International trade and agricultural development in developing countries: Significance of the Uruguay Round of GATT negotiations

Liberalization of world trade in agricultural products ranks high on the agenda of the Uruguay Round. After a period of more than six years, however, the negotiations have not been concluded. Nevertheless, an outcome seems to be in sight. The agreement will most likely not result in a move to freer trade. It seems that domestic policies will become even more regulative than in the past in an attempt to cut exportable surpluses and to ease trade tensions among the main exporting nations. This paper explores possible impacts of the GATT Round on agricultural development in developing countries. Agricultural development is more than only growth in agricultural production or productivity. However, it is argued in the paper that other variables which also indicate agricultural development are often closely correlated with growth in production and productivity. Trade in agricultural products is not always an engine for agricultural development. If internal divergences are not accounted for by appropriate domestic policies, trade may be even harmful to agricultural development. Hence, empirical research based on cross-country analysis does not provide a clear answer about the role of trade for development. Past policies in industrialized countries have most likely had a negative effect on developing countries as a group; however, the effects differ widely across countries. Liberalization policies in industrialized countries would not just reverse these negative effects for developing countries. Price reduction in industrialized countries may not result in the often-cited production decline in the short term. Present X-inefficiency in agriculture will be reduced by liberalization, leading to an outward shift of the supply curve. Hence, liberalization may not lead to higher world market prices for temperate-zone products in the short and medium term. Apart from this, empirical models differ widely in the price effects they predict. The expected outcome of the Uruguay Round – increased regulation of domestic policies – is likely both more negative for developing countries than past protectionist policies and worse than an overall liberalization. World market prices will increase, uncertainty and instability can be expected to grow, and food aid may become less available. There will be a need to react to these challenges with measures on the international and national level. Initiatives to deal with food crises in developing countries and to stimulate liberalization in developing countries should be considered. Finally, developing countries should be made aware that their own domestic policies have a much greater economic impact than policies in other countries, even if the latter are as protectionist as current agricultural policies in the industrialized world.     

Will WTO Domestic Support Provisions Constrain Domestic Agricultural Policies?

For the first time, the agricultural trade negotiations in the Uruguay Round imposed disciplines on the domestic support programs of Canada and other members of the World Trade Organization. This paper describes the principal domestic support provisions of the Agreement on Agriculture and Canada's notification of compliance for 1995. It discusses the implementation of the disciplines and emerging issues for further negotiations to begin in late 1999, and assesses their implications for Canadian domestic policies. The paper concludes that the disciplines have been a factor in Canadian farm policy formulation, and their influence is expected to continue and be strengthened through further trade negotiations.     

AGRICULTURAL TRADE LIBERALISATION AND THE URUGUAY ROUND*

With the Punta del Este Declaration, agriculture was accorded prominence in the GATT negotiations and, for the first time, national support policies were on the agenda. In this paper, the progress of the negotiations on agriculture is reviewed in an attempt to understand the factors which shaped the final outcome and to assess the likely impact of the round on liberalising agricultural trade. Although the immediate impact is likely to be modest, the round will provide longer term benefits to agricultural trade through the extension of the GATT rules-based system to agriculture. The framework which has been laid should provide a sound basis for future negotiations. Within the multilateral framework, the pace of change is a function of the willingness of all parties to compromise and this is evident in the Uruguay Round's outcome which reflects the European Union's agricultural reform agenda.     

Canada's Agricultural Trade Policy: Choices and Challenges

As a small open economy, Canada has a considerable interest in the achievement of substantive trade liberalization for agriculture in a multilateral context. Despite the advantages of a multi lateral approach to international trade rules, there are clear economic benefits for small countries like Canada from pursuing unilateral trade liberalization. In the context of Canadian agricultural policy this would require a considerable adjustment to the high levels of protection afforded Canada's supply-managed sectors. The benefits of an open economy are often not reflected in public discussions or in the language of trade negotiations. Instead these tend to reflect a focus on rent-seeking by special interest groups. This misrepresents the concessions of reduced trade barriers as costs, rather than recognizing them as benefits. There is a challenge for agricultural and applied economists to spell out the benefits of an open economy more clearly. A related useful focus of research is to explore the conditions and the nature of compensation to producer groups that would encourage rapid unilateral trade liberalization.     

