Multilateralism: A Constraint on Unilateralism and Regionalism in Agricultural Trade

Abstract

It would be difficult to imagine a more interesting time to be considering the mix of multilateral, regional, and unilateral elements that make up the international agricultural trade regime. It has been assumed until recently, with full justification, that multilateral rules are an ineffective constraint on domestic farm policies and hence on the conditions governing world trade in temperate zone commodities. The wellknown exceptions in the GATT have made it a weak rod with which to beat protectionist domestic policies. Article XI of the GATT, which establishes the tariffs only principle, allows quantitative restrictions on imports where domestic agricultural policies control supplies. This exception has, for example, allowed Canada to keep tight restrictions on trade in dairy and poultry products. Article XVI, though banning most export subsidies, admits their use in primary products under certain (so far unenforceable) conditions. As a result, EC export restrictions have for twenty years depressed world markets for wheat and dairy products. The United States managed to get a waiver in 1955 exempting it from even the modest constraints of Article XI, thus allowing quantitative import constraints on a number of products. The EC went one better, choosing in 1961 a variable for its main import barrier. Such a levy was neither a tariff, which could have been bound, nor a quota, which would have been subject to Article XI.' As a grey measure, its place in the GATT has been in dispute ever since. With US and EC policies essentially beyond GATT scrutiny, other countries could hardly be made to toe the line. Japan was persuaded to replace many of its quantitative restrictions by tariffs, but chose to keep them in place for the most sensitive commodities. Regional rules on agricultural trade have not effectively curbed unilateral tendencies to subjugate trade relations to domestic policy requirements. In most free-trade areas, as discussed below, agriculture has been treated as an exception. The EC, determined to go beyond the free-trade area model toward a common market, translated domestic policy objectives to the Community level. This decision resulted not in a modest, liberal regime emphasizing free trade and competition in global markets, but in an obtrusive protectionist policy designed to seal off EC agriculture from the cold winds of outside com-