The pathways linking trade and foreign direct investment from food to chronic disease are described below. We identify three general pathways which relate to the changes in the food system: growth of transnational food corporations; liberalization of international food trade and investment and global food advertising and promotion. While international trade is a key driver for rising chronic disease linked to changing food consumption patterns, there are other factors, such as urbanization, which are also important [
30,
31], but a discussion of these factors are beyond the scope of this paper. Urbanization, however, can also be indirectly linked to international trade, becoming part of the broader social system that we discuss briefly [
32].
Growth of transnational food corporations (TFCs)
Food production, distribution, and retailing have been consolidated into a small number of transnational food corporations (TFCs). Food retailers in particular have undergone an intense and rapid transformation; changes that occurred in regions such as Latin America between 1990 and 2000 took place in the US over a period of 50 years [
33]. In 2003, the top 30 food retailers controlled almost 30% of the market in Latin America and 19% in Asia and Oceania [
32]. Reardon and his colleagues have labeled the retail transformation beginning in the early 1990s as a 'take-off' period [
34], launching a 'supermarket revolution' and the rapid spread of fast food chains. Supermarkets are rapidly increasing (they are now the dominant food retailer in Latin America), and the transformation can be characterized in two ways [
33]. First, rapid consolidation occurred where a small number of supermarket chains usurped domestic chains. The second way in which this transformation is occurring is through rapid multinationalization. For example, Wal-Mart has emerged as the largest chain since it began to sell food 10 years ago to the extent that Mexicans spend 3 out of every 10 pesos on food at Wal-Mart [
35].
The growth of supermarkets during the 1990s can be attributed to demand side factors, notably urbanization, the entry of women into the workforce, and economic growth [
33]. The supply side was driven by trade liberalization and foreign direct investment (FDI). Conditions for FDI were facilitated through the easing on FDI regulations as part of structural adjustment programs and free trade agreements. FDI has played a critical role in the diet transition as it has especially targeted highly processed foods [
36]. There is a close correspondence between a rise in FDI and increased investments in processed foods. In Latin America, between 1988 and 1997, FDI in food industries grew from US$ 222 million to US$ 3.3 billion [
37]. Supermarkets have focused on highly processed foods because of their long shelf lives and for the potential economies of scale [
38]. There is a strong plausible link between the rise of supermarkets and dietary changes, although there is little empirical evidence due to a simple lack of studies on this topic [
32].
Liberalization of international food trade and investment
Liberalization of trade - eliminating quotas, reducing tariffs, and privatizing state trade agencies - was adopted by many LMICs either voluntarily or as a condition of structural adjustment loans from the international financial institutions initiated in the 1980s, with a quickening pace during the 1990s as many countries entered into global, regional, and bilateral trade agreements [
32]. Food was first represented in multilateral trade treaties with the formation of the WTO in 1995 and adoption of the Agreement on Agriculture (AoA). Before this time, agricultural trade existed largely outside of formal trade treaties, and developing countries did not have to reciprocate in granting greater market access to developed country exports. With the WTO's trade rules and dispute settlement procedures, developing countries are under increasing obligation and ongoing negotiation pressures to lower tariffs, export subsidies and domestic agriculture support (AoA), as well as to open themselves to FDI in food-related sectors they may have committed under the General Agreement on Trade in Services (GATS). Alongside a growing number of bilateral and regional treaties, such as the North American Free Trade Agreement (NAFTA), the Central American Free Trade Agreement (CAFTA), and the Southern Common Market (MERCOSUR), regulation of international food trade and investment is increasingly governed by trade treaty rules. A specific example of trade treaty effects on health-related food policies includes the long-standing dispute between the European Union and several countries over the EU ban on hormone-treated beef (the ban violates requirements for scientific risk assessments under the WTO Agreement on Sanitary and Phytosanitary Standards) [
39]. Another example involves the threat of a trade dispute involving the Gerber company and Guatemala over the latter's effort to abide by the infant formula code (International Code of Marketing of Breast-milk Substitutes) by banning the 'pudgy baby' picture on Gerber infant formulas (which the company argued was an infringement of its intellectual property rights) [
39].
At the start of the new millennium, food represented 11% of international trade (likely more today), with the rise of processed food occurring more quickly than primary agricultural products [
40]. While international trade of food and food-products has increased, so have the level of subsidies provided to agricultural producers in high-income countries (notably the USA, the EU and Japan) with much of their produce (particularly American and European) going to export markets. This has led some trade policy analysts to argue that the high level of subsides can be viewed as dumping [
41], defined in trade terms as goods entering a foreign market at less than 'normal' prices. These subsidies are due to be reduced under the terms of the AoA (which gave WTO member nations a 10 year moratorium from trade disputes related to agriculture, which expired on December 31, 2004); although both the US and the EU have been altering slightly the terms of their subsidies to allow them to still qualify under the AoA's complex set of 'boxes' permitting some, but disallowing other, supports to domestic producers. Much prevailing criticism of subsidies is that they damage the value of food exports from developing countries by suppressing world prices. From a public health vantage, eliminating production subsidies on unhealthy food products (such as fats and sugars) is likely to do more health good than harm for all countries. But their elimination on healthier and essential food products could do more harm than good to many low-income countries which have become net-food importers - as a result of population growth, loss of arable land and years of advice to shift from food products for domestic consumption to non-food cash crops (cotton, coffee, tobacco) for export [
29,
42].
FDI in food-related production, processing and retailing, enhanced by reducing investment barriers, has increased the presence of TFCs in most developing countries. This presence can increase food availability through reduction in retail prices following the removal of import barriers on food, depending on the dynamics of international and domestic prices. Food retail prices can also be lowered by the reduction of investment barriers since TFCs often purchase agricultural products at lower cost and promote economies of scale, but they also benefit from the lower agricultural cost of their own products. Hawkes and Thow demonstrate these effects in their analysis of the Central America - Dominican Republic - Free Trade Agreement [
43], which the authors argue will likely lead to greater consumption of highly processed food, meat, and other non-traditional foods in Central America.