THE IMPACT OF CHANGES IN TRADE POLICY ON DEVELOPING COUNTRY AGRICULTURE*

The Uruguay Round of trade negotiations has attracted much attention in the developing countries. It promises to weaken moves towards bilateral trade agreements, break open trade in temperate agricultural products, and should remove the last vestiges of protection against tropical products – although tariff escalation will remain. Overall, the main gains for the developing world will probably accrue to exporters of temperate products, above all those in Latin America; whilst for some of the poorer countries, losses may occur as the benefits of special and favoured access to the industrialised countries' markets will be eroded.     

The War on Terroir: Geographical Indications as a Transatlantic Trade Conflict

Terroir, the concept of an essential link between location of production and a specific quality attribute, is emerging as a contentious issue in trade negotiations and disputes. This issue is manifest through disputes and disagreements about appropriate protection of ‘geographical indications’ (GIs). This paper explores the differences in approach taken by the EU and the US towards GI protection, and illustrates the nature of the legal and economic arguments. The transatlantic dispute is spreading to other countries through the inclusion of GI protection in regional and bilateral trade pacts. It also has implications for the eventual conclusion of the WTO Doha Round negotiations, as the terroir issue arises in both the agricultural and the Trade‐Related Intellectual Property (TRIPS) agendas, once again pitting the US and EU as protagonists. But there are signs of change in these positions as the GI system in the EU comes under review and producers in the US reconsider the possible advantages of location‐based identifiers. These issues are important in a number of food sectors, and are likely to be persistent. They deserve more attention from practising applied economists than they have yet received.     

LIBERALISING OECD AGRICULTURAL POLICIES IN THE URUGUAY ROUND: EFFECTS ON TRADE AND WELFARE

A dynamic, stochastic, multi-commodity model of world food markets is used to estimate the effects of liberalising agricultural policies in industrial countries. The effects on international and domestic prices, on trade volumes and on economic welfare of a phased liberalisation of industrial-country policies between 1988 and 1992 are compared with the effects of a similar hypothetical liberalisation in the early 1980s. The results suggest that, because of the dramatic increase in agricultural protection during the 1980s, the effects of a liberalisation under the Uruguay Round would be, in real terms, more than double those that would have resulted from a similar liberalisation a decade earlier. Major gainers are consumers in Western Europe and Japan and farmers in developing countries. But the cost to tax-payers in Western Europe is also escalating, not to mention the burden on non-agricultural producers in those countries whose competitiveness is reduced by farm policies. These domestic pressures from treasuries and from producers of non-farm products, together with greater international pressure for reform from agricultural-exporting countries, have raised the probability of at least some liberalisation during the Uruguay Round of multilateral trade negotiations.     

Issues Facing Agriculture in the GATT Negotiations

This paper is aimed at those who do not specialize in agricultural trade policies, but who wish to know more about the issues involved in the agricultural component of the Uruguay Round of trade negotiations. The preparatory work on agricultural policy reform in the OECD and on agricultural trade reform in the GATT are described, as is their synthesis in the negotiating proposal made by the United States. Implications for Canadian agricultural policy and programs are drawn. Some areas needing further research to support the negotiations are identified, with particular emphasis being placed on the use of the “producer subsidy equivalent” as a trade negotiating tool, the trade effects of supply management and stabilization programs, and the process of adjustment in agriculture to more competitive conditions. Le présent document s'adresse aux personnes qui ne sont pas spécialisées dans le domaine des politiques du commerce agricole mais qui souhaitent en savoir plus sur les questions qui seront abordées dans la composante agricole de la ronde des négociations commerciales qui se tiendra en Uruguay. Nous décrivons les travaux préparatoires portant sur la réforme des politiques agricoles de l'OCDE et sur la réforme du commerce agricole au sein du GATT et nous étudions la synthèse qu'en on faite les représentants des Éms-Unis dans leur proposition de négociations. Nous en exaxninons en outre la signification pour la politique agricole du Canada. Nous cernons certains des domaines qui devraient faire l'objet de recherches ultérieures à l'appui des négociations en mettant particulièrement l'accent sur l'utilisation de 1‘“équivalent de subvention au producteur” comme outil de négociation, sur les effets sur le commerce de la gestion de l'offre et des programmes de stabilisation et sur le processus d'ajustement du secteur agricole à des conditions de concurrence accrue.     

State Trading Enterprises: Some Legal and Conceptual Issues

State trading may become an important issue in the current WTO negotiations on agricultural trade as witnessed by some of the recent proposals for negotiating agendas. On the premise that state trading enterprises can hinder market access in importing countries and can affect export competition, it has been proposed that state trading enterprises should be pan of the negotiations. We consider the current status of state trading enterprises in the GATT framework and summarize the list of concerns relating to the effects which they may have on agricultural trade. Drawing on some recent research, we show that state trading enterprises are likely to influence market access and export competition under trade liberalization when measured relative to a benchmark of imperfect competition.     

