Agricultural trade in the WTO
Agricultural trade rules in the GATT
After the Second World War, free trade was seen as an important mechanism for world peace and a crucial factor in the restoration of the world economy. The Bretton Woods Conference in 1944 set up three organisations to maintain international economic co-operation; the International Monetary Fund (IMF), the World Bank and the International Trade Organisation (ITO). However, the US Congress refused to ratify the ITO and in 1947, 23 countries agreed to the General Agreement on Tariffs and Trade (GATT) as a temporary measure until the ITO was set up – yet the GATT survived for 47 years!
The main objective of the GATT was the reduction of barriers to international trade. This was achieved through the reduction of tariff barriers, quantitative restrictions and subsidies on trade through a series of international agreements. The success of the GATT in promoting and securing the liberalisation of world trade has been widely acknowledged. Continual reduction in tariffs helped spur high rates (8% on average) of world trade growth during the 1950s and 1960s and the momentum of trade liberalisation helped to ensure that trade growth consistently out-paced production growth throughout the GATT era.
However, despite this apparent success, agriculture remained largely exempt from GATT rules. Few agricultural tariffs were bound and agriculture remained outside the general tariff-cutting process in GATT negotiations. On top of this, import quotas and export subsidies that were prohibited for other sectors were permitted for agriculture under certain conditions. Agricultural trade was also particularly affected by non-tariff barriers implemented to protect food safety and plant and animal health.
The Uruguay Round
Beginning in 1986 and concluded in 1994, the Uruguay Round was the most ambitious GATT round of trade negotiations. It succeeded in expanding the competence of the GATT to important new areas such as services, capital, intellectual property and agriculture. It was recognised that the new set of agreements would be too unwieldy to manage under the GATT system. Thus an important outcome of the Uruguay Round was the establishment of the World Trade Organisation in January 1995. The principal objective of the WTO is to help trade flow smoothly, freely, fairly and predictably. The duties of the WTO include administering trade agreements, acting as a forum for trade negotiations, settling trade disputes, reviewing national trade policies and assisting developing countries in trade policy issues.
One of the new agreements was the Uruguay Round Agreement on Agriculture (URAA). It common rules in three areas of agricultural policy; market access; export subsidies and domestic subsidies (these pillars remain central to the debate on further reform of agricultural trade in the ongoing Doha Round negotiations).
The Marrakesh Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least Developed and Net Food-Importing Developing Countries was also signed in 1994, during the conclusion of the Uruguay Round.
Doha Development Round
Article 20 of the URAA committed Members to continue the reform process designed to achieve the long-term objective of substantial progressive reductions in support and protection, resulting in fundamental reform. Agricultural negotiations began in a Special Session of the WTO Committee on Agriculture in March 2000. These negotiations were incorporated into the Doha Round trade negotiations launched at the Fourth WTO Ministerial Meeting in Doha, Qatar in November 2001, with a view to concluding the negotiations as a single undertaking by 1st January 2005. In the case of agriculture, modalities for further commitments were to be established by 31st March 2003.
The Doha Ministerial Council Declaration identified commitments aimed at: establishing a fair and market-orientated trading system; substantial improvements in market access, reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support.
The original mandate was refined by work at Cancun in 2003, Geneva in 2004, and Hong Kong in 2005. However, each of these meetings was soured by dissension on agricultural issues and, in July 2006, the General Council, supported a recommendation by Director-General Pascal Lamy to suspend the Doha negotiations. Talks continued behind the scenes work to build the basis for agreement in three of the most contentious areas: cuts to agricultural tariffs, cuts to agricultural subsidies and cuts to industrial tariffs.
The Chairman of the agricultural negotiations, Ambassador Falconer, presented revised draft modalities in February and May 2008. These modalities have begun to give a strong indication of what a final agreement on Doha will look like and can be viewed across the three pillars:
In June 2008, the WTO’s 152 Members reinitiated talks on completing the deal, however, by the end of July the talks once again collapsed. Technical discussions on the Doha agenda continue at Geneva, but no new deadline for the conclusion of the round has been set. A stock-taking by the three Chairs of the main negotiating groups - on agriculture, non-agricultural market access and services - in March 2010 showed little progress has been made since the July 2008 talks breakdown.
Links:
WTO Doha Development Agenda website
Gives access to materials, briefing papers and news on the Doha Round
WTO Website – Agricultural Gateway
Website has a comprehensive collection of resources explaining the Agreement on Agriculture and Doha Negotiations. These included detailed summaries, as well as more detailed technical explanations.
Resources:
Report of the Chair on the state of play of the agricultural negotiations at the March 2010 stocktaking, 2010
Provides a summary of the main sticking points in the negotiations on agriculture as of March 2010
Elliott, K. Agriculture and the Doha Round (PDF), Center for Global Development, 2007
Brief that examines some of the myths and misunderstandings surrounding the Doha negotiations, looks at the patterns in rich country support for agriculture, and at the opportunities and challenges that reform of that support would pose for developing countries, It is a summary of the author's book Delivering on Doha: Farm Trade and the Poor, 2006.
Action Aid, The WTO Agreement on Agriculture (PDF), 2003
Introduces the WTO Agreement on Agriculture and sets out a set of demands from a developing country perspective for further reform.