AGRICULTURE, TRADE AND FOOD SECURITY: ISSUES AND OPTIONS

As part of its mandate to provide assistance to member countries for the follow-up to the Uruguay Round and future negotiations on agriculture, FAO has pursued a wide range of activities with a view to enhancing the capacity of member countries, particularly developing countries, to analyse the implications of the Uruguay Round Agreements for the agricultural sector, to adjust to the new trading environment and thus take advantage of trading opportunities, and to participate effectively in future multilateral trade negotiations.

The 1996 World Food Summit Plan of Action commits FAO to continue assisting developing countries on trade issues and in particular "in preparing for multilateral trade negotiations including in agriculture, fisheries and forestry, inter alia through studies, analysis and training". The objective is to "ensure that developing countries are well informed and equal partners in the negotiation process". Assistance to member countries has been intensified to that end, in view of the forthcoming WTO negotiations. A series of activities has been initiated, including regional capacity-building workshops, which cover issues primarily related to the Uruguay Round Agreements on Agriculture, Sanitary and Phytosanitary Measures (SPS), Technical Barriers to Trade (TBT), and Trade-Related Aspects of Intellectual Property Rights (TRIPS).

In the same context, a symposium was convened in Geneva on "Agriculture, Trade and Food Security: Issues and Options in the forthcoming WTO Negotiations from the Perspective of Developing Countries" on 23-24 September 1999, with the objective of highlighting developing countries' concerns related to agricultural trade, in particular the interrelationship between agriculture, economic development and food security. The symposium was intended mainly for government representatives concerned with the upcoming WTO negotiations on agriculture, interested international institutions and regional organizations and agricultural trade experts. About 170 participants falling into these categories attended.

The Symposium was divided broadly into two parts. The first part, covering the first day, focused on the interrelationship between agriculture, economic development and food security, overall trends in agricultural production and trade and the experience so far with the implementation of the Uruguay Round Agreements as they have affected world agricultural markets and the developing countries. On the second day, the focus was on issues at stake for developing countries and options for enhancing their agricultural production, trade and food security in the context of the forthcoming WTO negotiations.

Vol. I, Part One, of the present publication contains a summary of the proceedings of the symposium. In view of the many rich and varied ideas that were put forward, it was felt that any attempt at a synthesis would be less fruitful than a presentation of the array of views expressed. A summary is therefore provided of the main points made by speakers (panellists as well as other participants) during each of the four sessions, using as closely as possible their actual words. (See the Annex for the programme and list of speakers and panellists).

Part Two of Vol. I reproduces five of the six background papers prepared for the Symposium. (The sixth, summarizing national experience in 14 countries, is reproduced in Vol. II.)

Vol. II contains the country case studies, including a synthesis of the studies that was distributed to participants as background paper No. 3.

ACP	African, Caribbean and Pacific
AMS	Aggregate Measurement of Support
AoA	Agreement on Agriculture
ATC	Agreement on Textiles and Clothing
BSE	bovine spongiform encephalopathy
CAP	Common Agricultural Policy (of EC)
CARICOM	Caribbean Community
CET	Common External Tariff
CIS	Commonwealth of Independent States
EC	European Community
EU	European Union
FAO	Food and Agriculture Organization of the United Nations
GATS	General Agreement on Trade in Services
GATT	General Agreement on Tariffs and Trade
GDP	gross domestic product
GMOs	genetically modified organisms
GSP	Generalized System of Preferences
HFTA	high temperature forced air
HS	Harmonized System (Harmonized Commodity Description and Coding System)
IIASA	International Institute for Applied Systems Analysis
IFPRI	International Food Policy Research Institute
IMF	International Monetary Fund
LDC	least developed country
LIFDC	low-income food-deficit country
MERCOSUR	Southern Common Market (Mercado Común del Sur)
MFA	Multifibre Arrangement
MFN	most favoured nation
NFIDC	net food-importing developing country
NGO	non-governmental organization
NTB	non-tariff barrier
NTC	non-trade concern
OECD	Organization for Economic Cooperation and Development
PSE	Producer Support Estimate (of OECD)
PVP	plant variety protection
SACN	Southern African Customs Union
SADC	Southern African Development Community
SAP	structural adjustment programme
SARD	sustainable agricultural and rural development
SDT	special and differential treatment
SPARTECA	South Pacific Regional Trade and Economic Cooperation Agreement
SPS	Sanitary and Phytosanitary
SSG	special safeguard (measures)
TBT	technical barriers to trade
TRIMS	trade-related investment measures
TRIPS	trade-related aspects of intellectual property rights
TRQ	tariff rate quota
UNCTAD	United Nations Conference on Trade and Development
UR	Uruguay Round
USDA	United States Department of Agriculture
WFS	World Food Summit
WTO	World Trade Organization

The FAO Symposium on Agriculture, Trade and Food Security addressed the interrelationship between agriculture, economic development and food security and reviewed the experience of developing countries with the implementation of the Uruguay Round Agreement on Agriculture and other relevant WTO Agreements, in terms of both the global agriculture market and country-level impacts. The participants discussed issues of concern to developing countries in the forthcoming round of multilateral trade negotiations and explored policy options to assist them in pursuing their food security and agricultural development goals. The main conclusions of the Symposium are summarised below:

Participants felt that the effects specific to the implementation of the Uruguay Round results were difficult to identify and distinguish from other events, such as earlier domestic structural adjustment programmes, the Asian financial crisis and El Niño. In so far as empirical evidence was available, it indicated relatively minor quantitative effects for most of the developing countries studied. However, the qualitative impact has been significant. The spirit of the Agreement on Agriculture has profoundly altered the approach governments are taking towards agriculture trade policies, rural development and food security. Specific observations included the following:

Participants regretted that, in spite of some progress in several major developed countries, very high levels of support and protection remained in place. The continued use of export subsidies was singled out as the most trade-distorting practice.

For many developing countries, their implementation of the Agreement on Agriculture has been less difficult than expected, thanks largely to domestic structural adjustment programmes carried out in the 1980s, which anticipated to some extent the market-oriented trade reforms embodied in the Agreement.

Participants were nevertheless concerned that further adjusting the agricultural sector in developing countries to the new trading environment was costly and needed time. As a result, several countries faced a situation where the opening of

borders had resulted in rising food imports, whereas agricultural exports were still stagnating.

Two broad lines of approach emerged with regard to the negotiations: bring more balance into the Agreements that exist, and try to achieve more flexibility to enable developing countries to pursue their domestic food security and development objectives. Specific observations made included the following:

There was general agreement that developing countries would continue to require special and differential treatment. Many domestic producers would need time to adjust before they could take advantage of new trading opportunities.

One of the policy options suggested was the creation of a `development box' similar to the `green box'. This box would identify support measures which developing countries would be allowed to continue to utilise in order to meet domestic goals related to a broad range of issues, including increased food production, reducing rural/urban income disparities, rural development, structural adjustment, the environment and food security.

It was noted that small producers were often the losers in trade liberalization. As any threat to the livelihood of small farmers increases the risk of domestic food insecurity, there was a need to establish some kind of targeted support mechanisms to increase productivity and competitiveness and stimulate rural economic diversification. Also, social safety nets needed considerable improvement in many developing countries.

Participants regretted that the technical and financial assistance promised in the Marrakesh Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net-Food Importing Developing Countries had not resulted in action so far. They proposed that future WTO negotiations should examine ways of better delivering these types of assistance programmes.

Since its inception in 1945, FAO has worked to alleviate poverty and hunger around the world by promoting policies in support of agricultural development and food security. By food security we mean "access for all people at all times to the food they need for an active and healthy life." The Plan of Action of the World Food Summit, held in Rome in 1996, reiterates FAO's commitment to assist developing countries on trade issues, and in particular, "in preparing for multilateral trade negotiations including in agriculture, fisheries and forestry inter alia through studies, analysis and training ... to ensure that developing countries are well informed and equal partners in the negotiation process." A specific priority has been to assist member countries in the follow-up to the Uruguay Round and to prepare for future negotiations on agriculture.

FAO's work and technical assistance in this regard falls into two main categories: analytical studies and field programmes. Our analytical work includes assessments of the impact of the Uruguay Round on commodity markets, analysis of factors affecting agricultural markets and their stability, food security policy options for developing countries within the WTO rules, and annual assessments of the global food security situation. The field programmes include technical assistance aimed at building trade-related capacity at the regional and national level. We pay particular attention to the SPS and TBT Agreements, highlighting the critical role played by the Codex Alimentarius Commission and by the International Plant Protection Convention.

This Symposium aims to address the critical linkages among agriculture, economic development and food security, which are closely related to agricultural trade. For most developing countries, agricultural growth is essential for overall economic development and for food security. No other sector can generate growth multipliers as strongly as agriculture while providing the basic wage good that is constituted by food.

The first session of this Symposium will review major trends in world agricultural markets and in food security, together with the medium-term outlook, paying particular attention to the participation of developing countries in world agricultural trade.

The second session will review experience in the implementation of the Agreement on Agriculture, at both the global level and at the national level. You will recall that Article 20 of the Agreement on Agriculture calls upon WTO members to review and take into account these experiences in furthering the reform process.

The third session will address possible issues at stake in the forthcoming negotiations from the perspective of the developing countries, taking into account the World Food Summit Plan of Action: how can the Agreement on Agriculture and other relevant WTO provisions contribute to the process of agricultural development and how can we ensure that the next round of trade negotiations is supportive of agricultural development?

The fourth and final session will consider options for enhancing agricultural production, trade and food security in the developing countries in the context of the forthcoming WTO negotiations - options regarding domestic support, market access and export competition, as well as some horizontal issues such as the Marrakesh Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries, as well as the provisions for special and differential treatment.

(b) WTO intergovernmental preparatory process for Seattle - the situation as at end-September 1999: Remarks by the Chairman of the WTO General Council²

At the second WTO Ministerial Conference, which took place here in Geneva in May 1998, Ministers agreed, in their Declaration of 20 May 1998, that at the next Ministerial Conference they would first and foremost evaluate the implementation of the individual agreements: what were the difficulties and how could they be resolved? They agreed to address the `mandated negotiations' in agriculture and services and the `Singapore issues' which were discussed at the first Ministerial Conference (such as investment, competition policy, trade facilitation and transparency in government procurement). In Singapore it was decided to establish an integrated programme for LDCs to assist them in integrating into the global system by providing technical assistance to improve their production capacity and their market access. The Geneva Declaration included a commitment to review and follow up on this issue in Seattle. The last category of issues that will be discussed in Seattle are the so-called `new issues', such as industrial tariffs and the environment, but only if all members agree that they can be placed on the agenda.

The General Council was required to decide on the scope of the negotiations, the time frame and the structure. In the first phase (September 1998 to March 1999) member States were to identify the issues which they thought it was important to address. In the second phase (March to July 1999) they were to table concrete proposals on the various items identified. However, 200 proposals in the various areas have been discussed, and members have been coming up with new proposals every time, so we are still dealing with a backlog of the second phase. During the third and last phase, from September until November, a draft ministerial declaration is to be prepared, which will provide a background to the negotiations, but will not contain the proposals themselves. It is to be a kind of synthesis by Ministers of what needs to be done in terms of undertaking the various negotiations from the year 2000 and beyond.

