Nontrade Concerns: Reconciling Domestic Policy Objectives with Freer Trade in Agricultural Products

Abstract

Since the conclusion of the Uruguay Round of trade negotiations in 1994, there has been increasing debate about the implications of freer trade for domestic or “nontrade” objectives in agriculture. These range from traditional concerns, such as food security and rural development, to more recent issues such as the relationship between agriculture and the environment, and the effects of agricultural practices on human health and animal welfare. For countries reluctant to reduce agricultural protection, a key issue is the extent to which domestic policy objectives would need to be sacrificed under freer trade. For countries espousing trade liberalization, the issue is whether domestic policy objectives will be used as a guise to undermine freer trade in agricultural products. In this paper, we focus on two areas of concern that are stressed by rich, developed countries—the linkage between agriculture and the environment, and animal welfare. Environmental issues are prominent in Asia, Europe and, increasingly in North America, while animal welfare is a major issue in Europe. It is generally acknowledged that agricultural support, provided through implicit consumer taxes and direct subsidies in developed countries, generates much of the distortion in global agricultural trade. The more than $300 billion of agricultural support that is provided annually by OECD countries, disadvantages developing country exporters and causes distortions in importers. Ensuring that there are effective disciplines on trade-distorting forms of support will be vital to the suc