The Role of State Trading Enterprises and Their Impact on Agricultural Development and Economic Growth in Developing Countries



Current Agriculture, Food & Resource Issues

G. N. Vlontzos


State Trading Enterprises

The GATT Agreement of 1994, Article XVII, defines STEs as follows:

Governmental and non-governmental enterprises, including Marketing
Boards, which have been granted exclusive or special rights or privileges,
including statutory or constitutional powers, in the exercise of which they
influence through their purchases or sales the level or direction of imports
or exports. (WTO, 1994)

STEs vary in terms of structure, operation, power and function. Attempts to classify
STEs until now have used criteria that measure market contestability, market
concentration, trade shares, price differences and rents. According to this approach to
classification, there are three types of STEs. Type I STEs are characterized by low
potential to distort trade. Type II STEs have the ability to distort trade flows, but in a way
that contestability can be retrieved without serious changes in the way they operate.
Type III STEs have adverse impacts on contestability and distort trade (WTO, 1996). The
latter category includes all import STEs (those that operate as monopolies for import of
goods into a country); this type gives rise to the most strongly worded protests against
STEs. The usual objectives of STEs are domestic price stabilization, market regulation
and control and promotion of exports. The issues surrounding STEs are not new for the
WTO. In order to monitor the operation of STEs, the GATT itself established the
International Trade Organization (ITO) in 1948. An entire chapter was created under the
title “Restricted Trade Policies”. During that period, the trading environment was not
mature enough to put obstacles in the way of developed-country STEs. STEs functioned
as one of the most effective means by which developed countries enlarged their market
shares on an international level. This was especially true for the United States, where the
pressure not to make changes to the operation of STEs was so strong that President
Truman withdrew the “Restricted Trade Policies” chapter (Veeman, Fulton and Larue,
1999). In 1957 the issue of STEs arose again under Article XVII of the GATT: reporting
requirements represented an attempt to monitor and evaluate the degree of distortion of
international trade that could be attributed to STEs.

STEs and the Competitive Environment

One of the most useful tools for evaluating the competitive environment in a market is
Michael Porter’s “five forces competitive model,” or FFCM (Day, 1984). The five
parameters the model examines are

the threat of new entrants;

the bargaining power of suppliers;

the bargaining power of consumers;

the threat of substitute products; and

the intensity of rivalry amongst competing firms.

114



More intriguing information

1. The name is absent
2. Tissue Tracking Imaging for Identifying the Origin of Idiopathic Ventricular Arrhythmias: A New Role of Cardiac Ultrasound in Electrophysiology
3. Why Managers Hold Shares of Their Firms: An Empirical Analysis
4. The name is absent
5. An Investigation of transience upon mothers of primary-aged children and their school
6. The Prohibition of the Proposed Springer-ProSiebenSat.1-Merger: How much Economics in German Merger Control?
7. Robust Econometrics
8. DEMAND FOR MEAT AND FISH PRODUCTS IN KOREA
9. CGE modelling of the resources boom in Indonesia and Australia using TERM
10. RETAIL SALES: DO THEY MEAN REDUCED EXPENDITURES? GERMAN GROCERY EVIDENCE
11. The name is absent
12. Artificial neural networks as models of stimulus control*
13. The name is absent
14. Methods for the thematic synthesis of qualitative research in systematic reviews
15. Performance - Complexity Comparison of Receivers for a LTE MIMO–OFDM System
16. QUEST II. A Multi-Country Business Cycle and Growth Model
17. The name is absent
18. The name is absent
19. Multiple Arrhythmogenic Substrate for Tachycardia in a
20. THE WAEA -- WHICH NICHE IN THE PROFESSION?