This is where we stand, but there are a number of difficulties. Some countries think that the agreements should not be reopened, while developing countries say that they cannot continue to implement some of the agreements without a review of their various provisions. Agriculture is a fairly controversial issue, with varying positions taken by different countries. The Cairns Group has other priorities than, for example, the European Union. Services is a less controversial area, while issues regarding LDCs are not controversial, because their need for assistance is generally recognized. The question is how to assist them and where will the money come from? The main issue for LDCs in Seattle is whether they will receive concrete assistance on market access.

The Ministerial Declaration will reflect the views of all countries, so the negotiations in the next few weeks will be very important. As Chairman of the General Council, I issued an outline last week in which I attempted to reflect the various areas, which need to be covered. The difficulty will be to reach agreement by all members on a common approach to agriculture, on implementation issues and on new issues, etc. The duration of the new round of multilateral negotiations also needs to be decided, although there is a general view that three years is about optimum. Once that is agreed, the actual drafting will start, so that we can go to Seattle with an agreed text that is acceptable to Ministers. It is hoped that the discussions in this symposium will help facilitate agreement on the ministerial declaration and the negotiations that will follow thereafter.

The Symposium was addressed on this subject by a representative of WTO and the Secretary-General of UNCTAD. A keynote address was delivered by Professor Kirit S. Parikh, Director, Indira Gandhi Institute of Development Research, India.

Food security is of particular concern to many developing countries and a daily problem for parts of the population. Enhancing food security involves at least six policy-related challenges. We need: (i) peace; (ii) strengthened purchasing power of the poor; (iii) greater efficiency of food production and distribution; (iv) adequate growth and stability of the food supply; (v) better and more secure access to the food supply; and (vi) appropriate availability of food aid, especially in emergency situations. I shall focus on one of the complex aspects at issue, notably the relationship between food security and trade. Moving ahead with the trade agenda in the future WTO negotiations is part of the solution, because it can contribute to progress on all six fronts.

War and civil strife aside, poverty is a root cause of the lack of food security. Here, further trade liberalization can make a difference. There is plenty of empirical evidence that trade-induced economic growth and job creation have greatly enhanced the power of people to purchase food. Further trade liberalization can be a forceful weapon in the fight against poverty. In this regard, the dismantling of excessive trade barriers at home is of as much importance as improvements in market access abroad.

The cost of food is, of course, another important element and depends a great deal on the efficiency of food production and distribution. In this regard, a further dismantling of trade barriers and trade-distorting subsidies in the context of the future WTO negotiations would help boost food production in countries and regions where it can be produced at lowest cost, including the many developing countries whose agricultural development is currently adversely affected by subsidy practices abroad. Lower food prices will make food more affordable, particularly for the poor.

A more efficient use of the global resources available for the production of food strengthens, almost by definition, the capacity to feed a growing world population. From a food security perspective, the issue is not only whether world food supply keeps pace with world food demand. The stability of supply, and access to that supply, are of similar concern.

Even in the best of circumstances, food aid will remain important, particularly in emergency situations, whether brought about by natural disasters or wars. One challenge in this area is, however, to minimize any adverse impacts on agricultural development in the country or region concerned. It is therefore for good reasons that under the Agreement on Agriculture food aid is exempted from the export subsidy reduction commitments, but subject to certain conditions, including the requirement for food aid transactions to be in accordance with the FAO principles of surplus disposal and consultative obligations.

The WTO Agreement on Agriculture also contains provisions related to domestic food security programmes, particularly the green box cover for domestic food aid and public stockholding for food security purposes. The related provisions include special and preferential treatment for developing countries. Thus, subject to the relevant criteria, WTO members can operate such programmes as they see fit.

Food security at both the international and the national level could benefit from a further strengthening of the multilateral trading system, including through further liberalization. The importance of a strong trading system in keeping the world economy on track, including by helping countries that have slipped into deep recession to recover, has been dramatically illustrated by the recent financial crisis in Asia and elsewhere. It does not require much imagination to figure out what would have happened to world economic development in general, and food security in particular if, as once happened, these financial crises had triggered a wave of protectionism in trade.

The contribution of future WTO negotiations to enhancing food security will depend on what they deliver in terms of economic growth and job creation, particularly in developing countries. In turn, this will depend on the scope of the negotiations and the depth of their results. Trade liberalization and food security are not intrinsically in conflict. Quite the contrary. This does not necessarily imply that the trading system as it stands today is in all respects perfect, as far as food security aspects are concerned, but the trade negotiations provide an opportunity to address any deficiencies.

I will concentrate on issues concerning the liberalization of agricultural trade. Agriculture is the major test of the credibility of the rules-based trading system, which was inspired by the belief that free trade contributes to the efficient allocation of resources. If we accept that belief, there is no reason why agriculture should be left outside of the disciplines and rules of the system, as it has been for far too long. We frequently hear complaints about the long transition periods required by developing countries to adapt to, for example, new rules on intellectual property rights. But people forget that for the world in general, and for industrial countries in particular, there has been half a century of transition for agriculture. If we don't accept that agriculture should be submitted to a rules-based system, we are not sincere in trying to impose such a system on industry or on services, or in other areas. There is no valid intellectual or theoretical argument why agriculture should be exempt.

When I was Brazil's Ambassador to Washington, at my first meeting with Ms Carla Hills, the United States Trade Representative, back in 1991, she lectured me on all the shortcomings of my own country in respect of trade and all the things that we were doing wrong, advancing the solid arguments of the classical economist about how we were hurting ourselves by not following the good advice of all the theoreticians. I then put to her only one question, `Can you show me the chapter in David Ricardo or in Adam Smith where they expressly exempt frozen concentrated orange juice from those beautiful theories?' She laughed, saying that `Well you know, in concentrated orange juice we have the Florida lobby who ...,' So you see the problem. Either you are coherent or you are not.

Very little has been achieved in agriculture. At the beginning of the Uruguay Round of agricultural negotiations, one of the first proposals tabled by President Reagan was the zero option, i.e. zero domestic support, zero market barriers, zero export subsidies. Measured by those admittedly ambitious goals, how much did we achieve? I really don't know, but I sometimes wonder whether it was not a mistake to accept so little in agriculture at the end of the Round.

There is an additional argument, which has to do with development. We have been seeing with satisfaction that more and more organizations and personalities are now saying that we have to redress the imbalances in the trading system. Last week we had a very significant meeting of the G-77 and China in Marrakesh, where the Director General of WTO, Mr Moore, came out strongly in favour of the idea that the next round of negotiations on trade should be a development round. It is extremely encouraging that everybody is now preaching that development should be at the centre of the stage but it also raises the level of expectation, and the disappointment will consequently be bitter if once more we fail to translate the change in discourse into something meaningful.

It has to be admitted that after almost five full years of implementation, it is becoming a common view among the developing countries that the Agreement on Agriculture has had little effect in improving their participation in world agricultural trade. Agricultural tariffs remain distinctively higher than those in the industrial sector - almost six times higher on a trade-weighted basis. Problems of tariff peaks and tariff escalation persist, as shown in a joint WTO/UNCTAD study. The total current aggregate measurement of support by OECD countries is still very high, amounting to almost US$100 billion, of which the European Union alone accounted for over one half and Japan for over a quarter, and is thus much more than the entire GDP of some medium-income developing countries.

Some of the commitments that had been linked to potential benefits for developing countries have not been fully or satisfactorily implemented. Such implementation problems include the failure of developed countries to provide improved market access to developing countries' exports. Other examples are high in-quota tariff rates, discriminatory and non-transparent tariff rate quotas, administration methods, and, as already mentioned, the unsatisfactory implementation of the Ministerial Decision on the net food-importing countries.

Given such an assessment, what should be the objective of the forthcoming negotiations? Of course, it is to fully bring the agricultural sector into the multilateral discipline, but from the perspective of developing countries it should also be to formulate the future agreement in a manner that, while aiming at the objective to establish a fair and market-oriented agricultural trading system, would reflect more closely the needs and specific conditions of developing countries. And its implementation should ensure a balanced and equitable allocation of benefits among all countries. In this respect it is encouraging that developing countries have been participating more actively in the preparatory stage. Many of the some 40 proposals related to agriculture have been tabled by developing countries that have been able to create groups of like-minded countries actively pursuing their objectives.

On the eve of the negotiations we can distinguish three main negotiating positions. First, there are the mainly industrialized countries, like the EU, Japan, Switzerland and Norway, that stress the multifunctionality of agriculture, that is, their non-trade concerns. A second group is constituted by the more active "demandeurs" in the negotiations - the United States, of course, and the Cairns Group, which includes developing countries that, are highly dependent on agriculture for the improvement of their trade prospects. Finally, there is the group of developing countries for which agriculture goes beyond an activity that is purely governed by market rules, because it involves a high proportion of the population, generally more than 50 or 60 percent, and where problems of poverty alleviation or food security are very serious.

I would be the last to deny the difficulties involved in liberalizing trade in agriculture, but at the same time I must caution against treating agriculture as a totally different animal. For instance, people talk about its multifunctionality. To say that agriculture not only involves producing goods for the market, but also raises questions of environmental protection, landscape, the conservation of the rural development, and so on is undoubtedly true. The problem is whether pursuit of those goals necessitates trade-distorting policies.

Multifunctionality does not apply solely to agriculture. I quote from my experience as Minister for the Environment. In the Amazon rainforests of Brazil, the threat comes precisely from agriculture, because it is agriculture, which makes imperative the burning of forests in order to convert land for agricultural uses. Some 20 years ago we created a free zone in the capital city of Manaus. It had an amazing impact, because many people who were living in the rural areas of the Amazon migrated to the capital, reducing the pressure on the forest. So in our case it could be argued that industry in the Amazon is the multifunctional activity, because it preserves the forest.

We still have seriously to address many problems of market access: tariff peaks and tariff escalation; SPS and TBT issues (not exempting anyone from standards that are necessary from a scientific point of view but trying to improve the capacity of developing countries to establish and meet those standards); MFN tariff reductions and their impact on preferential regimes; the tariff quota system. In terms of domestic support, we have to discuss whether or not we need a development box. The criteria of the development box, for it to be operational, would need to be linked to appropriate development indicators, such as the percentage share of agriculture in GDP, the rate of under-nourishment of the population, the population growth rate, the productivity growth rate, the degree of dependence of basic foodstuffs on imports, etc. Last, but by no means least, we must deal decisively with the scandal of export subsidies to agricultural goods. There is no justification whatsoever, in a trading system where export subsidies for industrial products have been prohibited, to continue to allow countries to defend their share in world agricultural markets through their financial capacity to provide export subsidies. This is not a matter for bargaining. Eliminating export subsidies is a consequence of the central principles of a sound trading system.

Keynote address by Professor Kirit S. Parikh, Director, Indira Gandhi Institute of Development Research, India

I agree with many of the points made by Ms Stanton, but efficiency of the market system depends critically on the initial income distribution and it may take a long time before growth trickles down to the poor. In the transition period, which Mr Ricupero emphasized can be long, many people can face serious food security problems. We cannot rely on the market to solve them, and the Agreement on Agriculture has not been particularly sensitive to this need for food security, particularly during the transition period.

To the definition of food security of the World Food Summit we should perhaps add that not only food should be made available to everyone, at all times, but also that it should be made available as a matter of right, without imposing any humiliation or requiring other conditionalities in connection with food aid. The key here is economic access; food security is basically a problem of the poor. The world food system provides for those who have the money. If you give money to the poor, they will demand food, more food will be produced and brought to them. But if you give money to the farmers, or provide them with incentives to produce more food, the food will not reach the poor, because they cannot afford it. Today in India more that 13 million tonnes of cereals are in official buffer stocks but more than 200 million Indians go hungry.

