massive US$318.3 billion,which was calculated to be at the rate of more

4


Table 1. Level of agricultural assistance in selected OEDC economies

Selected OEDC Producer Support Share of PSE in Producer Supporteconomies Estimate (PSE) farm income per farmer

(US$ billion) (%) (US$1,000)

Australia 1.2 4 3Canada 6.0 20 11EU 112.6 36 17Japan 55.7 59 21Korea 21.0 66 23New Zealand 0.2 1 1Norway 2.9 71 45Switzerland 5.5 75 32United States 90.3 18 16OECD 318.3 31 11

Source: OECD (2003)

than US$870 million a day. The share ofproducer income support (PSE) in farmersincome was as high as 75% for Switzerland.PSE support per farmer was highest in Norwayfollowed by Switzerland and Korea. As such,the level playing field that was much talkedabout in the Uruguay Round did not very muchmaterialize.

On the other hand, developing economieswith not much money to directly support theirfarmers mainly depended on borders measuresto protect their local agriculture. This is alsotrue for the ASEAN economies. As such theeffectiveness of the trade liberalizationmeasures in enhancing trade among developingcountries depends on reforms undertaken inthe area of market access. However, the sametariff cutting approach as in domestic supportwas also applied to tariff reduction. Table 2shows the simple average tariff structure forselected WTO member countries. It can beseen that in many cases, the final boundaverage tariffs of most countries are higherthan the current applied tariffs. This means toshow that it was unlikely that real marketaccess created as a result of reduction in mostfavoured nation (MFN) tariffs under the URRound took place. However, new marketopportunities were, nevertheless created. Thiswas mainly through the minimum marketaccess provisions where products that werepreviously under imports bans need to beopened by 35% of domestic consumption.

For AFTA, member countries placedtheir protective industries in the SL and HSL.Most of the products under the lists wouldonly be liberalized by 2010. Most likely itwould be only after year 2010 that significanteffects could be observed. Tengku Ariff andEngku Elini (2004) found that ASEAN tradeexpanded by more than 42% between the pre(19911995) and post AFTA (19962000).However, the share of intra ASEAN trade tothe groups total trade only marginallyincreased from about 16% to just about 17%.This provides indications that, in general,although AFTA did enhance intra ASEANtrade, thus far, it was not sufficient to alter thegroups overall trade pattern.

Analyses of Malaysias trade in agriculturalproductsFrom the assessments made in the abovesection, it appeared that both the AoA andAFTA would only make small differences inreal competitive international trade for manycountries including Malaysia. Nevertheless,while a number of analysts shared this view,there were many who were of the opinion thatliberalization initiatives did make a difference.Taylor and Fairchild (2000) attributed thatchanges in trade policies resulting from theAoA and regional preferential tradingarrangements as one of the factors thatcontributed to the growth in world trade infruits and other horticultural products. Other

5


Table 2. Final bound and applied tariffs for agricultural products of selectedOECD and ASEAN countries

Country Simple average Simple average % lines applied Maxfinal bound applied tariff duty free Advaloremtariff

OECDKorea 52.9 42.9 1.7 897Japan 6.9 7.3 29.2 50New Zealand 5.7 1.7 60.0 7USA 6.9 5.1 26.2 350EU 5.8 5.9 25.9 75

ASEANBrunei D.S. 23.2 0.0 99.7 30Cambodia n.a. 19.7 3.3 50Indonesia 47.0 8.2 10.4 17Malaysia 12.2 2.1 66 30Myanmar n.a 8.5 6.6 40Philippines 34.7 8.0 0.0 50Thailand 35.5 29.0 7.9 65Singapore 9.5 0.0 99.7 0

Source: WTO (2006)

factors include increasing consumer demanddue to strong economic growth, technologicalinnovations especially in the areas ofpostharvest handling and storage,transportation and communication that hadprovided the driving force growth ininternational trade in perishables as well asthe globalization of supply chain throughstrategic alliances and joint ventures, whichhas improved supply chain managementstimulating growth in international trade.Malaysias postWTO and AFTA tradeperformance would also most likely beinfluenced by this combination of factors.

The analyses undertaken in this sectioncomprised of observation in trends inMalaysian agricultural trade for the period1985 to 2004. A simple comparative analysiswas made to indicate the trends and levels oftrade that took place before and after WTOand AFTA came into force. For this purpose,the periods were divided into two, pre-WTOand AFTA (19851995) and post-WTO andAFTA (19962004).

