Agriculture and the WTO into the 21st Century

Abstract

One of the great achievements of the Uruguay Round (UR) was to begin to bring agricultural policies into the mainstream of GATT discipline. Non-tariff barriers to agricultural imports were tariffed and bound and are scheduled for phased reductions, and farm production and export subsidies also are to be reduced, mostly between 1995 and 2000. That UR Agreement on Agriculture, together with the SPS Agreement (to limit the use of quarantine import restrictions to cases that can be justified scientifically), the new policy notification and review requirements, and the Dispute Settlement Agreement (which has greatly improved the process of resolving trade conflicts), ensure that agricultural trade will be much less chaotic in future than prior to the formation in 1995 of the new World Trade Organization (WTO). However, much remains to be done before agricultural trade is as fully disciplined or as free as world trade in manufactures. This mid-way point in the UR implementation period is an appropriate time to examine what has been achieved to date, to evaluate what remains to be tackled when WTO members come back to the negotiating table in 1999, and to decide on the most effective ways of ensuring that the process of reform continues or accelerates as we move into the next millennium. Action is needed on numerous fronts simultaneously. The first priority is to secure an early commitment to begin a new round of multilateral trade negotiations at the turn of the century, and one that is comprehensive enough to allow inter-sectoral tradeoffs. The second priority is to ensure all possible areas for opening agricultural markets are on the table. In addition to reductions in production and export subsidies and bound tariffs, this includes expanding tariff-rate quotas, de-monopolizing state trading enterprises, and phasing out special safeguard provisions. Agricultural exporting countries also have a clear, if indirect, interest in ensuring a continuation and spreading of rapid industrialization in densely populated Asia and elsewhere, for that will expand those developing countries' net imports of farm products (especially if WTO commitments prevent them from raising food import barriers). That in turn depends heavily on advanced economies honouring and then extending their commitments to liberalize markets for manufactures, especially cars, textiles and clothing. It also depends on socialist economies in transition (most notably China) reforming sufficiently to be welcomed into WTO membership.