ABSTRACT
This chapter discusses some aspects of domestic agricultural policies of particular importance to the operation of the trading system. It considers some empirical evidence on the reaction of governments in the wheat market to the period of high agricultural prices and the consequent implications of these reactions for international trade in wheat. The presents the context of the Tokyo Round of international negotiations and the policy choices facing major governments in the next few years. Governments maintain production and restrict consumption by a variety of measures. The quantity of stocks needed to give a particular level of price stability, and hence to maintain consumption levels in low-income countries, is therefore greater the more the developed country governments are successful in their own price-stability objectives. The implications of such a trading structure occasioned by domestic policy objectives are far-reaching.