Exports of agricultural productsMalaysias agricultural exports expanded fromUS$2.8 billion to US$11.7 billion from

19852004, registering an impressive growthof more than 7.4% per annum (Table 3).However, export growth slowed down to 4.7%per annum from 10.4% per annum during thelater decade after the liberalization initiatives.Nevertheless, average exports increased byalmost 1.9 times between the periods. Basedon the average exports between the twoperiods, it appears that liberalization inagriculture favoured products like, tobacco andtobacco manufactures (859%), chemicalmaterials and products (328%), animal oilsand fats (318%), beverages (266%), essentialoils and perfumery (200%), miscellaneousedible products and preparations (189%),cereals and cereal preparations (150%), animaland vegetable oils, processed (112%) andmedicinal and pharmaceutical products(112%).

Imports of agricultural productsOverall, imports grew almost at the same rateas exports. Total imports increased from aboutUS$2.0 billion in 1985 to about US$8.3 billionin 2004 registering a growth of 7.6% for the19852004 period (Table 4). The productcategories that recorded high import growthincludes fixed vegetable oils and fats (16.8%),

6


Tab

le 3

. Mal

aysi

a's

expo

rts

of a

gric

ultu

ral

prod

ucts

, 198

520

04 (

US$

mill

ion)

Des

crip

tion

1985

1995

1996

2004

Ave

rage

Ave

rage

Cha

nges

(%

)A

GR

* (%

)A

GR

* (%

)A

GR

*(%

)19

851

995

1996

200

419

852

004

1985

199

519

962

004

1985

200

4

Liv

e an

imal

s24

.722

0.3

244.

082

.013

0.7

137.

05

21.9

13.

66.

3M

eat

and

mea

t5.

728

.333

.533

.015

.627

.577

16.0

0.2

9.2

prep

arat

ions

Dai

ry p

rodu

cts

and

17.2

98.0

109.

315

0.5

57.4

112.

496

17.4

4.0

11.4

bird

s e

ggs

Fish

, cru

stac

.,10

2.1

328.

932

0.1

567.

123

0.2

364.

458

11.7

7.1

9.0

mol

lusc

s an

d pr

epn.

Cer

eals

and

cer

eal

33.2

143.

015

4.9

200.

962

.115

5.5

150

14.6

3.3

9.5

prep

arat

ions

Veg

etab

les

& f

ruits

91.8

197.

820

6.4

248.

814

9.3

212.

142

7.7

2.3

5.2

Suga

rs, s

ugar

pre

pn.

19.5

80.4

84.7

116.

169

.696

.739

14.2

3.9

9.4

and

hone

yC

offe

e, t

ea, s

pice

s,29

5.1

311.

531

3.3

575.

633

2.8

368.

211

0.5

7.6

3.5

etc.

and

man

uf.

Feed

ings

tuff

for

61.5

130.

116

4.7

150.

497

.812

4.2

277.

51

.14.

7an

imal

sM

isc.

edi

ble

38.4

262.

724

6.4

511.

111

0.3

318.

718

919

.29.

113

.6pr

oduc

ts a

nd p

repn

.B

ever

ages

9.7

89.4

95.4

206.

633

.612

3.2

266

22.2

9.7

16.1

Tob

acco

and

tob

acco

0.9

69.2

133.

922

4.7

20.0

191.

985

943

.66.

529

.1m

anuf

actu

res

Oil

seed

s an

d18

.810

.310

.712

.014

.812

.71

4

6.1

1.5

2.4

olea

gino

us f

ruits

Pulp

and

was

te p

aper

0.5

11.1

2.4

2.7

3.2

1.6

49

31.4

1.4

9.2

Tex

tile

fibr

es a

nd28

.814

1.8

159.

098

.479

.210

2.0

2915

.9

6.0

6.5

thei

r w

aste

rC

rude

ani

mal

s an

d8.

035

.342

.259

.626

.542

.259

14.8

4.3

10.5

veg.

mat

. nes

.A

nim

al o

ils a

nd f

ats

0.0

0.2

7.9

0.3

0.3

1.3

318

36.6

41

.022

.3

(con

t.)

7


Tab

le 3

. (C

ont.)