Tariff Peaks for Agricultural and Food Products: their Incidence and Alternatives for their Removal

The aim of the paper is the analysis of the current market access situation in global agricultural markets for the post‐Uruguay Round period. It identifies those commodity groups in the food and agricultural sector for which tariff peaks exist, and examines how various tariff‐cutting formulae would affect their levels. The related issues of tariff complexity and of the administration of Tariff Rate Quotas are also reviewed here. Results show that the implementation of the Uruguay Round agreement has not significantly reduced agricultural protection, since high tariff peaks and nontransparent tariff structures still persist. A repetition of the Uruguay Round cuts would not solve the problem of high protection levels either, and only the introduction of more aggressive harmonising formulae could lead to a true liberalisation of world agricultural and food markets.     

Food aid,food policy and the Uruguay round: implications for Bangladesh

The relationship between the effects of food aid and those of the completion of the Uruguay Round of the GATT are studied in this paper, focusing upon the food aid recipient countries, and taking Bangladesh as an illustrative example. It is argued that, among other factors, the magnitudes of these effects depend crucially on the policy environment within the food aid recipient country itself, particularly the government's policy with respect to commercial food imports. It is shown that when the quantity of Bangladesh's commercial food imports is controlled by the government, the benefits derived from food aid are smaller than when these imports are liberalised. Likewise, the negative effects that the Uruguay Round may be expected to have on Bangladesh will also he larger if commercial food imports are subject to quantitative controls than if they are liberalised. The effects the Uruguay Round will have on Bangladesh will also depend on the way food aid donors respond to the Round. If donors reduce the volumes of food aid, either because of reduced food surpluses resulting from lower agricultural subsidies, or in response to increased international food prices resulting from the Round, the losses incurred by Bangladesh will be magnified. But these effects will also depend heavily on whether Bangladesh itself participates in the liberalisations that are central to the Round itself. If it were to participate fully, the negative effects that the Uruguay Round would otherwise have on Bangladesh may be entirely offset by the gains Bangladesh would derive from its own liberalisation.     

International Poultry Trade and the GATT

This research simulates and evaluates present and future trends in international poultry trade utilizing the Armington framework which allows traded goods to be differentiated by their country of origin. Parameters in the Armington model were estimated, and the trade distorting impacts of tariffs and export subsidies on the international poultry market were simulated. Results illustrate the potential impacts of increased trade protection on future market potential oversees. They also demonstrate the importance of a meaningful agreement on agricultural trade in the Uruguay Round of the GATT.     

中国农产品SPS措施遵从成本的影响因素分析

卫生与植物检疫(SPS)成为乌拉圭回合后农产品贸易的主要非关税措施,也成为入世后中国农产品出口的主要障碍。本文基于山东、浙江、福建、四川四省56家农产品出口企业的问卷调查数据,采用最优尺度回归方法研究企业SPS措施遵从成本的影响因素。研究发现,企业成立时间、企业规模、出口市场类别、自检能力等特征不同,SPS措施遵从成本也大相径庭。因此,中小企业应通过合并、联盟等形式进行适度规模经营;在巩固原有市场基础上,出口企业应开辟多元化市场;政府对自检企业进行有效监控;政府和协会应为企业提供服务,帮助企业降低遵从成本,更积极主动地应对SPS措施。     

STRATEGIES FOR DEALING WITH AGRICULTURE IN THE URUGUAY ROUND

Full integration of agriculture into the GATT framework is shown to be the most fruitful approach to resolve agricultural trade problems and to ensure an overall success of the Uruguay Round. Full integration implies, however, that certain widely discussed ideas for agricultural trade reform, such as producer subsidy equivalents, will be less useful. An alternative proposal for trade reform is outlined which is applicable across all sectors and hence would better promote full integration of agriculture into GATT.     

A POST-KENNEDY ROUND LOOK AT SOME PROBLEMS IN AGRICULTURAL TRADE

The Kennedy Round, concluded in 1967, ws the most far-reaching in the series of trade negotiations. The United States insisted on the inclusion of agricultural products, with the support of other foodexporting countries. The results for agriculture should not be underestimated. The agreement on cereals gave practical recognition of joint responsibility in food aid. There were also many agricultural tariff concessions. However, it is domestic agricultural policies, not tariffs, which really hamper agricultural trade. The cost of these policies and the extent to which they achieve their objectives are questionable. Competition becomes fiercer for the remaining accessible markets, and export subsidies multiply. The Kennedy Round left the basis problems untouched. It did, however, strengthen the “global” or comprehensive, multilateral approach.     