If poverty is the cause of hunger, to reduce hunger one has to reduce poverty. The poor have too little land, capital and skills, and we have to increase the value of their endowments and products to improve their real incomes. But all this takes time, and hence the critical importance of the transition period.

We have analyzed various scenarios using the general equilibrium policy and analysis models of the International Institute for Applied Systems Analysis (IIASA). To see whether a large amount of additional food on the world market can help the poor or not, we made a simulation in which we assumed that 50 million tonnes of extra wheat appear on world markets every year. We found that after 10-15 years hardly any of it goes as additional consumption to the poor. Even though the world market price initially falls, it subsequently rises again, finally reaching the level of the reference period. So the system adjusted: it changed production, and cropping and trade patterns, but consumption by the poor hardly changed at all.

Similarly, there are those who say that if there is a crop failure, free trade will give you access to the global market. Certainly it will for those who have the money. In a simulation exercise we first assumed a weather shock that reduced production in the northern, industrialized countries; then we made the same assumption for developing countries. No matter where the crops fail, the number of poor in the developing countries increases, because in developed countries there is enough money to buy food from the international market. Consequently, world food prices go up, and the poor food-importing developing countries are unable to import as much, food aid dries up, and so on. Therefore, even when rain fails in the north, hunger increases in the south. And similarly, of course, when it fails in the south, hunger increases there in any case. The system provides food only to those who have the money to buy it.

We also examined the effects of agricultural trade liberalization under various scenarios such as free trade by OECD members, free trade by developing countries and global free trade. I would emphasize one point: some countries gain and some lose. It cannot be given as a prescription that free trade is good for all countries. We concluded that OECD countries in general gained as a result of trade liberalization, whatever the scenario. Some developing countries gained under certain scenarios, but in general the poorer countries lose. They are hurt by terms-of-trade losses, other distortions and rigidities, and high food prices. So, one would argue for liberalization but only with corrective policies to avoid these losses.

We need to give further thought to some issues. First, the sequencing of reforms is crucial. Developing countries need adequate market access for their exports, so that they can import as much food as they need even if prices rise. Second, domestic price stabilization is important for economies that are suddenly exposed to world market prices. In such cases, we could permit buffer stocks and other operations, such as variable tariffs or price-bands, so as to avoid the immediate and full impact of world prices.

The multifunctionality of agriculture, mentioned by Mr Ricupero, is relevant to the question of self-sufficiency. A certain degree of self-sufficiency may be desirable on many grounds such as political security. The alternative of building up buffer stocks is expensive and in any case may not be an option for many poor developing countries, because so many people depend for their livelihood on the agricultural sector. Such countries should be allowed to have reasonable self-sufficiency targets in order to preserve the level of employment in agriculture, but without distortion of the global market.

Many of the measures in the Agreement on Agriculture are unfair. From the point of view of their impact on hunger and food security, developing countries are not treated equitably. In some cases the special and differential treatment is not adequate and in others the problem arises simply from the failure of developed countries to comply with the Agreement they have signed.

Because so many in the world lack food security, it is essential that food security be kept at the centre of the new round of WTO negotiations and that the Agreement on Agriculture be made fairer and more sensitive to the concerns of developing countries in this respect. The LDCs need flexibility, but they must not forget that market distortions are expensive and that the beneficiaries are not necessarily the poor in whose name many of the distortions are initiated. Growth is one of the best anti-poverty measures, and developing countries should aim for the fastest possible growth of their agricultural sector and of the economy in general. Meanwhile, income transfers through a self-targeting, self-adjusting, self-liquidating mechanism may be one of the best measures. One mechanism of that kind could be an employment guarantee scheme, such as the one that has been operating with some success in the state of Maharastra in India for the last 15 years. Experience shows that more people offer themselves for employment in bad, monsoon, years than in good years. The programme is self-targeting in that only the poor offer to work because the rich do not need those wages. Once the economy grows and sufficient alternative employment opportunities are available, people will not offer themselves for relatively low-paid work under employment guarantee schemes. So one can think in terms of framing a social security system, or a security network for food security, which does not necessarily distort agriculture. For that developing countries should get help, certainly over the transition period.

Chapter 3
MAJOR TRENDS IN GLOBAL AGRICULTURAL
MARKETS AND THE MEDIUM-TERM OUTLOOK

Nikos Alexandratos⁴: Significant changes have occurred over the past 25 years in the availability of food for human consumption in developing countries. There was a sharp improvement in consumption in the Near East/North Africa region between the mid-1970s and the mid-1980s, reflecting the oil boom and an accompanying growth in food imports. Significant progress occurred throughout the period in East Asia. South Asia is still in an intermediary position, but making progress. Sub-Saharan Africa has fallen behind - it was worse off in the mid-1980s than in the mid-1970s - although recently it has been making some limited progress.

Twenty-five years ago there were about 1 billion chronically undernourished people in the world, some 37 percent of the population in the developing countries. The proportion has since declined, to some 19 percent but, as noted by Mr de Haen, the absolute number of undernourished has fallen only very slowly, and stands at more 800 million. The absolute numbers are growing in sub-Saharan Africa and are relatively stable in South Asia, declining only very slowly. The proportion of undernourished in East Asia, including China, has been declining very fast, although the absolute numbers remain high because of population growth. In the Near East/North Africa both the proportion and the number of undernourished have declined rapidly. Latin America, which has relatively less under-nutrition, suffered during the 1980s but made strong progress in the 1990s.

The improvement in per caput food consumption in the developing countries came from two sources: domestic production and trade. The aggregate developing country numbers are dominated by China and India, which became self-sufficient, remained self-sufficient, and did not often enter the world market as major food importers. However, for a number of countries, food trade has been extremely important in making possible the gains in per caput consumption and reducing under-nutrition, notably in most of the Near East/North Africa region.

Over the last 35 years developing countries have been net importers of cereals. This was a period of sudden and very rapid growth in food imports, particularly during the early 1970s to the early 1980s, when the oil boom created a very rapidly growing market for cereals. After the impact of the oil boom fizzled out, the developing countries continued to grow as net importers, but at a much slower rate. Since the former Soviet Union and Eastern Europe dropped out of the import market, world cereal trade has been essentially flat. Part of the flatness in the grain exports of the industrial countries reflects the growth in meat trade; the United States has turned from being a net importer of meat to being a net exporter, as have the European Union, Australia, New Zealand, Brazil and Argentina. Meat imports are growing very rapidly in Mexico, Saudi Arabia, the Republic of Korea, Egypt and Hong Kong, China.

Suppose trade liberalization were to boost global food demand. Does the world have the productive capacity to respond? This question is often raised by the big importers of food, such as Japan or North Africa. World production of cereals has slowed down in recent years and the available supply per person has been declining. Some observers view this with alarm, but the reduced availability was essentially due to the collapse of production in the former Soviet Union and Eastern Europe. In more recent years, production has been picking up and world per caput consumption has started growing again. There appears to be sufficient production potential in the main exporting countries, such as North America, Western Europe, Australia and Argentina, to satisfy reasonable amounts of additional demand on global markets.

To conclude, there is sufficient production potential. The growth in trade has flattened out recently because effective demand has been weak. For developing countries facing the problem of food security, the cause continues to be poverty, and that is where the local development of agriculture comes into play. One of the topics to be discussed here is essentially whether further changes in the trade policy environment will help or will impede the development of local agriculture, raise the incomes of the poor and thus enhance their ability to buy food or to consume food which they themselves produce.

Loek Boonekamp⁵: In recent years, OECD has been relatively optimistic about the medium-term market outlook for agricultural commodities, and global markets, in terms of both trade volumes and prices. We have consistently pointed to the possibility of a slowdown in the real price decline for a number of agricultural commodities over the medium term, based on three main elements: (i) growing demand in a number of emerging economies and a shift towards more protein-based diets; (ii) the slow and very gradual movement toward less distorting government practices in OECD countries; and (iii) the expectation that the Uruguay Round Agreement would lead to less market distortion.

Right now market prices for many commodities are at historical lows. However, that has more to do with a reaction and adjustment of the supplies to sometimes record high prices in previous years. For a number of reasons I do not believe that the record low prices we see for a number of commodities at the moment invalidate our earlier assessments of a slower decline in real prices. One reason is that the recovery in a number of the non-OECD economies that were at the basis of our expectation of more buoyant markets in the medium term. Expectations for economic growth in the Republic of Korea and some other Asian countries affected by the economic turmoil surpass by far what anybody would have forecast even six months ago. Second, it is to be hoped that the trend toward more market-oriented policies, at least in OECD countries, is not going to be reversed. If those two conditions are fulfilled, world prices will recover from their current lows and trade will further increase. Nevertheless, I think that the price outlook for the medium term will be dampened. Even if their historical economic growth rates resume, the economies that were affected by the economic turmoil will have total incomes far lower than they would have been in the year 2005 had the economic downturn not occurred.

Two issues are likely to have important impacts on commodity markets in the medium term. One is increased public concern about how food is produced, how safe it is, and what the social and environmental side-effects could be. This can have important implications for markets and trade. There are obviously calls for increased regulation. In our opinion, these calls should be considered very carefully, and the issues at stake should, to a maximum degree, be resolved through consumers being able to express their preferences. Where regulations are needed, they should be transparent and based on internationally accepted criteria.

Assessment of medium-term prospects is subject to a number of uncertainties, some of which are beyond our control, such as the weather and natural disasters. But there is one that we can do a lot about, and that is policy interference in markets. If the very slow trend in OECD towards the use of less distorting market measures should persist and be strengthened, there is reason to expect a better functioning of markets in the medium term. If the trend should be reversed, we risk going back to the sort of market depressions experienced in the 1980s.

Eugenio Diaz-Bonilla⁶: I should like to make four points. The first concerns the relationship between agricultural trade and food security: trade has helped, but food security remains a domestic issue. An indicator of the ability to finance food imports is to express their current value as a percentage of total merchandise exports. This indicator has been declining over time. The food import bill for developing countries is less because they are trading more in general. Some of these net food-importing developing countries also export services such as tourism. If these export revenues are also included, the food bill is proportionately even lower. International trade has thus certainly helped, but food security remains a domestic issue, involving questions of land structure, infrastructure, domestic policies in general, domestic institutions and processes. Another indicator is the proportion of food imports to total food production (rather than to total consumption, since some of the countries are net food importers). For the least developed countries this proportion was about 4 percent in the 1960s, jumped in the 1980s to about 8 percent and is now declining again. So, there is no evidence, for those countries, that increasing globalization may be displacing internal production. For low-income food-deficit countries, a group for which FAO has separate data, the proportion ranges from 6 percent to 10 percent, and has never exceeded 10 percent despite globalization.

My third point is that the Agreement on Agriculture does not constrain good policies in developing countries in terms of poverty, environment, food security, food aid, etc. What it does constrain are some of the bad policies, which mainly involve transfers. Professor Parikh has referred to distortions that basically involve transferring money from consumers to some producers, usually the richer producers. Protection of food products in developing countries, or in any country, is a consumption tax on food, which, as a percentage of income, is borne greatly by the poor. Basically, the consuming poor are taxed in favour of richer producers. If our concern is for the poor, we must target the poor and provide them with the things they need: land tenure, credit, infrastructure, irrigation, etc. The Agreement on Agriculture constrains the policies that involve non-wealth-creating transfers.

