Agriculture And The Multilateral Trading System

Agriculture and the multilateral trading system in Global Commerce Policy

In this regard, a definition of this issue is as follows: the rules of the GATT do not distinguish between agricultural and other products except in minor ways. The entries on trade policy are here. Article XI requires the general elimination of all quantitative restrictions, but Article XI:2 permits some import and export restrictions on agricultural products under closely defined conditions. The entries on trade policy are here. Article XVI (Subsidies) enjoins parties to avoid the use of subsidies on the export of primary products, and Article XX (General Exceptions) allows members to suspend some of their obligations in order to comply with measures they have accepted as part of their membership of international commodity agreements. Trade under these agreements was effectively not subject to GATT rules. For the first few years of the GATT ™s existence this situation did not cause any real difficulties. Western Europe was still recovering from the effects of the war, and there were as yet few hints of the persistent surpluses that were to be a feature of world agricultural trade a decade later. The entries on trade policy are here. In particular, there seemed to be markets for United States domestic surpluses, except for dairy products. By the time of the 1955 GATT review session, there was a feeling among members that the time had come also to bring commodity arrangements under the supervision of the GATT. The United States, however, had run into a problem. Domestic production ran persistently ahead of consumption, and its import market was attractive to foreign suppliers. The 1951 Trade Act specifically held that new trade agreements could not be made in contravention of existing United States agricultural programs. The import restrictions permitted under GATT Article XI:2 appeared insufficient to deal with this problem. The entries on trade policy are here. In 1951 the United States had been granted a waiver from the GATT rules to impose import restrictions on dairy products. This was superseded by a request in 1954, and granted in 1955, for a waiver without a time-limit until it would be able to bring the provisions of the Agricultural Adjustment Act into line with GATT obligations. This was the Section 22 waiver. The United States was now permitted to impose import restrictions on agricultural products as it deemed necessary. This action created a precedent for the future treatment of agriculture under GATT rules. The chances of dealing with it under normal disciplines had been dealt a serious blow. For example, when Switzerland acceded provisionally to the GATT in 1958, it obtained a carve-out for its entire agricultural sector. Nevertheless, the remainder of the GATT membership continued its search for an international regime for trade in commodities. The entries on trade policy are here. A proposal had emerged in early 1955 for a Special Agreement on Commodity Arrangements (SACA). The entries on trade policy are here. It contained a mechanism for dealing with disequilibria between production and consumption of primary commodities, including the possibility of commodity arrangements. Whether this arrangement would have existed side by side with the GATT, or whether it would be subordinate to it, was never made clear. The entries on trade policy are here. In any case, whatever the merits of the proposal, this did not matter, since it did not enter into force. There were those who considered that they would fare better under the existing GATT provisions. The entries on trade policy in the Encyclopedia are here. Others saw no point in proceeding once the United States made it clear that it was not interested in becoming a member of SACA. The entries on trade policy are here. Attempts over the next three decades to impose GATT disciplines on agricultural trade fell well short of this proposal. The entries on trade policy are here. An initiative later in 1955 to deal with the problem of surplus disposal, particularly under United States acts such as PL 480, petered out after several years of discussion. The next attempt to deal with the problem of agricultural trade came with the commissioning of the Haberler Report in 1957. The entries on trade policy are here. It was aimed particularly at analyzing the failure of the trade of developing countries to develop as rapidly as that of industrialized countries, excessive short-term fluctuations in the price of primary products and widespread resort to agricultural protection. The panel report, titled Trends in International Trade, was issued in October 1958. The entries on trade policy are here. It argued, among other things, for a moderation of agricultural protectionism in North America and Western Europe, and its overall tenor was in favour of trade liberalization. Though the Report was universally welcomed, its influence turned out to be quite small. The entries on trade policy are here. A committee was indeed established to consider the Report ™s recommendations in detail, and this led some to believe that a solution was nearer. The entries on trade policy are here. Analysis and discussion there were, but the most that can be said about the longer-term effect of the Haberler Report is that it can be regarded as the first step towards the launch of the Dillon Round in 1960. The entries on trade policy are here. In any case, by that time Western Europe ™s complete recovery from the effects of the war and the establishment of the European Economic Community had led to a new situation in global agricultural trade. The introduction of the Common Agricultural Policy with its variable levies and domestic