How Effective are WTO Disciplines on Domestic Support and Market Access for Agriculture?

Abstract

A new round of trade negotiations through the World Trade Organization (WTO) was launched in 2001. One of the major aims of the Doha Development Round is to reduce agricultural protection and impose greater discipline on domestic agricultural subsidies, particularly those that are the most trade distorting. In this article, we examine whether the proposed WTO modalities for agriculture will actually achieve this aim in Norway, which ranks among the top providers of government assistance for agriculture. Norway has a complex system of farm subsidies buttressed by substantial import protection. The extent to which its agricultural support policies will have to change in response to new WTO disciplines provides an important indication of how successful these are likely to be. We find that Norway will probably be able to sustain its current agricultural activity and production levels while staying within the new WTO rules. Following recent practice in some other WTO members, Norway will be able to reduce its notified support without making real changes in some of its programmes. However, there will have to be a shift from market price support, which is paid for by consumers through higher food prices, to budgetary support paid by taxpayers. This could generate increased domestic pressure for policy reform.