Challenges which prevents the Cairns Group from achieving its developmental goals.
Cairns group is a coalition of 19 agricultural countries which is responsible for over 52% of total world's agricultural export. Members of the fair are Argentina, Australia, Brazil, Canada, Indonesia, Malaysia, Chile, Costa Rica, Guatemala, Paraguay, Colombia, New Zealand, Philippines, Thailand, Pakistan, South Africa, Peru, Uruguay and Viet Nam. Made up of developing countries, the group has done well in the liberalization of trade in agricultural exports. Cairns group has been able to achieve a record breaking 14.5% increase in the world agricultural merchandise. However, there are a few challenges that the group faces. These will include:
The civil wars and insecurity in some of the countries such as Pakistan and Brazil are affecting the operations of the organization. One of the most enduring an universal theme of all countries in the block has been the pursuit of security for economic development. However, that has never been realized. In countries such as Pakistan, the high levels of insecurity characterized by civil wars and violent crimes has seen its GDP drop from 5% to 0.3% between 2007 and 2009. As a result, there has always been inconsistent agricultural production within the Cairns group. The inconsistency has contributed to slowing down of the group achieving some of its developmental goals.
Some countries produce similar goods, which has made the volume of trade to be less rewarding. Both Canada and Australia are top five leading wheat producers in the world. They account for 16.2% and 14.5% of total global wheat export respectively. In addition to that, there are other countries contributing wheat to the group such as South Africa. It has limited the market for wheat each country can access in the trade organization. Their high contribution of wheat to the market has resulted in lowering profits gained by each of these countries. Consequently, trading wheat in the group has been less rewarding.
Free trade agreement in all the countries in the trading union denies the exporting countries revenue when they trade with other nations. Income which is usually earned in taxing imported goods generally in a great way promotes economic development. As a result, there has been slacking in industrial development, especially in the agricultural sector due to the free trade agreement. Brazil, being the country, whose economy is most dependent on agricultural export at (90.66 billion dollars) is the most affected on this issue. Additionally, countries like Argentina which feature on top 10 global countries globally whose GDP depends on agriculture is not left behind. That has resulted in slaking of agricultural development.
Lastly, most of the countries in the Cairns group are also members of other trade organizations. Despite the fact that a country being part of a mixed economy has numerous benefits, it also has its downfalls. Being a member of more than one trading block or union inevitably results in divided loyalty. As a result, the developmental goals of Cairns group may not be achieved for this reason. For example, a country such as South Africa is a member of COMESA, SADC. Such multiple memberships have negative impacts on Cairns group since such trading blocs also receive from the country resulting in a distributive benefit situation.