Liberalization of trade in food products can increase availability and lower retail prices [
43,
44]. Food availability increases due to reductions of import barriers on foods; although total food availability depends on whether or not there is a concomitant decline in domestic production, or the amount of domestic production that converts to export crops. Impacts on domestic production raise concerns about short- and longer-term food security. A recent study by the United Nations Food and Agriculture Organization (FAO) examined trade liberalization and food security in fifteen small and large developing countries (Chile, Guatemala, Guyana, Peru, Cameroon, Ghana, Kenya, Malawi, Morocco, Nigeria, Senegal, Tanzania, Uganda, China, and India). Their key finding was that "trade reform can be damaging to food security in the short to medium term if it is introduced without a policy package designed to offset the negative effects of liberalization" [[
42], p. 75). The study went on to caution that trade reforms generally benefit farmers producing exports crops, but have negative impacts on farmers producing import-competing food stuffs, especially those that are highly subsidized by exporting countries. For low-income countries whose economies are still heavily dependent on agriculture, raising agricultural productivity and creating non-agricultural employment should precede trade reforms such as tariffs reductions on crops grown by low-income households. Production subsidies in developing countries, the report concluded, should also be permitted if these are directed principally to subsistence or resource-poor farmers.
Trade liberalization can also affect food security at the household level. Studies by the International Food Policy Research Institute (IFPRI) in the 1980s examined the nutritional impact of a series of cash cropping schemes in ten developing countries. The findings suggested that cash cropping generally results in higher incomes and spending on food, but has a relatively small impact on energy intake, and, in most cases, little or no impact on childhood malnutrition [
45]. Several projects actually had negative impacts on nutrition. Where improvements did occur, most were attributed to the control of income within the household. Female-controlled incomes were related to higher levels of caloric intakes among children, as women are more likely than men to allocate resources towards food.
Hawkes and her colleagues reviewed the available evidence on the links between international trade and dietary patterns [
32]. They found supporting evidence, notably from India and the Pacific Islands, that the increase in international trade has shifted dietary patterns from local, 'healthy' diets to the consumption of fattier diets. One study from Colombia found that the proportion of calories consumed from imported foods has increased over time, but the extent to its contribution to increased energy availability is not clear. There was also some limited evidence to support some authors' claims that changing diets has influenced trade and that international trade is simply responding to new demands.
Food exports are another core component of the liberalization of the international food trade [
46]. Support for export industries is promoted by the International Trade Centre, which is a cooperative agency composed of the United Nations Conference on Trade and Development and the WTO. The focus of these policies has been especially on the exportation of 'cash crops'. Increasing cash crops decreases land available for domestic crops, requires fewer farmers for domestic production, and reduces the production of traditional food crops for local diets. This has led to a decline in consumption of traditional food crops and often a decline in the 'prestige' of traditional foods. These effects are particularly harmful in areas where undernutrition rates are still high and influence levels of food security for poor and marginalized groups. More recently, several high-income countries have been entering into long-term land lease arrangements with poorer, indebted countries to grow food specifically to meet the needs of citizens of the high-income nations. This new development has increased concern over future food security in poorer countries [
47‐
49].
Global food advertising and promotion
Advertising and promotion marks the third pathway through which trade is affecting food systems and chronic disease. In order to dominate in competitive food retailing markets, corporations employ aggressive marketing techniques. Spending on food advertising is now higher than it is for tobacco [
35]. In 2004, Coca Cola spent US$ 2.2 billion and PepsiCo spent US$ 1.7 billion on marketing of soft drinks [
37]. The global food advertising has been steadily growing and the advertisement market is controlled by a few communications networks [
32]. Processed food, especially targeted to children, has been the main focus of promotion and advertising [
32]. FDI has also played a major role in marketing products [
25,
35]. Global food advertising has especially targeted developing countries in its search for new markets, with a focus on highly processed foods. In 2002, almost 60% of food advertisements in Brazil were for foods high in fats and sweeteners [
50].
Advertising and product marketing has contributed to changing cultural expectations of food [
37] and the "systematic molding of taste by giant corporations" [[
35], p. 1559]. Marketing has been especially targeted to youth. During the late 1990s, soft-drink companies targeted school children by selling products in attractive combination packages in schools in Mexico and Colombia, which led to a 50% increase in soft drink sales among children [
32]. Evidence from industrialized and developing countries found that children engage with food advertising and that there is clear link between advertising to children and the consumption of these products [
51,
52].
Social change
Given that the diet transition advances with rising incomes, urbanization, and changes in the labour market, it can be expected that trade liberalization- when it leads to economic growth, increasing employment, and urbanization - will also influence the diet transition as changes in lifestyles and new food demands arise [
32]. However, since liberalization does not always or necessarily lead to economic growth, diets may not be markedly influenced. When trade-related economic growth does occur, economic inequalities that generally accompany such growth can lead to the poorest groups with limited access to food and the abilityto meet their basic nutritional requirements. This can generate patterns of overnutrition and undernutrition in the same country, particularly in LMICs. There are only a few studies that have demonstrated links between trade liberalization, employment conditions, and nutrition. Better jobs and higher incomes can lead to changes in food preferences and capacity to buy new foods. However, time constraints and more women in the labour force can lead to increased consumption of energy-dense, time saving foods. Job insecurities and limited access to family and welfare benefits can also restrict healthy food choices. In sum, although there are links between economic growth, urbanization, and changing labour markets, the nature of these links are not clear and likely depend on the particular context.