Theoretical foundations of environmental international trade: sectoral aspect

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Theoretical foundations of environmental international trade: sectoral aspect

Introduction

The transformation of contemporary economic relations is accompanied with a tendency to a significant growth of population and, consequently, of the demand for goods and services, exacerbating the problems of non-renewable resource overuse and ecosystem destruction. At the same time, the existing ecological problems mainly have a supernational nature. Such circumstances form a necessity of reaching the balanced development and positive synergism between commercial activity and ecology at the international level, which would enable to satisfy existing growing needs for goods and services and ensure ecologically friendly attitude to the environment at the same time. Considering the abovementioned, solution of the described contradictions requires coordinated actions at the international level. At present, the international trade is developing, taking into account postulates of sustainable development ideology. Implementation of the mentioned concept in the commercial activity is reached by means of rationalization of resource distribution and use, implementation of the latest scientific and technical achievements, etc. In particular, the importance of the mentioned problems have been long acknowledged by the WTO member countries; that fact was represented in stimulation of the sustainable development and green economics by means of ratification of the number of provisions as for formation of the protection mechanism and control on the field of environmental protection. The mentioned norms are aimed at maintenance of balance as for promotion of ecological purposes, on the one hand, and on the other hand, at avoidance of measures of commercial activity protectionism, and, as a result, of the negative impact on the rights of other WTO member countries. As an exception, for the purpose of achieving ecological benefits, it is allowed to violate such rules of international trade as non-discrimination of obligations and prohibition of quantitative restrictions. At the same time, it is distinguished that it is important to facilitate strengthening of the potential in the field of trade and environmental protection for developing countries.

The central task in the conditions of the economics globalization is an integrated, functionally and institutionally structured multi-level system. The central task is now an adaptation to the global economy with the saving of national interests and minimization of financial and economic, social and demographic, political and environmental risks. The leading integrating link of the global economical system is the world market and its structural branch elements.

One of the components of the SMART economy is implementation of the principles of `green economy' We thinking in terms of the 'greening' of the economy. We agree that one accepts a broader `greening of the economy' definitional approach, several trends become apparent about the relationship between the environment and the economy (2013, Craig Alexander, ): 1. Environmental considerations are increasingly embedded into corporate decision making; 2. Improving environmental efficiency frequently results in cost advantages; 3. Incentives to reduce environmental impact can be a strong driver of innovation; and 4. Corporate responsibility is a driver for improving environmental performance.

Globalization of agrofood markets and impact of external competitive environment become determinant for national business entities, and global interdependency and complementarity of all sectors of national economics transforms social and political, organizational and economical, information and technological, ecological and resource conditions of countries development. The main success determinants in the conditions of global development are represented by structural reorganization of external economic potential with strategic orientation at competitive products export. An important potential item of the national agricultural sector export potential is represented by organic agro food products of crop production and animal husbandry. Moreover, the organic is “green” economic sectors.

Principle Themes of the Global Economic Development and Greening of the Economy Literature

