Free Economics Essays - To What Extent is Unfinished Business from the Uruguay Round Agreement on Agriculture Influencing the Current Round of WTO Agricultural Trade Negotiations? Contrast these with any new Economic Objectives on the Agenda.
The long-term objective sought under the Uruguay Round Agreement on Agriculture (AOA) is the establishment of a “fair and market-oriented agricultural trading system … through substantial progressive reductions in agricultural support and protection.” This was motivated from the need to reduce surplus caused by rising levels of support and protection in a number of developed countries during the 1980s and 1990s. The hope of the AOA was that the strengthening of the governing agricultural rules will lead to improved predictability and stability for importing and exporting countries, however, this has not occurred. Clarification is lacking over which variable tariff practices are allowed and which are not. As certain banned schemes under the AOA are still in operation, for example, throughout the EU and Japan.
Over ten years have elapsed since the declaration of the WTO was formed and the seven-year Uruguay Round of multilateral trade negotiations concluded. The most important factors of the AOA were an agreement to convert non-tariff barriers into tariffs and bind and reduce all tariffs. To establish minimum access tariff quotas, to cap and reduce export subsidies, and put discipline on trade rules for agriculture. Also, developing countries were provided with lower reduction commitments and a longer implementation period. Leading up to the Hong Kong Ministerial, ten years later, agriculture is still heavily supported in rich countries and for many products barriers are still formidable.
This inability to carry out a finite set of terms for agricultural trade, especially tariff regulations, put a great deal of pressure and strain in negotiations at the recent Ministerial in Hong Kong. The one agreement that did come forth amicably is an elimination of agricultural export subsidies by 2013. A major disappointment was that no discernible progress was made on expanding access to developing country markets, despite 81% of the world’s population now consisting of developing countries that will represent the future for growth throughout agricultural trade.
The U.S. was quite upset that no progress had been made to reduce tariffs in other countries that make American farm products too expensive to attract customers. National Farmers Union President exclaimed “The failure of the WTO to agree … is an indication that any agreement on agriculture will be difficult to achieve until they are willing to negotiate all factors of trade, not just export subsidies, domestic subsidies and market access.”
The U.S. and European Union (EU) conflicted over many issues including the EU ’s high tariffs, and the EU retaliated by making U.S. food aid and cotton programs their main focus. A worry that is evident between both parties is that advanced, net-agricultural exporting developing countries are subject to similar disciplines that face the U.S. and the EU. For example, Brazil under WTO rules can offer extensive domestic, export and tax subsidies to their competitive sectors, despite the fact they are world-class exporters of many commodities. A factor that is prohibited under WTO rules for the U.S.
In the Ministerial at Cancun in 2003 and the previous at Doha, Qatar in 2001 talks have been hampered with little result on issues including investment, competition, government procurement, and trade facilitation. Therefore at the recent Hong Kong Ministerial negotiators seemed hard-pressed to get a deal. The outcome of the Round is a deal, which will create substantial gains for richer countries in a decade and leave poorer countries with little benefit. The deal will have rich nations liberalize their markets within one another and also open their markets to goods from the poor nations. However poor nations will maintain their trade barriers. The plan also requires cutbacks in the U.S. food aid and agricultural export credit guarantee programs.
This deal has not been taken kindly by all parties as once again the U.S. and the EU powered the decision-making process as they did years back in the last phase of the Uruguay Round creating a compromised formula at the last minute, the AOA, and pushing it upon the WTO and then stating that if the WTO did not agree with the package they would be on their own to form a new one and be responsible for the Round.
What has transpired has angered many less developed countries, many throughout Africa. The new development package, as stated by the G90 alliance of Africa Union group, “offers nothing new or substantive. It is only the latest in an unbroken history of false and broken promises by the major trading powers in the WTO.”
According to many developing countries, the key factors that sold the Uruguay Round package in 1994 were promises to developing countries to off-set the economic and policy costs of the heavy undertakings made by developing countries in that round. Such promises have not yet been fulfilled. What has not changed since 1994 is the major trade powers insistence on pushing developing countries to forego their general needs and to compromise.
In contrast to ever changing issues without resolve, new economic issues on the agenda included the U.S. and the EU wanting Australia, New Zealand and Canada to end the monopoly powers of their state trading enterprises. The plan does not call for an end to their monopoly practices but instead says that their trade distorting practices need to be curbed. Also, special provisions have been made to help West African cotton producers by lowering world cotton prices. This declaration is alarming to the U.S. and EU as they feel they will be asked to take larger cuts quicker, to give preferred access to products produced by the least developed countries with nothing in return. The least developed countries are given duty and quota free access to the U.S., which consumes only 6 million bales annually, but did not require China, India or Pakistan, which consume a total of 70 million bales annually, to give West African cotton the same access.
However, least developed nations are still not completely happy with the cotton resolution. As like many other power struggles from the U.S. and EU, the EU has discussed trade aspects with no finance development and the U.S. has done just the opposite with talk of finance but none on trade.
To recap, the Hong Kong Ministerial focus on agriculture was largely on export competition, and specifically the link between establishing an end-date for phasing out these subsidies and the concept of parallelism. On cotton, there has been a resolution, which seems to a benefit and a disadvantage to both rich and poor. This also holds true on the proposed duty-free, quota-free market access for least-developed countries.
The constant since the creation of the WTO is the developed countries forcing their hand throughout these negotiations while developing countries fight for what little they can and try to bend as little as possible despite making up over 80% of the countries within the WTO.
References:
www.wto.org
www.cnn.com
http://www.fao.org/trade/
The New York Times; December 18th and 19th