support measures meant that the Community joined the United States in contributing to global trade distortions. Next, the Kennedy Round, launched in 1963, appeared to offer another opportunity to sort out agriculture. The entries on trade policy in the Encyclopedia are here. One of its objectives was the adoption of measures for access to markets for agricultural and primary products. The entries on trade policy are here. It began badly with the outbreak of the Chicken War, a dispute between the United States and the European Economic Community over the sudden closure of German and other European markets for poultry through the operation of variable levies. The outcome on agriculture of the Kennedy Round was poor. The entries on trade policy are here. Its main achievement was creating the impetus for the eventual conclusion of a new International Grains Arrangement. The mandate for the Tokyo Round (1973-1979) included negotiations on agriculture, taking into account the special characteristics and problems in this sector. These negotiations again ended in failure. The conclusion of the Agreement Regarding Bovine Meat and the International Dairy Arrangement introduced a fragile peace into these trades, but they did not deal with the underlying problems of domestic over-production, export subsidies, import restrictions and other measures characterizing agricultural trade. The Tokyo Round ended with agreement that there should be continuin
g negotiations on the development of a Multilateral Agricultural Framework aimed at avoiding endemic political and commercial confrontations in this area. Negotiations were rejoined, but not to any effect. The entries on trade policy are here. As noted by Hudec, Kennedy and Sgarbossa, there had been 100 disputes in the GATT concerning agriculture between 1947 and the early 1980s, accounting for nearly 43% of all reported disputes. The United States and the European Economic Community had been involved either as a complainant or a respondent in 87 of them. The entries on trade policy are here. A new start to finding a solution to the problems of agricultural trade was clearly necessary. The 1982 GATT Ministerial Meeting agreed on a work program for the examination of all matters affecting trade, market access, competition and supply in agriculture. The entries on trade policy are here. A working party made recommendations in 1984 concerning better market access, greater export competition, clearer rules on quantitative restrictions and subsidies, and more effective special treatment for developing countries. The report containing these recommendations was adopted in the same year. These recommendations then receded into the background as negotiations began for what became the mandate of the Uruguay Round, but they provided in effect a draft set of negotiating objectives for the Round when it was launched in 1986. Ministers agreed at Punta del Este that negotiations should aim to achieve greater liberalization of trade in agriculture and to bring all measures affecting import access and export competition under strengthened and more operationally effective GATT rules and disciplines. The entries on trade policy are here. Attention would be given to the reduction of import barriers, a better competitive environment and the effects of sanitary and phytosanitary measures. The entries on trade policy are here. Another new factor now entered into play. The entries on trade policy are here. In the Kennedy and Tokyo Rounds the negotiations on agriculture were conducted mainly between the European Economic Community and the United States. The entries on trade policy in the Encyclopedia are here. Other agricultural traders existed very much at the margin of these negotiations. The formation immediately before the launch of the Uruguay Round of the Cairns Group, a group then consisting of fourteen agricultural producers and exporters, ensured that there would be an influential and moderating third voice. The entries on trade policy are here. Agriculture was one of the most difficult negotiating subjects during the Uruguay Round. The issues were well understood, but no real progress was made until the European Community had accepted that changes to the Common Agricultural Policy were necessary for internal budgetary reasons alone, and that reductions in price supports were possible without tearing the Community ™s social fabric apart. Even then, the European Commission had great difficulty obtaining a negotiating mandate from the member states. The entries on trade policy are here. Its difficulties in participating meaningfully in the agricultural negotiations led to the collapse of the Brussels Ministerial Meeting in December 1990. Matters were not helped by adherence by the United States to its objective of zero subsidies, something that observers doubted it would be able to deliver even in respect of its own practices. The Round then effectively marked time until the Blair House Accord in November 1992. Negotiations remained difficult, and some changes in favour of the European Community were made to this accord in December 1993. This allowed concluding the Round within a few days. Trade in all agricultural products is now covered by WTO rules, but extensive further negotiations will be required to achieve a trade regime resembling that for industrial products. Negotiations on agriculture resumed on 1 January 2000 under Article 20 (the continuation clause) of the WTO Agreement on Agriculture. See also Baumgartner proposals, Mansholt proposals and Ploughshares War.[1]

Agriculture and the multilateral trading system

Notes and References

1. Dictionary of Trade Policy Trade, “Agriculture and the multilateral trading system” entry (OAS)

See Also