If sustainable development is to become a reality, then transnational corporations must take their environmental responsibilities seriously. In the industrialized countries, some positive steps have been taken P. Utting (2015). The works of such scientists as U. Bek (2001), O. Bilorus (2001), V. Vlasov (2004), D. Lukianenko (2010), S. Maistro (2009), I. Pakhomov (1997), P. Sabluk (2008), S. Sokolenko (2002, 2004), D. Held (1993) et al. are dedicated to the issues of establishing of the global development model, impact of economics globalization on structuring and transformation of market relations, determination, perspectives and ways for adapting Ukraine to these processes. The widespread adoption of more eco-friendly approaches to economic production and consumption is changing the nature of work, and thus the skills required of many workers. While the greening of economies presents challenges, it also offers considerable potential for job creation, a matter of urgency in countries struggling to recover from the global economic crisis and to address longer- term employment concerns (2015, Greening the global economy). “Green jobs” are jobs that reduce the environmental impact of enterprises and economic sectors, ultimately to levels that are sustainable. This definition covers work in agriculture, industry, services and administration that contributes to preserving or restoring the quality of the environment (2008, UNEP/ILO/IOE/ITUC). The issues of the greening of development economics are described in systematic works of A. Blackman, M. Mathis, and P. Nelson (2001), Hess, David J. (2015), Mark L. Clifford (2015), C. Piovani (2015), P. Utting (2015) et al. The works of such scientists as S. Antonets (2010) and A. Podolynskyi (1994) are dedicated to many-sided research of the issue of organic agricultural production method spreading. The issues of economical efficiency of economical activities in the sphere of organic farming are reported in scientific works of O.Dudar (2012), О. Khodakovska (2011), B. Shuvar (2012) et al. The aspects of organic agrofood market formation were considered by E. Boyko (2011), O. Kozlova (2011), A. Mazurova (2009), O. Rudnytska (2007) et al. The literature summarized above is diverse and voluminous to draw conclusions from greening of development economics. However, we argue that two overarching, closely related concerns underpin the literature: the appropriate role of government in environmental policy and the existence of significant trade-offs between economic and environmental policy objectives (2001, A. Blackman, M.Mathis, and P.Nelson).

Table 1.The spread of organic agriculture worldwide

Source: (2015, World of Organic Agriculture

The goal of study is the theoretical and practical study of globalization determinants of the greening of economic development, global and Ukrainian organic agrofood market development. The object of study is the process of functioning of global and domestic organic agrofood market entities and adaptation of national agricultural goods manufacturers to the conditions of globalized world economics. The subject of study is the totality of theoretical, methodological and practical aspects of forming and development of the organic agrofood market and development of business entities' mechanisms of adaptation to global economy conditions.

Research Methodology. Methodological support for the research is based on the principle of theory and practice unity and the system and synergetic approach. It considers the development of the agricultural sector branches development from the perspective of the holistic paradigm and within the concept of its multifunctional development while taking into account the close interconnection of economic and organizational, social and political, ecological and natural factors and priorities. Due to this approach, the main branch issues considered from the perspective of integrity and continuity of the object, the subject and the environment, objectives, methods and controlling means, were identified. The systematic approach methodology allowed identifying the problematic aspects of the branch functioning and the agrofood market forming components at all levels: functional, empirical, methodological and institutional at the certain abstraction level. The comparison method was applied in determining the peculiarities of activities of countries - organic food manufacturers.

Findings. During the third millennium agrifood markets have global trend of constant growing demand and supply for ecologically safe products with the proper labeling and quality certificates. Organic food market is comparatively new and immature - the emergence of the idea of organic production has occurred only in the forties of the nineteenth century. It should be noted, that the formation and development of this market was contributed by a number of factors such as increased level of conscious attitude to food, technological and medical progresses, the growing role of “environmental issues” in sectoral and trade policies. Consumer motivation and preferences have global trend and are the same for different regions. Consumers select organic products, focusing on product quality, careful attitude to nature and animals.

The origin of the global organic food market is the American and European regions that became now major global markets. In 2014 the global market was estimated to be $ 80 billion (table). United States of America are the market leader with a capacity of 24.3 billion EUR, the following places were taken by Germany - 7.6 billion EUR and France - 4.4 bn. Euro. It is also necessarily to highlight China Republic as a fast-growing organic products market with a volume of 2.9 billion USD. The highest purchasing power of organic food for one person is observed in Switzerland - 210 EUR and Denmark - 163 euros.

Organic production occurs almost in each country. Currently, the global market has more than 2 million of producers, most of which are registered in India (650 thousand), Uganda (189.5 thousand) and Mexico (170 thousand). The largest exporters of organic products are Italy, Netherlands, Spain, the US and France. World organic production occupied 43,1 million of hectares of land, that is four million more than in 2012 (39,04 million of hectares) or 0,9% of agricultural land.