Finally, there has been much public discussion regarding WTO. We know that in Seattle a lot of people will be complaining about liberalization, but the legal framework of WTO is embedded in the legal framework of every country. Decisions are taken and implemented by governments. I know of no WTO document saying that some faceless international bureaucrat decided this; it is always a country that says this or that. If you want to democratize, you have to begin with your own country. The WTO needs to be strengthened rather than weakened, and everyone who is trying to remove agriculture from the orbit of WTO or weaken the Organization is working against the poor under-developed countries.

Keiji Ohga⁷: I shall limit my comments to the long-term background structure of world food supply and demand. Before the 1980s, that structure was deeply conditioned by the cold war. Countries all over the world protected and subsidized their agriculture in order to secure the support from their own people, especially from the farmers, to protect their own social and economic system, whether socialist or capitalist. Developed countries, led by the United States, have set up various research institutes and helped the developing countries to enhance their productivity. After the cold war, that enthusiasm disappeared and now they mainly advocate free trade or the laissez-faire market system. Even the World Bank and regional banks, such as the Asian Development Bank, have begun to retreat from agriculture. Many organizations, including FAO, are cutting down on budgets and staff. Consequently, we cannot just extrapolate the past trend but must consider the long-term impact of the retreat from investment in agriculture (for example irrigation) and from agricultural research.

Another point, in relation to the WTO negotiations, is the assumption that competition in the world market will only bring winners. It will also bring losers. Those with a comparative advantage will win, but the people or the industries which do not have a comparative advantage will lose and will do so especially in the transition period. Most developing countries are food importers and so have little comparative advantage in that field. And in the winning countries it will be the big farmers that win. Small farmers, peasants, will lose. They have to migrate from agriculture to the cities, living in slums. According to theory, aggregate welfare should increase, but within the aggregate there are winners and losers; the poor tend to lose and the rich to win. That is the severe law of competition, and there needs to be some form of compensation, both within and among countries.

Questions to Professor Ogha: Several speakers requested elaboration of his views on winners and losers in a free trade system, the need for compensation at national and international levels, and the role of competition in agriculture.

Response: Regarding 'competition' in agriculture, there are two issues. In trade negotiations, the problem is basically one of levelling the playing field, but even with a level playing field, competition itself brings about winners and losers. It is in this sense that competition should be on the negotiating table. The issue of compensation should be addressed both at the domestic and at the international level. Domestically this generally involves a political process of negotiations among the interested groups. Normally compensation is provided through the budgetary allocation process, with the loser being compensated in the form of subsidies and so on. Although there are some compensation programmes under IMF and other institutions, they are very weak and matters need to be put right not only under the WTO negotiations on trade but also through devising an international compensation scheme. When the GSP was originally negotiated, it was intended to provide special treatment for developing countries - i.e. a form of compensation.

Question to Mr Boonekamp: Mr Boonekamp expressed confidence that demand will start growing again and agricultural prices will improve. Professor Ogha concluded that supply side difficulties (production/technology) might result in an even sharper increase in prices. And that raises the sort of issues, which we tend to miss in a lot of our discussions, that is: What happens with higher prices? There are a lot of losses, which can take place. Also, what does OECD do about the issue of research? Publicly funded agricultural research is on the decline everywhere. Does OECD or anybody else have anything to offer in that area?

Response: There are different ways of looking at the price issue. One, on which we agree, is that a decline in prices at a given time is a sign that the market, at least to a degree, is reacting to a situation of over-supply, so that after an adjustment period the excess resources will leave certain areas of production and markets will recover. In that sense a decline in prices is a sign of a better functioning market. If prices increase again in the future, that is something which is no doubt bad for consumers but probably not bad for producers inasmuch as, particularly if you move into a situation of more generally global market-oriented allocation of resources, an increase in prices will attract additional resources into production. As regards OECD and agricultural research, we are not a university or a research institute, but the applied research that we do is definitely a case of publicly-funded research and the areas obviously that we are mostly looking into have to do with agricultural policies and the implications for market and trade.

Questions to Professor Parikh: A number of questions were put concerning the impact of trade liberalization on agricultural prices, specifically regarding the relationship among agricultural subsidies, technological innovation and transfer and supply response and prices. Mr Parikh, in particular, was asked whether he agreed that a price increase stemming from the elimination of subsidies would stimulate production and in turn bring prices down.

Response: It is true that when you raise food prices the poor suffer, but higher food prices also stimulate production. Would food prices then come down, so that the poor consumer would benefit even more? We did some simulations of that kind, but even after 10 years of high food prices, in many developing countries consumers continued to remain worse off. While the supply response for a particular crop can be very high, for the agricultural sector as a whole it is somewhat limited. You can produce more wheat by diverting land from corn production but you cannot produce more wheat and corn and everything else at the same rate. So, because the aggregate supply response is muted, agricultural GDP does go up but consumers remain worse off, even after 10 years of such high prices.

Question to Mr Boonekamp: A medium-term perspective of five years is not enough to consider policies. There are many longer-term concerns about world production potential, such as climate change, water shortage, and environmental concern in various countries. Have you anything to say on this?

Response: I do not agree that a medium-term assessment is not useful for policy analysis. Certainly, there are policies or policy changes that take a long time to mature and generate effects, but there are definitely policies, particularly some of the policies that affect directly agricultural supply that have almost immediate impacts. We believe that a medium-term projections model that generates a baseline is very useful to analyze the effects over four, five or six years of changes in agricultural policies and their direct impact on the agricultural sector.

Questions to Mr Diaz-Bonilla: To what extent does he consider that trade liberalization actually trickles down to consumers? Or are the gains simply absorbed by intermediaries in the market? The Agreement on Agriculture may not constrain good policies, but does it constrain trade-distorting policies?

Response: I agree that you may totally liberalize the economy and the agricultural sector, but prices may not be reduced for consumers because of monopolistic or oligopolistic market structures. The issue is then not one of trade but more one of domestic policy and how you enforce competition policy on the domestic market.

The Agreement on Agriculture does indeed also allow trade-distorting policies. Witness the blue box and some of the Aggregate Measurements of Support that basically the developed countries kept for themselves. That is why it is important to complete the process of agricultural reform under the WTO.

Chapter 4
EXPERIENCE WITH THE IMPLEMENTATION OF THE URUGUAY ROUND AGREEMENT ON AGRICULTURE

Jim Greenfield⁸: It is extremely difficult to assess the effect of the Uruguay Round on global commodity markets, for two reasons. One is counterfactual: What would have been the world agricultural commodity situation if there had been no Uruguay Round? We do not know, but the suspicion is that it would have been pretty terrible. The trade wars of the late 1980s led one observer to describe the world commodity situation as being in "disarray". The second reason is that all of the assessments undertaken so far show rather small effects. Therefore, the type of changes observed in agricultural commodity markets, month to month, year to year, swamp the longer-term, slow-moving policy changes.

FAO analysis has found: (i) little evidence, with the exception of a few commodities, of any effect due to the Uruguay Round on the volume of trade and the level of prices, (ii) some evidence that part of the increased food import bills of the Marrakesh Decision countries could be attributed directly or indirectly to the Uruguay Round-related policy changes, and (iii) little evidence of much change in world price instability.

We have done further work on specific commodity impacts, which is presented in Background Paper No. 2. It revealed some evidence of Uruguay Round effects on global markets for cereals and butter through reductions in government-held stocks, and for bovine meat through the export subsidy caps. Citrus has been affected by the SPS Agreement and bananas, of course, through the dispute settlement process. For the other major agricultural products, we found no direct effects on global markets, because the policy changes were negligible and/or were overshadowed by macroeconomic shocks, weather anomalies or other market factors.

While some of these changes have been due to the Uruguay Round, in several cases they were on account of other Agreements rather than the Agreement on Agriculture (SPS, textiles, dispute settlement). The anticipated strength of commodity markets in the FAO model and in other models was largely due to expected income growth. It was supposed to have been positive and it is not. GDP average growth rates are lower in the last four or five years than they were in the previous four or five years. Individual commodity markets were thrown off by mad-cow disease, El Niño, and any number of smaller effects, but the average moves quite closely with income. If income has not delivered, ergo the commodity markets cannot deliver either.

Are commodity markets more or less unstable since the Uruguay Round? We do not know, but we should beware of the word "instability." It has a precise economic meaning: prices return to equilibrium after a shock. But stability in this sense is perfectly compatible with lots of price fluctuations due to weather and other shocks. Professor Sarris, of the University of Athens, has shown that commodity markets are stable. They return to something like equilibrium after a shock, despite very big fluctuations.

samarendu mohanty⁹: It is difficult to say how the agriculture agreement has impacted on world agriculture markets, because so many other things have happened at the same time. Over the last six years, core agricultural prices first went sky high (up some 40 percent) and then fell back (down 40 percent) in the next two years. It is very hard to distinguish if the Agreement on Agriculture has anything to do with this.

Changes in domestic support policy in the United States and EU that might be due in part to their WTO commitments are affecting grains market, although other factors dominate. Exports rose between 1993-94 and 1995-96, but prices dropped and exports declined in the following two years. Did WTO have anything to do with that? Of the 11 million tonnes drop in grain exports, the fall in Chinese imports accounted for 9 million, but that had nothing to do with WTO; China is not a member of WTO. The Uruguay Round commitments on market access have created very few real market openings, particularly for politically sensitive commodities. Tariffication has done nothing to improve world agricultural markets; it has basically increased the level of protection. But perhaps it is a good foundation for the next round.

John Finn ¹⁰: Implementation of the Agreement on Agriculture has been going ahead reasonably well, with most countries meeting their commitments in all areas. On market access, practically all product lines have been tariffied, although the results may not please everyone. We have had some problems with the administration of market access, but on the whole it is proceeding according to the commitments. Similarly, for domestic support and export subsidies, there are problems in individual areas, but in general commitments are being met.

The Agreement on Agriculture places constraints on the types of policy instruments that countries can adopt. The 1992 reforms of the EU's Common Agricultural Policy were influenced by the Uruguay Round. One of the reasons behind the change in the FAIR Act in the United States was to shift the policies out of the amber box and into the green box. The United States put themselves in a very good negotiating position for the future by shifting from market price supports to direct payments. The EU and other countries have shifted toward policies in the blue box and the green box, moving away from intervention purchasing and using less distorting forms of support. There has thus been a huge impact on the way countries administer their policies. The share of developing countries in agricultural trade was declining fairly steadily up to about 1993 and since then it has been growing. Of course, we would like to attribute this success to the Uruguay Round, but we have heard that we really cannot. Other factors are far more important at the moment. In my opinion, its biggest impact has been that it has constrained countries in their policies for agriculture. To answer Mr Greenfield, if there had been no Agreement on Agriculture, the most serious result would have been considerable freedom of action for countries that can afford subsidies, to the detriment of those that cannot.

There has been much talk about the probable negative effect of the Uruguay Round, but any such effect is questionable. Available data suggest that the effect has been positive, but the greatest effect is in constraining policies. Instead of policy making on the basis of political or financial power, we now have some rules which give everybody the same rights.

Donald Mitchell ¹¹: Prices of an individual commodity seem to be almost unfathomably complicated. But in the aggregate, commodity prices are well behaved, regular and very depressed. That is true for nominal prices of all commodities except energy, back to 1980 on a monthly basis. Real prices have declined by 50 percent over that period. So, if you are an agricultural producer or a developing country exporter it has been a very difficult time, but if you are a food importer it has been a less difficult time, and a relatively good time in some periods.

