The political economy of protection of some “sensitive” agricultural products in Colombia

Abstract

As part of a comprehensive structural reform agenda, in the early 1990s Colombia undertook an important trade liberalization program, mainly through a reduction in tariffs. In the last two decades the widespread use of non-tariff barriers and other trade protection measures have partially reversed the liberalization effort, particularly for some agricultural products considered to be sensitive. It is also the case that Colombia stands out as the one country in Latin America in which agriculture severely under-performed during the decade of high commodity prices, with a sectoral policy focused on protection rather than on providing public goods. This is particularly worrisome in the context of the Peace Agreement with FARC which, to be sustainable, requires a fast-growing and competitive agricultural sector. Of course, a country´s trade policy does not happen in a vacuum but is, rather, the result of complex political interactions among diverse interest groups. To shed light on the political economy of protection of sensitive agricultural products in Colombia, we analyze the cases of rice and sugar, two highly shielded products that weigh heavily on household´s consumption baskets and are part of complex value-added chains. Our analysis of secondary sources and more than 20 semi-structured interviews allow us to better understand the “why” of trade protection. We identify winners and losers and discuss the channels of influence of key players, including agricultural producers and their organizations, the food-processing industry, large economic conglomerates, congress, the media, and some highly politicized ministries. We also discuss the compensation mechanisms used in the few liberalization episodes that have taken place, including prominently the TPA with the U.S. We argue that agricultural producers are well-organized and supported by pressure groups such as “Dignidades” and carry more political weight than millions of disperse consumers and the downstream industry.