Discussion: Kennedy round Agricultural Negotiations and the World Grains Agreement

Abstract

there is a general willingness on the part of major trading nations to accept some limitation on their freedom of action in the field of domestic agricultural policies, it is difficult to see the utility of launching another major agricultural trade negotiation. If and when a favorable climate for further negotiations develops, the self-sufficiency concept introduced into the grains negotiations is a useful principle deserving of further exploration. If seriously applied, it would place limitations on a country's ability to extend high protection to unlimited production. Perhaps after some experience with its present CAP, the EEC may be willing to negotiate some modifications that would make the system more compatible with liberalized trade. It would be foolish to expect the system to be completely replaced, however. The objective of farm income and price stability could be reconciled with the objectives of trade liberalization by some modification of the EEC system. As suggested earlier, this would require that gate prices or minimum import prices be directed primarily at preventing dumping or other abnormal interference with the setting of world market prices. Such an approach would require also coming to grips with the problem of agricultural export subsidies. It is a major indictment of the EEC negotiating plan for the Kennedy Round that it would have exacerbated this problem. The EEC variable levy system of protection has already produced or threatens to produce surpluses in poultry, dairy products, and sugar, which the Community is tempted to dump on world markets. Although the results of the Kennedy Round negotiations in agriculture were modest, and in many instances disappointing, at least nothing was done to give international respectability to the EEC system of agricultural protection and export dumping of surpluses. We must, however, in the next negotiations develop some international restraints on the use of export subsidies and variable levies or we are likely to see retrogression rather than progress in reducing agricultural trade barriers.