Since May 1996, we have been in a typical cyclical decline: supplies increased, final demand could not absorb the increased supplies and prices began to decline. A year later came the crisis in Asia; it clearly did not cause the decline in commodity markets, but it certainly contributed to it. The decline in prices is not particularly unusual; the price cycles since 1980 are all surprisingly similar. The current decline is slightly deeper than earlier ones (29 percent against an average of 25 percent) and is now almost of average length. However, there are some irregularities caused by the Asia crisis, which make the present decline unique.

For commodities that are heavily exported by the East Asian region, the effect of the crisis was very sharp and immediate. The countries devalued their currencies and at the same time underwent a recession that decreased domestic demand and made the international market more attractive. Domestic supplies shifted into the international market, contributing to a decline in prices. In contrast, when the crisis raised concerns about domestic food supplies, Indonesia imposed export controls on palm oil, which led to the opposite effect: a surge in international prices of palm oil and soybean oil.

Developing countries are by and large importers of food, and food prices have really taken a beating. For developing countries that are food importers that is a blessing, but unfortunately they finance much of those imports through exports of raw materials and tropical commodities. Grain prices, in particular wheat, a dominant food import of the developing countries, were relatively stable up until 1995, while world stocks declined sharply. Prices did not respond at first, but the world economy and demand were growing quite rapidly and prices suddenly began to respond. There was a temporary panic and everybody was convinced they were going to run out of grain, so prices spiked upward for a few months. Then they went into their normal decline, back now to a US$100 for wheat and US$85 for corn. So, in many respects these price movements are not so unusual and are consistent with the long-term trend in commodity markets.

Questions and comments: Mr Mitchell and Mr Greenfield were asked by one participant whether recent policy changes might actually have led to an increase in the supply response. He said that was important because the idea was that subsidy cuts would lead to reduced production, but some of the policy changes in the FAIR Act and in Agenda 2000 - removal of offsets and expansion of the so-called "decoupled" items in the green box - meant that governments were picking up the fixed costs of producers. Did they expect prices to settle closer to the variable costs than they were before, without offsets?

Another participant noted that the Agreement on Agriculture contained commitments on export subsidies, domestic support and market access. If the impact of the Agreement was insignificant, why was that? Was it either because the reforms were insignificant in these three areas, or because the market was not functioning properly? He was supported by another speaker, who noted that the biggest reductions were applied to the lowest tariffs, quotas were not correctly administered, and there were doubts about the amounts of support and subsidies. Were these only nominal commitments that were not intended to affect the market or was there a real change in the behaviour of countries?

- The most important impact of the Uruguay Round is that it has created the institutional framework for reducing subsidies, but has not yet actually reduced them. Subsidies in fact have increased; total agricultural support in OECD countries stands at US$335 billion and producer support at US$251 billion, which is much below what is allowed under the Uruguay Round. Unless these amounts are radically reduced in the next Round, there will not be much impact on markets. There is also the problem of market structures as far as developing country exporters are concerned. Given the market concentration on the importing side, while there is this atomization on the exporting side, the distribution of the benefits from trade liberalization requires further study. This changing market, of course, allows developing countries to export things like fruits and vegetables directly to the importing supermarkets thereby opening up market opportunities, but that is again something on which research needs to be done.

- We cannot predict what would have happened to commodity prices without the Asian crisis. Prices were on an upward trend since the end of the Uruguay Round for most commodities until that crisis and then they started to decline. I would like to get some comments on that.

- With reference to the presentation by Mr Greenfield, from the analytical point of view it is domestic prices that matter rather than the major exporters' so-called international prices. It is domestic prices that influence the food security of the poor importing-country consumer and these are strongly affected by currency fluctuations and the macroeconomic situation.

- We have been hearing that implementation of the Uruguay Round agreements has had no fundamental impact on markets, but I would point out that there has been a change in agricultural markets. Over the last 10 years the EU has decreased its share of global wheat exports by 4 percent, whereas the shares of Argentina and Australia have increased by 17 percent. For the other grains, the EU has lost 5 percent and the United States 10 percent, while Argentina, Australia and other countries have increased by 16 percent. For rice, the major beneficiary of this trend is India, which now has a much greater share of the world market than before. In other words, the least efficient areas are being replaced by more efficient producers, although world supply and demand are independent of this. Nonetheless, the effect is very important for individual countries which experience these changes.

john finn: I did not mean to give the impression that the Agreement on Agriculture was insignificant, only that there were many other factors of perhaps equal significance. All these other factors need to be taken into account if you want to work out why prices change, market shares change and so on. Also, perhaps I did not say sufficiently clearly that in a single year the effect of the Uruguay Round may not be as great as, say, the weather in that year. Take a five-year or six-year average, and you should be able to observe a much bigger effect because the commitments are made cumulatively.

Has there been a real change in policies? Yes, there has been quite a big impact: EU's 1992 CAP reform and Agenda 2000, the United States FAIR Act and similar changes in other countries as well. Domestic support in the OECD countries did increase this year, but the trend is still downwards and the level is still lower than before the Uruguay Round. I agree that there is a significant amount of unused export or unused domestic support commitments, mainly as a result of changes in policies in various countries, who now have shifted their support out of the amber box into the green box.

jim greenfield: Was the Agreement on Agriculture insignificant? The changes we have seen are being swamped by other forces so it is difficult to disentangle them. I would not say that it is insignificant; most people would accept that the qualitative effects on policy formulation are much more significant than the quantitative effects on markets. In certain countries there has definitely been a real change. Perhaps some countries have not always followed the spirit of the Agreement, although they may have followed the rule book. That, of course, is something which you will no doubt be seeing in the Committee on Agriculture continuously, this battle of what is the law.

As regards the PSE/AMS, one must be careful in making the comparison. AMS is a very specialized measure. The PSE published by OECD is a very much bigger number and it varies much more, year to year, with price fluctuations. The AMS is a fixed price measurement system; it is the administrative price against the fixed price, so it does not change very quickly. There is still some unused support, and that I think is the spirit of your question. There is some unused protection at the moment, so it could go higher, but the PSE could still go down at the same time because it is calculated on a different basis.

I take the point mentioned by the speaker from the European Commission. At the country level, there have definitely been changes. That is a subject to be taken up at the next session.

I take the very thoughtful point by Osamu Koyama about domestic price stability. The transmission from world price instability at the national level is potentially a very serious question which I believe will be taken up tomorrow.

donald mitchell: It was asked whether policy changes have increased supply responsiveness. I think, in general, that has been the case. Argentina is the country that increased production and exports of grains the most following the price increase in 1994-95. It had a huge response that was partly policy-related. The farmers had a better price, the cost of transportation was declining, and they had become more competitive as exporters. The major grain-exporting countries - and here I may be controversial - have huge excess capacity and given the slightest opportunity of higher prices they will increase production. At the global level, production increased 12 percent for grain and 13 percent for soybean in the two years following the price spike. So there is no shortage of capacity, but global grain trade has been stagnant for 20 years, so there is not much need to increase capacity. The case made about the change in market shares between Argentina, Australia and the European Union reflects the same thing. You have the capacity; if someone withdraws from the market it just creates an opportunity for someone else to expand.

What would happen without the Asian crisis? No one knows, of course. The substantial currency devaluations made these countries more competitive exporters, and I am sure will lead to an increase in their market share over time and put pressure on commodity markets for many years. That is one of the relatively longer-lasting effects of the crisis. There is now quite a good recovery in the income level, so before too long we may be able to stop talking about that aspect of things: but there are some longer-term effects of the Asian crisis as well.

samarendu mohanty: I shall try to answer what would have happened without the Asian crisis. We have simulated some scenarios and found that demand was reduced less than 5 percent because of the crisis. Thus, we would in any event have had these very low prices. Regarding whether countries made any real commitments, tariffication is an area where they did not. There was a lot of flexibility in the way a country could manipulate the system; they could reach the 36 percent average reduction without creating much real market access. On export subsidies, there have been real changes among the major exporters in the last three or four years: South Africa eliminated subsidies; Canada removed its transportation subsidy; the United States has been very restrained; and EU has announced in Agenda 2000 that it is going to reduce export subsidies.

Comment ¹²: I agree there has been a decline in export subsidies. However, it was not because of the Uruguay Round but because of budgetary constraints in America and EU.

Ramesh Sharma¹³: FAO has assessed the experiences of developing countries implementing the Agreement on Agriculture and the effects on trade flows, based on 14 country case studies. Most of these countries had already reformulated their domestic policies under structural adjustment programmes, so that compliance with the Agreement was not difficult. Of course, the SAPs and the Agreement point in the same direction, so it was difficult to say whether changes in policies were because of the Agreement or because of other reforms.

Only 3 of the 14 countries had commitments to reduce domestic supports as measured by the AMS. (In the Uruguay Round only 12 developing countries gave such commitments). For these three countries, current outlays from 1995 to 1998 were well within the permitted levels. In only one case did some concern exist, because the non-product-specific AMS was getting close to the permitted de minimis level of 10 percent. The other countries have their support measures under the exempt categories, like the green box, special and differential treatment measures, and in some cases the de minimis exemption.

These countries had already eliminated non-tariff barriers prior to the conclusion of the Uruguay Round, and the studies show that although their bound tariffs were generally high, applied tariffs were much lower. Applied tariffs were often changed in response to demand-supply imbalances or changes in world market prices, as a means of stabilising domestic markets. A number of constraints prevented these countries from utilising the full range of their bound tariffs, including: (i) commitments with international financial organizations; (ii) the fear of ruining trade relationships with big exporters who provided preferential market access, development aid, etc; and (iii) the political necessity in many instances of maintaining low consumer prices. None of the 14 countries had experience with tariff-rate quotas, special safeguards or other contingency measures.

A majority of the studies showed that no improvement in agricultural exports had taken place during the reform period. For traditional agricultural products, tropical beverages and raw materials, exports were along the trend, without significant changes. For non-traditional products (including processed products), some positive effects were reported for fruits and vegetables. Moreover, all of these countries feel that they have good prospects in this area. Some problems mentioned include: (i) supply difficulties; (ii) compliance with SPS/TBT requirements; (iii) high tariff peaks and tariff escalation.

Food imports were reported to be rising rapidly in most of the countries, and import surges, particularly of skim milk powder and poultry, were common. While trade liberalization led to an almost immediate surge in food imports, these countries were not able to raise agricultural exports due to weak supply response, market barriers and competition from subsidized exports. No experiences with assistance under the Marrakesh Decision were reported.

Common to many countries was the increasing concentration of farms. While this had the positive effect of increasing productivity and competitiveness, the process also marginalised small producers and added to unemployment and poverty. The main challenge faced by these countries is to continue the process of liberalization and development without hurting these sensitive sectors. Although disciplines on domestic support measures have not constrained them from investing in the agricultural sector, there is some worry that future disciplines may prevent them from fully developing their potential.

Abhijit Sen ¹⁴: As is no doubt true of a number of other countries, such tariff reductions as have taken place in India would probably have been made with or without the Agreement on Agriculture. Like a number of other countries, before Marrakesh, India had an extremely defensive posture, with tariff bindings generally ranging from 100 percent to 300 percent, except for a few commodities that were bound at 0 percent in the 1950s. For most commodities, applied tariffs range from 0 to a maximum of 40. So we have tariff bindings that are about 100-150-300 and applied tariffs of 0-10-40.

We have no tariff quotas, export tariffs, or export subsidies. On the AMS, India, like a number of developing countries, made two types of mistake. In our original notification we made that of calculating the AMS in the local currency, rather than in dollars. We corrected this in our next submission and the AMS was notified with dollar reference prices. Because of inflation, many developing countries are in the same boat. In the spirit of the Agreement, if an original mistake was made, there is a case to rework this issue and allow the same treatment for everybody.