Des

crip

tion

1985

1995

1996

2004

Ave

rage

Ave

rage

Cha

nges

(%

)A

GR

* (%

)A

GR

* (%

)A

GR

*(%

)19

851

995

1996

200

419

852

004

1985

199

519

962

004

1985

200

4

Fixe

d ve

geta

ble

oils

1,91

6.7

3,94

7.4

3,70

2.8

5,35

3.3

2,12

4.4

3,93

8.2

857.

24.

65.

4an

d fa

tsA

nim

al a

nd v

eg. o

ils,

92.5

1,09

1.3

988.

81,

627.

246

4.8

986.

311

224

.76.

215

.1pr

oces

sed

Med

icin

al,

17.8

80.2

84.2

131.

141

.087

.011

215

.15.

510

.5ph

arm

aceu

tical

pro

dt.

Ess

entia

l oi

ls,

20.0

193.

420

7.5

423.

091

.327

3.7

200

22.7

8.9

16.1

perf

umer

y, e

tc.

Che

mic

al m

at. a

nd44

.160

2.6

708.

394

7.4

155.

566

4.8

328

26.1

3.6

16.1

prod

ucts

, nes

.

Gra

nd t

otal

2,84

7.0

8,07

3.3

8,02

0.6

11,7

22.0

4,31

0.4

8,34

1.6

9410

.44.

77.

4

Sour

ce: U

N C

omtr

ade

(200

6)*A

GR

= A

vera

ge G

row

th R

ate

animal and processed vegetable oils (14.4%),pulp and waste paper (15.3%), coffee, tea andspices (11.3%), essential oils and perfumery(9.3%), chemical materials and products(9.3%) and medicinal and pharmaceuticalproducts (8.6%). From this, it was observedthat there were a number of similar productcategories where both imports and exportsexperienced high growth. For a few productcategories such as animal and processedvegetable oils and chemical materials andproduct, nes., average imports between thetwo periods swelled by at least 300%.

Balance of TradeMalaysias Balance of Trade (BOT) inagricultural products grew at a steady rate of7.1% over the 19852004 period, from aboutUS$892 million to US$3,457 million. For mostproduct categories with the exception of liveanimals, miscellaneous edible products andpreparation, beverages, tobacco, fixedvegetable oils and fats, processed animal andvegetable oils and other chemical materialsand products, all other product categories wereworse off in the post-WTO/AFTA period(Table 5). This means that out of the 22 productcategories only 6 product categories exhibitedpositive BOT development. AlthoughMalaysias overall total BOT for agricultureshowed an improvement of 2 times, thedeterioration of specific product category BOTaverages during the post-WTO/AFTA periodclearly showed that the country was stilldepending on very narrow range of productsfor its agricultural trade surpluses. On closerexamination, it can be seen that only twoproduct categories contributed significantly tothe surpluses, namely fixed vegetable oils andfats, processed animal and vegetable oils,clearly pointing to the dominance of palm oilin contributing to this positive BOT.

ConclusionIn general, the analysis conducted in this paperwas unable to show clear evidences of theeffects of the multilateral and regional freeinitiatives to Malaysias trade in agriculturalproducts. Although the overall BOT effects

8


Tab

le 4

. Mal

aysi

as

impo

rts

of a

gric

ultu

ral

prod

ucts

, 198

520

04 (

US$

mill

ion)

Des

crip

tion

1985

1995

1996

2004

Ave

rage

Ave

rage

Cha

nges

(%

)A

GR

* (%

)A

GR

* (%

)A

GR

(%

)19

851

995

1996

200

419

852

004

1985

199

519

962

004

1985

200

4

Liv

e an

imal

s16

.155

.952

.956

.927

.452

.892

12.5

0.9

6.6

Mea

t an

d m

eat

75.2

152.

118

4.3

253.

695

.820

0.8

110

7.0

4.0

6.4

prep

arat

ions

Dai

ry p

rodu

cts

and

100.

737

9.6

390.

641

1.4

208.

933

4.6

6013

.30.

67.

4bi

rds

egg

sFi

sh, c

rust

ac.,

100.

130

7.2

331.

451

8.2

180.

032

7.2

8211

.25.

68.

7m

ollu

scs

and

prep

n.C

erea

ls a

nd c

erea

l40

4.0

815.

71,

003.

792

6.4

505.

279

0.7

577.

01

.04.

4pr

epar

atio

nsV

eget

able

s an

d fr

uits

220.

