Topics handled by WTO committees and agreements
Issues covered by the WTO's committees and agreements

AGRICULTURE NEGOTIATIONS: BACKGROUNDER

‘Non-trade’ concerns: agriculture can serve many purposes

The Agriculture Agreement provides significant scope for governments to pursue important “non-trade” concerns such as food security, the environment, structural adjustment, rural development, poverty alleviation, and so on. Article 20 says the negotiations have to take non-trade concerns into account.

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UPDATED 1 DECEMBER 2004

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This briefing document explains current agricultural issues raised before and in the current negotiations. It has been prepared by the Information and Media Relations Division of the WTO Secretariat to help public understanding about the agriculture negotiations. It is not an official record of the negotiations.


Phase 1 back to top

A number of countries have produced studies to support their arguments, and these studies have also been debated — in particular, 38 countries submitted a note for the September 2000 meeting that includes their papers for a conference on non-trade concerns. Some other countries responded by agreeing that everyone has non-trade concerns and by calling for proposals for specific measures to be tabled so that the negotiations can move on to whether trade-distorting measures are really justified.

Most countries accept that agriculture is not only about producing food and fibre but also has other functions, including these non-trade objectives. The question debated in the WTO is whether “trade-distorting” subsidies, or subsidies outside the “Green Box”, are needed in order to help agriculture perform its many roles.

Some countries say all the objectives can and should be achieved more effectively through “Green Box” subsidies which are targeted directly at these objectives and by definition do not distort trade. Examples include food security stocks, direct payments to producers, structural adjustment assistance, safety-net programmes, environmental programmes, and regional assistance programmes which do not stimulate agricultural production or affect prices. These countries say the onus is on the proponents of non-trade concerns to show that the existing provisions, which were the subject of lengthy negotiations in the Uruguay Round, are inadequate for dealing with these concerns in targeted, non-trade distorting ways.

Other countries say the non-trade concerns are closely linked to production. They believe subsidies based on or related to production are needed for these purposes. For example, rice fields have to be promoted in order to prevent soil erosion, they say.

Countries such as Japan, Rep of Korea and Norway place a lot of emphasis on the need to tackle agriculture’s diversity as part of these non-trade concerns. The EU’s proposal says non-trade concerns should be targeted (e.g. environmental protection should be handled through environmental protection programmes), transparent and cause minimal trade distortion.

Many exporting developing countries say proposals to deal with non-trade concerns outside the “Green Box” of non-distorting domestic supports amount to a form of special and differential treatment for rich countries. Several even argue that any economic activity — industry, services and so on — have equal non-trade concerns, and therefore if the WTO is to address this issue, it has to do so in all areas of the negotiations, not only agriculture. Some others say agriculture is special.

Proposals that include positions emphasizing non-trade concerns submitted in Phase 1:

Submissions for discussion on non-trade concerns tabled in Phase 1

 

Food security: Phase 2  back to top

(See also developing countries and net-food importers)

The length of the debate reflects the fact that all countries consider food security to be important, especially for developing countries. Opinions differ on how to deal with this. Among the ideas discussed:

Is it necessary to protect domestic production in order to ensure food security? Most countries say this is best handled through a combination of means, but they vary a lot in the emphasis they give to various methods. These include: trade (importing, together with exporting in order to finance imports); stockholding; and domestic production (which can require some support and protection in developing countries).

They differ on whether liberalization and market orientation should be the main route because distortions jeopardize food security (countries advocating substantial liberalization take this view); whether market failings and particular circumstances such as an adverse climate require more emphasis on intervention (importing developing countries, some developed countries favouring continued protection and support); or whether a gradual approach towards liberalization is best (some European countries).

Some developing countries argue that they need to intervene in agricultural trade because they see little prospect of developed countries ceasing to distort markets with subsidies and protection, because at times they lack foreign exchange, and because they need to support small-scale subsistence farming.

Some countries distinguish between short-term and long-term measures and between different problems. One view is that developing countries’ short-term problems in obtaining food are best served with well-targeted food aid. In the long term, the solution is raising incomes, which means liberalization is part of the long-term best solution. However, complete reliance on market forces could lead to specialization in different regions, increasing the risk of acute shortages when weather and other conditions are unfavourable in those regions, and therefore, the best approach is gradual, monitoring the impacts, according to this view.

Some other countries agree that raising incomes is the long-term solution to food security. But for the short term, the Marrakesh Ministerial Decision on Net Food-Importing Developing Countries and Least Developed Countries, combined with food aid and other emergency measures apply, they say.

International stockholding and a revolving fund: Some countries propose creating an international stockpile. A number of developing countries have proposed a safety-net revolving fund to allow net food-importing developing countries and least developed countries to borrow in order to buy food in times of shortage. Developing countries concerned about food security support the stockpile proposal. Some countries question whether there should be a new fund, preferring existing World Bank and IMF programmes.

Phase 2 papers or “non-papers” from: Japan, the US, and 12 developing countries (Cuba, Dominican Republic, El Salvador, Honduras, Kenya, Nicaragua, Nigeria, Pakistan, Peru, Sri Lanka, Venezuela, and Zimbabwe)

 

Environment: Phase 2  back to top

Among the topics covered in the debate: Are environmental concerns best handled through comprehensive liberalization and “targeted, transparent and non- or minimally-distorting” Green Box supports? Or is agriculture special — i.e. is some support linked more directly to production necessary, particularly in areas where agricultural production has a low potential because production is needed for environmental reasons?

Phase 2 papers or “non-papers” from: from the Cairns Group, Japan and Norway

 

Preparations for ‘modalities’  back to top

In the preparations for “modalities”, non-trade concerns are not discussed as a separate item. Instead, they are taken into account in the discussions on each of the three “pillars”: export subsidies and competition, market access, and domestic support. Countries pressing for this issue to be included repeatedly stressed that it is important for them.

 

The revised first draft ‘modalities’  back to top

Again, this issue is not treated separately but taken into account under various headings in the draft.

   

The draft frameworks  back to top

(see Cancún ‘framework’ proposals)

Japan’s proposal calls for flexibility in improving market access when products are sensitive and closely related to non-trade concerns. The Pérez del Castillo and Derbez drafts take up the approach of the US-EU draft: that certain non-trade concerns would come under “further work” to be undertaken.

  

August 2004 framework: non-trade concerns  back to top

The framework’s introduction confirms that non-trade concerns will be taken into account.



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