Trade in agriculture

Trade in agriculture is one of the most prominent and acrimonious issues on the world trade agenda. Progress towards the liberalization of trade in agriculture, particularly progress related to agricultural export subsidies, domestic measures such as price supports and production quotas, and tariffs, was crucial to the successful conclusion of the Uruguay Round negotiations and is equally crucial to concluding the current Doha Round negotiations. Prior to the Uruguay Round Final Act, under solely the GATT, relatively few strictures were placed on agricultural protection. Moreover, a number of the major exporting states had come close to ignoring, when it came to agriculture, GATT requirements altogether, even to the point of refusing to implement GATT panel decisions. Protection of the agricultural sector has been pervasive in Canada, the USA, the EU, Japan and many other countries. In 2004, the weighted average applied tariff for agriculture and lightly processed food was 22.3 % and 21.8 % for high-income and developing countries, respectively. This fi gure was 1.2 % and 7.5 % for non-farm goods, respectively. 1 The OECD has estimated that its Members’ support for agriculture was about US$253 billion in 2009. 2 Valenzuela, van der Mensbrugghe and Anderson estimated that the global welfare cost of the overall trade restrictions in place as of 2004 was US$168 billion per year, with 60 % of this cost arising from agriculture and food policy. 3 These authors emphasize that this contribution is substantial as the shares of agriculture and food in global GDP and global merchandise trade are less than 9 % . 4

Despite the economic welfare case for liberalizing trade in agriculture, a number of rationales are often invoked for treating the agricultural sector differently than other sectors. A country may wish to protect its agricultural sector in order to ensure domestic food security or price stability, to preserve its rural areas or to implement environmental policies. Furthermore, the rapid liberalization of agricultural trade, while leading to substantial global and domestic net gains in welfare, would give rise to signifi cant adjustment and transitional equity issues in some countries.