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ISPPS WP 2003-07: Impact of Trade Policies on Prices of Fertilizers

This paper analyzes the overall impact of the economic and trade variables on fertilizer prices. It also discusses the changes in supply, marketing channels and domestic flow, distribution costs, sales, and government regulations as they affect the domestic prices of fertilizer. A comparative trend analysis was done for the years 1986-1993, the first years of the government’s import liberalization program for fertilizer, and the years 1994-2000, the period when other trade liberalization policies came about. Some increases in importation, exportation, production, and net imports of fertilizers came about as a result of the following developments: the government’s import liberalization program since 1986, the liberalization of interregional trade among the Association of Southeast Asian Nations (ASEAN) members through the ASEAN Free Trade Agreement-Common Effective Preferential Tariff (AFTA-CEPT) since 1993, the General Agreement on Tariffs and Trade-World Trade Organization (GATT-WTO), and implementation of other domestic trade policies, including the passage of the Agriculture and Fisheries Modernization Act (AFMA). Nominal prices generally increased through the years. Real retail prices, on the other hand, exhibited fluctuating trends, but they generally decreased during the 1994-1999 period. Apparently, further reduction in tariff rates and increase in intensity of the government’s import liberalization program caused by the AFTA-CEPT and the globalization objective of the GATT-WTO had reduced the real retail prices of fertilizers. Various factors, though, such as exchange rates, marketing costs and markup by handlers, competition, and demand for fertilizer could have also affected these trends, thereby increasing nominal prices.

UPLB Center for Strategic Planning and Policy Studies
Authors Keywords
Chupungco, Agnes R.; trade liberalization; General Agreement on Tariff and Trade; trade policies;
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