WORLD AGRICULTURAL TRADE AND THE NEW GATT ROUND

World agricultural markets are grossly imbalanced with supplies running well ahead of demand at current depressed world prices. At the heart of the problem is the high protection given to agriculture in many OECD countries. In particular, price supports to farmers are too high and incentives to maintain or expand production too great. The success of the Uruguay Round in achieving greater liberalisation of trade in agriculture will depend on the willingness of participating governments to undertake significant reforms of domestic agricultural policies, with the aim of reducing overall protection to agriculture and switching support measures away from direct producer price support to income aid for specific disadvantaged producers. In some countries, this notion has run up against complex politico-social and structural objectives, which prevent these countries from agreeing to any significant price reduction. Price support policies, however, have been ineffective in the long run in retarding the outmigration of labour from agriculture. Measures involving only quantitative controls on production will be useful in the short run to reduce surpluses but will not solve the underlying problems which the new GATT Round must address.     

ON THE NEGLECT OF DYNAMICS,RISK AND MARKET INSULATION IN THE ANALYSIS OF URUGUAY ROUND FOOD TRADE REFORMS*

The substantial investment in models of international food markets prior to and during the Uruguay Round of international trade negotiations has been a mixed blessing so far as the prospects for reform are concerned. At worst, results from these models have misled the negotiations because they have most often ignored a primary concern lending domestic political support to food market interventions, namely the avoidance of risks borne of dependence on international markets. In this paper the reasons for market insulating policies are reviewed and their links with protection elucidated. Some errors that have stemmed from the application of 'standard' but inappropriate models are noted. Finally, the implications of extending the standard method to include dynamic behaviour and market insulating policies are examined.     

Assessing agricultural trade policies options with the European Union: a Brazilian perspective

Brazil has shown interest in agricultural trade negotiations at bilateral, regional, and multilateral levels. This study addresses several important negotiations, using the agricultural sector model CAPRI (Common Agricultural Policy Regional Impact Analysis), to analyze liberalization scenarios between the European Union and the Mercosur countries focusing particularly on their impacts in Brazil. Four possible agreements between Europe and Mercosur are simulated, including a broader multilateral agreement proposed in the G20. The results suggest that a bilateral scenario involving larger tariff rate quota increase, as called for by Mercosur, generates larger gains than accepting the European Union proposal of 2004 or further multilateral trade liberalization based on the G20 proposal. However, much larger increases in tariff rate quotas for all products are not necessarily justified in all cases. Moreover, Brazil's production and export potential is limited by factors other than trade restrictions.     

The impact of entry costs on export market participation in agriculture

Theoretical models of market entry imply that sunk costs are an important factor in the decision to export. Following Helpman, Melitz, and Rubinstein (2008) , we develop a simple model of foreign market participation and use a Bayesian method to estimate the resulting dynamic discrete‐choice model with lagged dependent variable. Employing a balanced panel data that follows 81 trading partners for 30 years from 1971 to 2000, we estimate our model and compute the marginal effect of sunk costs on the likelihood of export market participation. We find that such costs are economically and statistically important for trade in all of the six major agricultural commodities (Cereals, Dairy, Fish, Meat, Vegetables and Fruits, and Sugar), for agricultural producers in both developed and developing countries. We also find evidence suggesting that, in general, market access for both developed and developing exporters had improved in the years following the Uruguay round of trade negotiations (1995–2000).     

新一轮多哈贸易自由化对中国农业的影响

多哈贸易自由化对中国农业的影响一直存在很大争论。与以往的研究不同,本文应用一般均衡模型GTAP与局部均衡模型CAPSIM对接的方法测算新一轮多哈贸易自由化对中国农业的影响。研究显示,贸易自由化总体上对中国经济有正面的影响,只不过影响幅度很小,但农业部门会在多哈自由化中享受相对较大的贸易优势;从分产品的贸易和生产来看,粮食作物、果蔬等产品有正的影响,而对畜产品和食糖会有负的影响;虽然贸易自由化对中国农民收入来说只有很小的正面影响,但这种影响在不同收入组之间差别很大,其中高收入组农民要比低收入组农民受益更多,贸易自由化在一定程度上会使农民的贫富差距拉大。