844

9.6

504.

457

2.5

272.

746

3.2

707.

11.

65.

0Su

gars

, sug

ar p

repn

.13

7.5

341.

134

7.6

311.

221

4.9

310.

344

9.1

1.4

4.3

and

hone

yC

offe

e, t

ea, s

pice

s, e

tc.

62.9

163.

015

2.1

540.

974

.226

7.0

260

9.5

15.9

11.3

and

man

uf.

Feed

ings

tuff

for

83.5

232.

333

7.1

379.

913

9.9

287.

310

510

.21.

58.

0an

imal

sM

isc.

edi

ble

prod

ucts

67.9

246.

530

7.4

404.

713

5.6

295.

411

812

.93.

49.

4an

d pr

epn.

Bev

erag

es45

.510

6.2

103.

815

9.0

63.1

85.9

368.

55.

36.

6T

obac

co a

nd t

obac

co49

.211

4.9

93.8

200.

761

.815

2.4

147

8.5

9.5

7.4

man

ufac

ture

sO

il se

eds

and

75.6

165.

917

2.3

285.

812

7.8

202.

658

7.9

6.3

7.0

olea

gino

us f

ruits

Pulp

and

was

te p

aper

5.3

45.7

46.7

97.4

23.3

64.1

176

21.5

9.2

15.3

Tex

tile

fibr

es a

nd t

heir

66.2

350.

641

4.3

254.

217

2.4

269.

957

16.7

6.1

7.1

was

ter

Cru

de a

nim

als

and

46.3

101.

511

3.0

86.7

63.3

83.9

337.

93

.33.

3ve

g. m

at. n

es.

Ani

mal

oils

and

fat

s1.

43.

83.

46.

81.

53.

211

410

.18.

68.

4

(con

t)

9


Tab

le 4

. (C

ont.)

Des

crip

tion

1985

1995

1996

2004

Ave

rage

Ave

rage

Cha

nges

(%

)A

GR

* (%

)A

GR

* (%

)A

GR

(%

)19

851

995

1996

200

419

852

004

1985

199

519

962

004

1985

200

4

Fixe

d ve

geta

ble

oils

28.8

132.

888

.970

5.7

103.

026

0.1

153

15.3

25.9

16.8

and

fats

Ani

mal

and

veg

. oils

,3.

214

.816

.449

.06.

030

.641

315

.413

.714

.4pr

oces

sed

Med

icin

al,

118.

131

8.5

333.

060

2.5

191.

139

4.7

106

9.9

7.4

8.6

phar

mac

eutic

al p

rodt

.E

ssen

tial

oils

,94

.434

5.3

368.

455

1.7

187.

538

6.6

106

13.0

5.0

9.3

perf

umer

y, e

tc.

Che

mic

al m

at. a

nd15

2.6

593.

461

7.7

889.

630

3.8

120

328

13.6

4.6

9.3

prod

ucts

, nes

.

Gra

nd t

otal

1,95

5.1

5,43

6.7

5,98

3.2

8,26

5.1

3,15

9.1

5,93

2.9

8810

.24.

07.

6

Sour

ce: U

N C

omtr

ade

(200

6)*A

GR

= A

vera

ge G

row

th R

ate

for Malaysia were positive, most productcategories were worse off in terms of the BOTduring the post liberalization era as comparedto the period before. Malaysias continueddependence on its palm oil was again provenin this analysis.

More likely than not, the enhancementin the international trade of agriculturalproducts for Malaysia resulted from acombination of traditional pull and supply-push economic factors such as rising incomes,changing tastes and preferences, increase inpopulation as well as technologicaladvancements rather than trade liberalizationper se. It seemed that the trade liberalizationagreements in agriculture were still notsufficiently substantive to effect changes infactor and output prices that could lead tospecialization within the ASEAN region inagriculture. This was indicated by more orless the same pattern of product traded duringthe pre and post liberalization era without clearevidences of changes in product portfolios inMalaysias trade regime. Further in-depthresearch needs to be undertaken to ascertainquantitatively the actual effects of these tradeliberalization measures.

AcknowledgementThe author would like to thank Ms EngkuElini Engku Ariff and Ms Norlida Abdul Halimfor collating and consolidating the largeamount of data that was required to undertakethe analyses for this paper.