Our second procedural difficulty concerned balancing product-specific and non-product-specific supports. For the latter, India is slightly below the de minimis, while product-specific supports have very large negative numbers, i.e. the support prices are below world reference prices and hence there is a negative subsidy. In India there is a belief that you can offset positive numbers on the non-product-specific side by negative numbers on the product-specific side, but clearly that is not acceptable to many countries. If you tell farmers that you are giving them negative subsidies and taxing them, you get pressures for them to say "remove those taxes, increase the prices". Clarification and a common standard on these matters are needed. Many developing countries approached the Uruguay Round through the prism of structural adjustment, which is that certain standards have to be met very quickly.

India started its reform process in 1991-92. During the next five years of peak prices, exports were higher and import growth rates were higher than in the preceding 5-10 years. In the subsequent three years (1996-1998), imports grew by about 50 percent, while exports dropped by about 20 percent , so over the entire eight-year period there is no real change for exports. It is very difficult to relate all this to the Agreement on Agriculture, because we had very few obligations under it.

T. Ademola Oyejide¹⁵: I have four things to say which are meant to cover all of Southern Africa. First, what were Southern African countries supposed to do under the Agreement on Agriculture? The only developed country is South Africa, which has notified compliance with respect to market access, production support and export subsidies. Most other developing countries of the region are LDCs, from whom no real commitments are required other than the prohibition of all non-tariff barriers and the binding of all tariffs. All have reported compliance with these two requirements. Only six have tariff bindings within the range 30-40 percent. The rest have a two-part tariff binding; they have uniformly imposed something like 100-150 percent tariff bindings and on top of that each has imposed other duties and charges of 80-100 percent. Applied tariffs, however, are usually no more than 30-40 percent. The LDCs and the developing African countries have not much to report on production support and national subsidies.

Secondly, the market-based liberalization of agricultural production and food regimes under SAPs predated the Agreement on Agriculture and involved substantial currency devaluation, reduced tariffs (especially on manufacturers), liberalization of agricultural production and marketing systems as well as reduced taxes on agricultural exports themselves. In general the agricultural sector is now less taxed than hitherto, but is nevertheless still taxed more heavily than manufacturing, which has a higher level of protection.

Thirdly, as regards agricultural performance, if you compare the three years ending in 1997 with the last three years of the 1980s, you will find an improvement, but what was it due to? Proponents of the economic reforms will, of course, claim that it is because of the change in policies, but a fundamental fact is that productivity has not changed, and indeed it has actually declined, in part because the SAPs have not paid sufficient attention to non-price factors.

Finally, the Agreement on Agriculture has had an impact in the sense that the external environment for African agriculture has changed in two areas: (i) commodity prices, and (ii) their impact on food imports. Since most African countries are low-income net food importers, their import bill has gone up. At the same time, they have suffered from preference erosion, due to the Uruguay Round. Their export earnings have not risen as fast as their import bills, and this is a negative impact which one can ascribe to the Agreement.

Mahmoud Al Oduimy¹⁶: It is premature to assess fully the impact on Egyptian agriculture, but some studies made as early as 1995 of the probable impact of the Uruguay Round concluded that the import bill would rise for most food products. Egypt implemented its SAP in early 1990, so the Agreement on Agriculture enhanced and consolidated the earlier economic reform.

Cotton, rice and potatoes are the most important Egyptian agricultural exports, but the failure of exports to improve is mainly due to domestic conditions, rather than the Agreement. The most important food imports are wheat, edible oils, meat and sugar. Wheat imports have risen nearly by 50 percent recently, edible oils probably have doubled from 1989 to 1998, and the value of imports of red meat also doubled during this period. These increases were not a result of the Uruguay Round, but of higher import prices and increased consumption.

I would make three concluding remarks. First, institutional mechanisms need to be improved at the national and the international level. There are many loopholes in the Agreement on Agriculture that could be exploited by developing countries. Second, experiences with SPS and TBT measures are important and mutual recognition of a description and standards, as well as unification of these measures among countries, are essential. The acceptance of certain standards, say between Egypt and EU, would have avoided the recent conflict over potato exports. Third, most developing countries experienced the negative effects of SAP. If we add to this the impact of the Agreement it is necessary to compensate for this negative effect through food aid, finance and technical cooperation.

Antonio Salazar P. Brandao¹⁷: Brazilian agriculture is changing for the better. The crop mix is changing and producers are making a big effort to reduce costs to international levels, largely as a result of unilateral reforms undertaken over the last 10 years or so. Of course, producers are under stress, aggravated by the country's macroeconomic instability and by the stabilisation plan recently implemented, which brought about a sharp rise in interest rates and currency depreciation.

The impact of the Uruguay Round on Brazil is minor compared to the strength and the coverage of the unilateral reforms made before. A major overall tariff reform initiated in 1990 brought average tariffs down from 32 percent to 14 percent; and these tariffs were further reduced with the Marrakesh Agreement. The effects of all these reforms were much more significant than the strictly speaking Uruguay Round commitments. Of course, such reforms may not have taken place without the Uruguay Round and the associated environment.

Brazilian commitments in the Uruguay Round have bound most agricultural tariffs at 35 percent, with some exceptions, such as dairy products. Applied tariffs are much lower. The AMS includes price support and credit subsidy policies. These policies have been discontinued over time, but are still in place, especially as regards price support in credit, although with a much more limited coverage than in the past, due to budget constraints. There are no export subsidy programmes.

Brazil enters the new round with low tariffs, no quantitative restrictions, low levels of domestic support and farmers under stress. Modernisation of agriculture will induce further rural-urban migration, which will be a big domestic policy issue since such migration is not favoured by the urban population, which tends to oppose the modernisation of agriculture. Our concerns for the new round are: high tariffs abroad, tariff escalation, export subsidies and high domestic support abroad. If we do not have significant gains in these areas, especially export subsidies and high tariffs, Brazilian agriculture may be severely damaged and the current modernisation drive stopped.

J.R. Deep Ford¹⁸: I shall speak primarily about Guyana and make some references to the Caribbean and the ACP countries.

Since trade liberalization in Guyana and the Caribbean has been going on for a long time, much that was required in the Agreement on Agriculture was already in place. We had a regional commitment to liberalize trade, and that process introduced a number of reforms that simplified the external tariff structure and reduced tariffs. Tariffs remained higher for the agricultural sector, generally at around 40-50 percent. The WTO came on stream and Guyana, like many countries, moved to across-the-board tariff bindings of 100 percent. Applied tariffs are far below that, but it was felt desirable to have the flexibility of going up to 100 if necessary. As regards domestic support, no AMS reduction was necessary. Budgetary restrictions have reduced our expenditures on green box policies, and many of the services that the Government formerly offered rural producers have been privatised.

An environment of freer trade has been positive for Guyana, with the qualitative changes being more important than the quantitative changes. There is more transparency and more certainty in the system, regulations were reduced, etc. Producers responded with phenomenal increases in output of the two major commodities that define and characterise agriculture in Guyana: rice and sugar. Rice production quadrupled over the period 1990-1998.

For more than two decades there have been efforts in many of the Caribbean countries to emphasise non-traditional export crops, but they have not been successful, and this is why one of our most critical negotiating points is for a sufficient transition period. One of the crucial areas is non-traditional crop exports, where some new products are being exported: papayas, peppers and so on. One of the issues for our countries is not only agreeing to put in place certain regulations that will oversee trade but also the ability to operate and oversee those regulations, especially some of the SPS regulations, which we feel are outdated.

Imports of food have almost doubled, but so has the capacity to import. There is increasing evidence that imported products are displacing domestic ones - for example milk, poultry, fruits and vegetables. Another dimension of this import "surge" is the change in consumption patterns in our countries, with a major shift away from dependence on root crops to "chicken and chips". Most important, in the case of imports, is the need for increased monitoring facilities as regards both unfair trade and trade in inferior products. Countries are opening their markets but they do not have the capacity to monitor what is going on in this area. Those are challenges for Guyana, the rest of CARICOM and indeed the rest of the ACP.

One of our most important challenges is to maintain preferential access to our two major markets: EU and the United States. In the Caribbean as a whole there is concern about uncertainty regarding preferential access. We need greater certainty, as a crucial sign to entrepreneurs to assist with the transformation out of the three major commodities: bananas, sugar and rice. That is going to be a crucial area of negotiation in the coming Round. We are facing a loss of the domestic market due to import competition, increased concentration of agricultural production, increased small farmer vulnerability, and, most importantly, the loss of public sector institutional capacity.

Question to Mr Sharma: According to the case study on Sri Lanka, thousands of jobs in the production of onions and potatoes alone were lost as a result of the surge of imports. Does FAO have a figure across the board for the 14 case study countries of the number of jobs lost in rural areas or the number of farmers who have gone out of business in the last five years?

Question to all panellists: Have any of you compared the conclusions officially adopted by WTO in its trade policy reviews with your own more independent assessments of the situation? You all say it is premature to reach any long-term conclusions, but there is enough material to justify some conclusions: food imports have gone up, exports have changed little in either volume or structure, there has been marginalisation of small farmers, and this has added to unemployment and poverty. Do we have more details about how these factors of poverty, undernourishment, and imports in relation to export earnings have changed prior to and post- Uruguay Round?

Comment addressed to Dr Oyejide: The observation that the liberalization that has taken place in sub-Saharan Africa has been as a result of SAP rather than the Agreement on Agriculture may well be true, but we think the Agreement has brought new impetus to and also new pressures on sub-Saharan Africa, notably countries like ours. Much pressure has been put on us to remove several non-tariff barriers to agricultural trade, with a notable impact on our economy.

Question: When my country participated in the Uruguay Round, we thought that there would be many opportunities for the developing countries to diversify their export structure, but we do not see any positive impact in this regard. If FAO has any data to justify its argument that the UR has brought positive results, we would be very happy to hear them.

Question addressed to Professor Brandao: You stated that the unilateral reforms in Brazil took place within a very unstable framework. How can you implement such policies when the macroeconomic system is an obstacle?

Responses

Professor Sen: The broad assessment that seems to be coming through is that we are being very optimistic. If I compare the economy of India in the 1990s with that of the 1980s there are very worrying things: agricultural growth is down; poverty, which was reduced during the 1980s, was not reduced any further during the 1990s. But I do not think you can link that to the Agreement on Agriculture. Those disturbing trends are the result of lack of investment, lack of movement on the non-price side, and other issues that are not covered in the Agreement. These issues need to be raised, including the issue of food security. We are not necessarily painting a rosy picture, but simply saying that (a) four years of implementation of the Agreement on Agriculture is a very short time; (b) much happened well before the Agreement was adopted. There is indeed both a positive and a negative side but most of the reforms, as far as the developing countries are concerned, took place well before the Agreement, which placed the major obligations on the developed countries. They are supposed to give us larger markets and greater opportunities, but that has not happened. That is the real message.

Mr Sharma: We do not have comprehensive tabulated data on the loss of jobs and unemployment for all the case studies, but I think this is something which should be done. We do, of course, check with WTO's trade policy reviews, which are an important source for factual data on things like actual tariffs and non-trade tariff barriers. We also use the USDA attaché reports and our own research to track down the development of policies - whatever we can lay our hands on. As regards other indicators, some of these indicators/data are not available beyond 1997 and so it takes time to analyse them on a regular basis.