According to the experts prediction in 2015 the global market of organic food products is estimated to be 93 billion EUR, and by 2020 the market will reach 188 billion EUR. (2015, World of Organic Agriculture). Is necessary to notice that the global forecasted volume of the world organic food market in 2014 increased in comparison with 2011 by more than 22 %, and the number of organic food manufacturers in the world increased for the same period by more than 37 % (2012, Helga Willer). The main volume of organic food production in 2014 is provided by the countries of North America (33%), Europe (27%) and South America (23%). At this, organic agricultural production spreads the most fast in European countries which is confirmed by the growth of area of agricultural lands involved in this sphere, almost twice for the period under consideration (2011, The Organic Market in Europe..., 2011, Developing the organic...). The organic food manufacture is carried out almost in all countries of the world. The most widely spread agricultural organic cultures are coffee (0,54 mln ha), olives (0,49 mln ha), cocoa (0,26 mln ha), nuts (0,2 mln ha) and grapes (0,19 mln ha) (2012, Organic farming.; 2012, The World Of Organic Agriculture: Key Indicators.). The leading manufacturers are Australia, Argentina, the USA, Italy, and Spain.

It can be indicated that the global market of organic agri-food products will grow and develop rapidly. The determining factors of market growth are consumers' interest and awareness of organic products usefulness is increasing; further formation of institutional basis in developed and developing countries while improving legislation; producers' awareness that greening the economy is profitable for their business and the increasing environmental corporate social responsibility; public support programs for organic and agri-food production activation both in developing and developed countries; increased interest of large retailers and supermarket chains in traditional and e-retail-wholesale organic agricultural products development.

In Ukraine, the organic food market is at the initial development stage but availability of fertile soils, location in favourable climactic zones and advantageous geo-economic location are the evidence of a large potential for its further development. Ukraine has a considerable potential to increase the organic land areas. This market is rather attractive for manufacturers because demand to organic products increases gradually. Organic agri-food products can become an important item of the national agricultural sector export potential. In the domestic organic food production structure, crop production prevails, in which the largest unit weight belongs to cereals production. The value of crop capacity received by the enterprises under consideration - organic food manufacturers - approaches to average indices throughout Ukraine, and in some cases even exceeds them. During last time production of animal husbandry organic food, economic efficiency of which production is lower, in distinction from crop production, recovered (2010, Yatsenko, O; 2014, Tsyhankova, T). The pricing policy adjustment mechanism in the sphere of organic agricultural production is not set up in Ukraine. The price difference between organic and common products, on the level of wholesale trade, is negligible. The highest profit at the organic food market is received by distribution networks or food manufacturers who sell their products independently.

In fact, Ukrainians have not a high level of environmental awareness. Now many agribusinesses recognize that more environmentally sustainable policies and practices are not just good for their brand and reputation, but they can also lead to cost savings, and new revenue generation opportunities. In addition, green initiatives are increasingly complementing economic growth. With the purpose to determine features of demand forming, two expert sociological polls (2010, Yatsenko O. M.) were carried out. In 2012: poll of managers and specialists of factory farm enterprises - organic food manufacOrre rs and poll of manngrrs and specialirto of factoiy-farm entaopetees.

Organic farming plays the important role in providing food security and agricultural development due to distribution of ecologically safe farming systems. The importance and topicality of the stated production is confirmed by the considerable attention given to it by governments of the numerous countries around the world. In particular, the EU countries within the general agricultural policy stress the importance of the organic agriculture development.

Consequently, a general framework for assessing greening are relationship between the environment and the economy should be understood as, firstly, government environmental policy; secondly, economic and environmental efficiency; thirdly, corporate social responsibility (CSR). The greening process in the agricultural sector include: observance of the principles of organic production; regulatory compliance; managing economic efficiency; greening all industrial and logistics supply chain; new agroservices.

globalization economy agrarian market

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