ReferencesOECD (2003). Agricultural policies in OECD

countries: Monitoring and evaluation 2003.http://thesius.sourceoecd.org

Taylor, Timothy G. and Fairchild, Gary F. (2000).Competition and trade in fresh fruits andvegetables in the New Millennium. Paperpresented at the conference on Globalagricultural trade in the new millennium,2526 May 2000, New Orleans, Louisiana

Tengku Ariff Tengku Ahmad and Engku Elini EngkuAriff (2004). Trade liberalization and ASEANagriculture with special reference to theMalaysian agricultural sector, Paper presentedat the Agriculture Congress 2004, The Mines,Seri Kembangan, Selangor, Organiser: UPM

10


Tab

le 5

. Mal

aysi

as

Bal

ance

of

Tra

de (

BO

T)

in a

gric

ultu

ral

prod

ucts

, 198

520

04 (

US$

mill

ion)

Des

crip

tion

1985

1995

1996

2004

Ave

rage

Ave

rage

BO

T19

851

995

1996

200

4D

evel

opm

ent*

Liv

e an

imal

s8.

616

4.4

191.

125

.110

3.3

84.3

0.8

Mea

t an

d m

eat

prep

arat

ions

69

.41

23.7

150

.72

20.6

80.

21

62.6

2.0

Dai

ry p

rodu

cts

and

bird

s e

ggs

83.

42

81.6

281

.32

60.9

151

.52

24.5

1.5

Fish

, cru

stac

., m

ollu

scs

and

prep

n.2.

021

.61

1.3

48.9

50.2

34.1

0.7

Cer

eals

and

cer

eal

prep

arat

ions

370

.76

72.7

848

.87

25.5

443

.06

29.3

1.4

Veg

etab

les

and

frui

ts1

28.9

251

.82

98.0

323

.61

23.5

243

.12

.0Su

gars

, sug

ar p

repn

. and

hon

ey1

18.1

260

.72

62.9

195

.21

45.3

220

.91

.5C

offe

e, t

ea, s

pice

s, e

tc. a

nd m

anuf

.23

2.2

148.

516

1.2

34.7

258.

711

3.9

0.4

Feed

ing

stuf

f fo

r an

imal

s2

2.0

102

.31

72.4

229

.54

2.1

148

.93

.5M

isc.

edi

ble

prod

ucts

and

pre

pn.

29.

516

.26

1.0

106.

32

5.2

13.2

1.5

Bev

erag

es3

5.8

16.

88

.447

.62

9.5

30.2

2.0

Tob

acco

and

tob

acco

man

ufac

ture

s4

8.4

45.

740

.124

.04

1.8

31.7

1.8

Oil

seed

s an

d ol

eagi

nous

fru

its5

6.7

155

.61

61.6

273

.81

13.0

176

.71

.6Pu

lp a

nd w

aste

pap

er4

.83

4.6

44.

29

4.6

20.

15

5.8

2.8

Tex

tile

fibr

es a

nd t

heir

was

ter

37.

32

08.8

255

.31

55.8

93.

21

73.8

1.9

Cru

de a

nim

als

and

veg.

mat

. nes

.3

8.2

66.

27

0.8

27.

13

6.9

46.

11

.2A

nim

al o

ils a

nd f

ats

1.4

3.7

4.5

6.5

1.2

1.6

1.3

Fixe

d ve

geta

bles

oils

and

fat

s1,

887.

93,

814.

63,

613.

94,

647.

72,

021.

43,

585.

6 1

.8A

nim

al a

nd v

eg. o

ils, p

roce

ssed

89.3

1,07

6.4

972.

41,

578.

245

8.8

900.

0 2

.0M

edic

inal

, pha

rmac

eutic

al p

rodt

.1

00.3

238

.32

48.8

471

.41

50.1

281

.71

.9E

ssen

tial

oils

, per

fum

ery,

etc

.7

4.4

151

.91

60.9

128

.89

6.2

115

.51

.2C

hem

ical

mat

. and

pro

duct

s, n

es.

108

.59.

290

.657

.81

48.3

10.

21.

9

Gra

nd t

otal

891.

92,

636.

62,

037.

43,

456.

91,

151.

32,

317.

62.

0

Sour

ce: U

N C

omtr

ade

(200

6)*>

1 in

dica

tes

that

BO

T h

as i

ncre

ased

Documents

Malaysia’s agricultural trade in the post-WTO era