Professor Oyejide: I should like first to clarify that my report has nothing to do with the FAO case studies. It is based on a much larger coverage of sub-Saharan countries and will be circulated at a WTO/World Bank conference later this month ("Agriculture in the Millennium Round: African Interests and Options"). Most of the reforms in African agriculture are due to SAPs, but that is not to say that the Agreement on Agriculture has had no impact. The fact that these countries have now signed binding agreements is important, because the reforms under SAP were not bound. Various studies done by the African Economic Research Consortium show that there were substantial policy reversals in Africa on trade liberalization, but in the context of WTO you cannot reverse. The Agreement has been useful in supporting policy credibility by forcing people to live up to their commitments.

As to whether the Uruguay Round helped African countries to diversify agricultural production and exports, in the light of the provisions of those Agreements, I do not know how anybody could have expected that, so it is unfair to expect us, as researchers, to say whether it did. Diversification may have been your goal when you were negotiating, but that is not what you got in the Agreement.

Professor Al Oduimy: The increase of food imports was caused by higher world prices and expanding demand due to population and per caput income growth. As regards diversification, every country would like to increase and diversify its exports, and we have tried these in Egypt. Cotton, for example, used to represent about one third of our agricultural exports but the proportion is now down to about 17-18 percent.

Professor Brandao: I do not think that everything is so rosy; the general direction is good but of course there are adjustment problems. If, as mentioned, producers are under stress and some farms are being closed down, policies must deal with these issues, but that is no excuse for stopping the reforms intended to improve the agricultural sector in Brazil. On the issue of raw materials and processed goods: Brazil exports significant amounts of some processed goods like orange juice, processed coffee and soybean products, and so for us tariff escalation is a big issue that should be given very close attention in the next round. On the point about unilateral reforms within an unstable macroeconomic framework: a number of people did get hurt, and probably the reforms could have been undertaken in a less painful way, but the essential point is that they were done.

Professor Ford: I agree with many of the panellists: stabilisation of the macro framework is a prerequisite. It is most important to remember that it is firms and entrepreneurs that do the trading, and not countries. What the WTO did for us in that regard was that it signalled new opportunities, increased transparency and increased deregulation. For the next round it is crucial to really put the third piece in place, which is essentially to emphasise that governments, NGOs and international organizations are important in providing the technology and education that will help countries gain access to those new opportunities, in helping firms and entrepreneurs to get the information and infrastructure they need to compete, and in supporting communities during the transition period for these new opportunities, so that what we have is not just more trade and more income but in fact more development.

Chapter 5
ISSUES AT STAKE IN THE NEGOTIATIONS ON AGRICULTURE FROM THE PERSPECTIVE OF DEVELOPING COUNTRIES, TAKING INTO ACCOUNT THE WORLD FOOD SUMMIT PLAN OF ACTION

From the moment the Marrakesh agreement was signed, it was clearly known that the negotiators would meet again in five years' time to try to continue with the reform process in agriculture. In Singapore, Ministers began a special informal process that we call the `analysis and information exchange' to see, in line with the process of implementation, how the different issues related to the Agreement were being addressed. This exercise has proved to be very effective and, in terms of education for negotiators, quite serious and important. We have a very concrete inventory of issues and a more or less clear picture about the interests, the objectives and the aspirations of the players in the negotiation. The participation of developing countries and their support to the process has been very substantial, so the scenario of just the United States and the European Community negotiating will not be repeated. The decision is going to be in more than two hands, by groups like the Cairns group, interests like the ones that are represented by the net food importers, or those who have these real concerns for food security.

For some, being confronted with a new round of negotiations seems premature, particularly since circumstances have changed dramatically in the last two years. The financial and economic crises of the last few years have created a completely different atmosphere, especially in some developing countries that have suffered from their full impact. The last year in Latin America has proven to be one of recession and has caused many actors to rethink their models and to see the need for slowing all these processes of economic opening.

Countries at different levels of development have responded to these crisis circumstances in different ways. The United States, for example, saw its exports of agricultural products fall by something like 30 percent because of the crisis in east Asia, and was able to respond with substantial support for the agricultural sector, with assistance packages of US$6 or US$7 billion. At the same time, the United States is protecting the sector, starting a crusade to find new avenues or new markets for their products. So, this combination of the need to protect the agricultural sector and the need to create and to open new markets gives an idea of how a country with the power of the United States could approach the negotiation. Add to that the fact that the trade deficit of the United States continues to grow, and it is not difficult to see why for American negotiators the need to be very aggressive in terms of market access is going to be decisive.

The other main developed member is the European Union, where agriculture is the backbone of its policy and consumes almost half its budget. The adjustments of Agenda 2000 show where the European Union stands. It will be accompanied by all countries that have a very protectionist approach to the matter, like Japan, Republic of Korea, Norway and Switzerland.

For many developing countries that are suppliers of agricultural products, the problem is to get into the market, to get to the consumer, when they must compete with the treasuries of developed countries and not with the natural competitor which should be the agricultural agent. Here I see an enormous difficulty for negotiators, because in order to maintain some social order and some stability in terms of political support, these countries - both the Europeans and the developing countries - need a new approach. Many developing countries are unable to open their markets because that could create enormous difficulties in terms of social and rural stability. Their fears of new big European conglomerates are real and need to be taken into consideration when appeals for market access are made. In India, for example, the agricultural sector plays a substantial role in the economy and in the social stability of the country. Once the market is opened and outside competition comes to challenge internal production, there could be - and I have seen myself - a tremendous disruption of society and of rural life. The same goes for other countries where rural and social stability are vital. The Europeans preach the need to preserve the rural area, which is why they talk about this concept of multifunctionality, which is the role agriculture plays in all this cosmos of stability of the rural areas. The developing countries understand what they are asking for the rural sector, but they should not approach the matter in the same way as the Europeans; rather, they should seek to obtain special and differential treatment in the real sense of the term. They need such treatment in order to create better and more stable conditions for their agriculture. That it is something that needs to be approached in the negotiations and will necessitate more concrete instruments.

Another issue that is now entering the scenario with a very powerful message is genetically modified organisms (GMOs). This highly emotional matter should be addressed, but in the proper context, namely the WTO trading regime. There are some other areas to be considered that are not in the purview of that Organization, and the challenge will be how to address the trade of products that have been genetically modified. What are the criteria that will regulate such trade? The ethical problem, the scientific problem, is something to be taken into consideration, but not by the WTO negotiators, who should be concerned with how the product is to be traded, with what kind of information for the final consumer, and with what kind of discretion for the importer. No proposals and no specific ideas have come to the negotiating table yet in this area, but I am sure that very soon the matter will be tackled.

Article 20 and the general structure of the Agreement on Agriculture outline the areas in which negotiation could evolve: the traditional problems of export subsidies, internal support, market access and these non-trade concerns, of course. Food security and the assessment of the situation of net food importers is going to be very important, but it is a matter which needs very careful consideration in terms of the Marrakesh Decision.

Coming from a developing country, Colombia, I have to say that this has to be the occasion for the upgrading of developing countries in international trade. It is clear for many that the industrialized countries have made the best use of and benefited most from the Uruguay Round, because they were able to do so. But developing countries have now managed to identify their problems, such as tariff escalation and tariff peaks. Developed countries have profited more during these five years because the agricultural market has evolved substantially in terms of trade in value-added products. Today more than 50 percent of traded agricultural products are products with added value, whereas 10 years ago the proportion was less than 30 percent. It is the industrialized countries that are adding the value. The developing countries continue to be the suppliers of raw commodities and as soon as they enter into the process of industrialization, tariffs in developed countries start to trigger up substantially. This is something that needs to be addressed in the negotiation. Tariff escalation is undoubtedly one of the major obstacles to attracting new investment. The moment the developed countries have a clearer picture about what could be done with the horizontal and vertical diversification of agricultural products, the possibilities of getting more investment, generating more production and being better partners in international trade, we in the developing countries will be there.

It will be difficult to agree on concrete specific and detailed terms of reference. Moreover, next year is an election year in the United States, which means that their full involvement in the negotiation could be delayed. But there is also the constraint of some specific dates in the Agreement, such as the expiration of the Peace Clause. Three years of negotiation seems a reasonable period. We do not have to write more agreements or a new agreement, so negotiations could go into details very soon. Then we will see to what degree all these objectives and aspirations of countries are met, but one thing is for sure: it is not going to be an easy negotiation.

Questions addressed to Ambassador Osorio: The preamble of the Agreement on Agriculture calls for improved terms of access for agricultural products of particular interest to the developing members, including the fullest liberalization of trade in tropical agricultural products. As you rightly pointed out, that was one of the goals of the negotiations, but it was not achieved. Will it be possible to achieve this goal in the next round?

Response: It is fundamental for each country to establish a clear picture, identifying a number of agricultural products that are exported, and where to, and to determine what are the export obstacles and which markets it cannot enter because of a special tariff or non-tariff barrier. One of the problems regarding market access for processed coffee, for example, is tariff escalation. Colombia can export green coffee with a zero tariff almost everywhere, but the moment you enter into the industry of roasting the coffee, making soluble coffee, the tariff goes up. That is an identified problem and you have an objective in the negotiation. Once countries know more clearly about these kinds of objectives, and identify these kinds of criteria, they can be valued actors in the negotiation. Likewise for tariff quotas: all those who are subject to import tariff quotas know where the problem lies. The sugar quota in the United States is damaging for many countries, as the banana quota was for others, or the tobacco could be for others. So these are concrete objectives: try to widen the spectrum of these quotas or eliminate them. This raises a problem, because some developing countries, suppliers of those products, have found a protected niche, and if the quota disappears or is widened, then there will be trouble. That is why it is so difficult to talk about common interests of developing countries.

Question: Many small developing countries and many NFIDCs have no access to the special safeguard mechanism, unlike most of the developed and some of the advanced developing countries, and they lack the institutional and legal framework necessary to follow the general safeguard procedure. Will this issue be taken up in the negotiations?

Response: Developing countries do need some protection in terms of safeguards, and the SSG has only been used by developed countries that are highly protectionist. One idea is that the SSG should disappear, and some form of safeguard be made available to developing countries as special and differential treatment. Ultimately, it is the general system of safeguards that should address these problems.

Question: With reference to the Marrakesh Decision, a process of assessment has been going on for five years now and I would like to hear more concrete approaches to assistance for the NFIDCs.

Response: Many studies have been done by FAO and other institutions, and I am not able to say where we are, in a technical sense, on this issue of assessment. But in the negotiations, the question is what the impact of elimination or reduction of subsidies could be for the net food importers. There are two schools of thought: those who say that if you reduce subsidies, prices will go up and the products will be less easily available; and those who say, on the contrary, the moment subsidies are reduced, there will be more competition, more products on the market, and prices will come down. I leave it to economists to continue this discussion.

Question: If you leave the whole question of GMOs to WTO then, as happened in the hormone cases and other cases, we don't know what the dispute settlement panels will do. Developing countries who adopt GMO agriculture, as the World Bank advises, may find the market in the north closed. It is not at all certain that GMO products are all completely safe. There is a huge debate on this subject and scientists are very divided, so the precautionary principle may be difficult for developing countries to apply. In that situation, if you allow trade in GMO products, what will be the consequences for poor developing countries?

Response: As far the GMOs are concerned, I am not proposing anything. The only message that I want to convey is that the subject will be taken up in the negotiation. The difficulty facing WTO is whether it is going to be possible to find a solution to the trade problem. The other issue is very important, but I am trying to focus on the trade point of view and the role that it could play in the negotiation, and I have no position at all on this matter.

Question: Given that the negotiations might go on for a long time, is there any way in which certain immediate questions or problems can be addressed, such as import surges and GMOs.

Response: During the first phase of the negotiation, we will see whether some unfulfilled commitments could be met as a preamble to the negotiation. But the approach which we call `early harvest' of taking some decisions early in the negotiation is tricky because it could go against a single undertaking. In a single undertaking, you create a universe in which negotiators can make trade-offs from one sector to another, so the moment you start to talk about early harvest, you need to have early harvest in a horizontal way.

Question: Regarding the issue of special and differential treatment and the need for more flexibility, can you identify some of the specific measures which the developing countries could use? Did you have in mind, for example, higher tariffs in developing countries or different-sized quotas for developing countries or some green box measures?

Response: I think a very concrete approach could be to increase the de minimis levels; another would be a differential one whereby if there is a formula for tariff reduction, there would be one scale for developing countries and another for developed countries in terms of market access or subsidy reduction or whatever. There could be a special approach to all those technical obstacles to trade; there are four or five matters that could be specifically covered. Also, where there are themes related to agriculture, it is possible to view them in a more lasting and indefinite context than just three or four more years for such special or other exceptional treatment.

Presentations by panellists

Harmon Thomas²⁰: I shall briefly outline the main elements of Background Paper No. 4, where we summarize some of the key issues of particular relevance to agricultural development, trade and food security. In general, these issues relate to the need for the developing countries to shift from a basically negative stance, in terms of support of the agricultural sectors, to one that is neutral or, in the case of the lower-income, food deficit countries, one that is more positive in terms of policy impact. A second need is for a trade environment that is less distorted, particularly by subsidies that lead to a crowding-out of developing countries from world markets. The third general element is that of better market access to enable those countries to expand their agricultural exports and so their general economic growth and development. The paper discusses in detail these questions.

Baba Dioum²¹: For the 20 countries of western and central Africa that I represent, the issues at stake in the forthcoming negotiations are important, not only because agriculture is the key to development, but also because the context is uncertain. It is uncertain because we have not yet implemented the measures called for in the Agreement on Agriculture and the impact of those measures applied is not yet perceptible. Consequently, it is difficult to assess the full effect of the Agreement, and to point to what should be changed in one way or another. On the other hand, in the forthcoming negotiations, developing countries must think in terms of development perspectives, linked to trade. Development must be a central point of their concerns, particularly for the agricultural sector.

Their first need is for market access, because there have been virtually no results in this connection. Second, they need to review domestic support in greater depth. Also very important are the phytosanitary measures, which lead to discrimination. Moreover, how can the positions under the Lomé convention be reconciled with the positions taken up in WTO? Their access on preferential terms to EU accounts for 52 percent of total production, and they have no desire to give up those preferences. Another important and fundamental matter is that of intellectual property, in particular the rules which countries have to adopt dealing with vegetable and animal varieties, and patents and so forth.

In the light of all these issues it is important to link the agreements to be negotiated on agriculture with a pact for food security and agricultural development. In other words, open a new box dealing with agriculture and food security, which would be tantamount to providing special and differential treatment for the LDCs. Developing countries should also try to strengthen their negotiating powers, which is a capacity-building exercise. The countries I represent are sufficiently well organized to have common positions and to be strong enough in the negotiations. I have in mind the establishment of an advisory committee on agriculture, which would make it possible for countries to reflect on these problems of trade and develop a converging position. More fundamentally, I believe a real partnership should be developed that would provide profitable markets. In other words, we should no longer negotiate for subsidies, but for a financial counterpart which would make development possible. I refer once again to the box I mentioned.

In sum, at present we are rather like a loving couple who want to get married but don't have the same religion. So what do we have to do? One has to convert to the religion of the other, that of liberalism.

Nipon Poapongsakorn²²: I shall discuss the issues at stake with regard to export subsidy, domestic support and market access, from the point of view of the food-exporting countries, such as Thailand and the Cairns group, and point to the need for negotiations on agriculture to be linked to those other sectors.

Thailand has definitely gained from the Agreement on Agriculture, not only through higher export prices of rice, and increased market access for its poultry exports to the EU market, but also as a result of the strengthened dispute settlement mechanisms, as well as the increase in import quotas of feed-grains which helped reduce the production cost of broilers. Thailand therefore shares the view of the Cairns group that a fair and market-oriented agricultural trading system will bring about increased global welfare. However, in the past five years, progress in reducing agricultural protection and subsidies has been very limited, particularly in the OECD countries. Consequently, the first and perhaps most important issue in the coming agricultural negotiations must be a ban on export subsidies, bringing agriculture into line with manufacturing under GATT and so restoring the GATT principle of non-discrimination. Agreement on this issue may not be so difficult to reach as when the UR was launched, because there have been unilateral farm policy reforms in the United States and partially in EU, as well as in Japan during the mid-1990s.

With respect to domestic subsidies, it may be possible to remove the blue box, which includes set-aside and deficiency payments, because the United States FAIR Act of 1996 further decoupled farm income support measures from production. The green box should be strengthened so as to reduce the number of loopholes which provide for output-increasing subsidies. And finally, the AMS should be further reduced, which would encourage developed countries to bring their policies into greater conformity with the green box criteria.

On import market access, there is still a high degree of water in the tariffs which makes bindings ineffective. The combination of dirty tariffication by developed countries and tariff bindings with very high ceilings in developing countries allows them to vary their protection. Hence, it is necessary to reduce bound tariffs to levels not far above the applied tariff rates for manufacturers. There are several ways of doing so. The first is a large across-the-board cut. The second is the Swiss formula, whereby the rate of reduction for each item is higher, the greater its tariff level, which has the economic advantage of reducing tariff dispersion. The third is the so-called zero-for-zero approach, which would increase the dispersion of tariffs across products. The Government of Thailand seems to favour the first two options. Reductions should also apply to above-quota imports under tariff rate quotas (TRQs); studies show that a given percentage reduction in the above-quota rate for sugar would result in higher world prices of sugar than the same percentage increase in quota, but the next best alternative is to expand the quota, so as to reduce its importance and increase competition.

There is also a need to link negotiations on agriculture with those in other sectors. A basic feature of WTO is that negotiations are multi-dimensional, allowing for trade-offs and cross-issue linkages. Such linkages are a necessary condition for progress in agricultural liberalization. Export-oriented farmers have a negotiating interest not only in better access to food markets abroad, but also in more competition in the domestic marker for non-farm products and services, which they often need as intermediate inputs. More importantly, WTO members who import our agricultural products and services would be interested in lowering their impediments to agricultural imports if our Government lowered impediments to their service exports. Moreover, Thai taxpayers would gain from foreign companies providing contract work to the Thai Government on an honest bidding basis.

B.L. Das²³: I start with two propositions which are not new but need emphasizing. One is that agriculture has a very special position in the world and in particular in major industrialized countries, which is why the multilateral rules in this area have been different from those in other areas. It also has a special position in the much larger number of developing countries, where it is closely interwoven not only with economic conditions in general but also with social and political conditions.

The second proposition is that there is gross inequity in the Agreement on Agriculture because, in the whole process of negotiation, final conclusions were reached as a result of compromises between two major partners, namely the United States and EU. The Agreement is characterized by high import restraints, huge support to domestic farmers and large export subsidies for the developed countries. Those who were distorting trade may continue to do so, while those who were not are prohibited from doing so, even for promoting their own development and trade. This constitutes a basic inequity.

I have five proposals for what should be the key issues in the negotiation in addressing the special nature of agriculture and removing the imbalance and inequity in the Agreement.

First: Certain activities, policies and measures should be kept out of the disciplines of the Agreement and indeed out of the WTO discipline as a whole. One is food production in developing countries for domestic consumption, and is important because it goes against the current concept of globalisation and liberalized trade. I venture to say that food production for domestic consumption is almost on a par with, say, border security. GATT Article XXI contains exceptions for border security measures - this is nothing new. Why protect the border if the population does not have food? The other measure to be kept out of the WTO rules is the protection of small household farmers in developing countries. The whole ethos of the Agreement is naturally international competition in production and trade. However, if small farmers and household farmers in developing countries are exposed to international competition then there will be not only economic disaster, but also total social and political chaos.

Second: If we are to submit agriculture to international economic and trade disciplines, import restraints in the developed countries must be completely eliminated. Agriculture is highly protected in those countries and in many sectors constitutes a closed market.

Third: Comparable treatment for farmers in developing and developed countries demands that domestic supports and export subsidies should be eliminated in the latter countries - not just reduced again by some percentage, but totally eliminated, because they create what is commonly now called a very tilted playing field.

Fourth: Developing countries, which have been prohibited from using subsidies beyond de minimis levels or import measures to improve and diversify their agricultural production, should be allowed to do so in specific cases. The handicaps they have faced for these five years need to be reviewed.

Fifth: The provision for the NFIDCs in the WTO is characteristic of many provisions in the GATT/WTO system. The Ministerial Decision is very high-sounding, but has not been acted upon. Unless the provision for NFIDCs is strengthened through some binding obligations, nothing will be done. My suggestion is to have a compensation fund for these countries during a certain period. It would only be fair (we can call it equity of demand) that the major developed countries, who have gained from heavy protection for all these years, at least in the five years since the Agreement on Agriculture came into force, should be the main donors.

T.J. Aldington²⁴: The Rome Declaration and the World Food Summit Plan of Action are obviously related to food security but also to trade. Ms Stanton recalled that the multilateral trading system, by removing possible differences of views, is conducive to peace, which is most important for agricultural and rural development and world development as a whole. We need to take a broad view, looking at the role of trade in agricultural and rural development and at the key issues for developing countries, without getting bogged down in too many specifics.

It should also be recalled that the World Food Summit was one of a series of United Nations conferences, such as the Social Summit in Copenhagen, the Population Conference in Cairo and UNCED and Agenda 21. Those conferences established an important agenda for development as a whole, in which food security played an important role.

In comparison with the rather binding international law represented by the Uruguay Round and negotiations, the seven commitments in the World Food Summit Plan of Action are rather soft. A key issue is how can such hard international law take into account effectively the desires of developing countries and their development needs? Three of the seven commitments are related to trade: (i) Commitment Four, dealing specifically with trade; (ii) Commitment Three, dealing with agricultural production, including the issue of multifunctionality, and (iii) Commitment Two, which relates more to the physical and economic access to resources needed by vulnerable groups. Commitment Four covers also food safety and relates, for example, to the SPS. The BSE and the dioxin problems that have emerged recently will be a difficult subject in the forthcoming negotiations, and environmental issues also need to be recalled.

Question: Most economists who preach the benefits of free trade seem to be quoting each other rather than empirical evidence. The evidence shows that free trade never brought growth; growth brought free trade. Growth and productivity, etc. come from other impulses, not from free trade. Could Mr Poapongsakorn or any other panellist throw some light on this?

Response by Mr Poapongsakorn: I agree that growth affected trade, but trade also affected growth. Trade liberalization is only one of several factors explaining growth. It is a two-way causal relationship. It was protection in the 1930s that led to a vast decline in world trade resulting in the Great Depression, and it was trade liberalization that led to recovery and growth.

Comment: As regards food security, it is now generally recognised that neither 100 percent self-sufficiency nor complete liberalization is an option. FAO could help developing countries to work on what can be considered adequate food security so that each country finds the right balance when undertaking obligations in WTO.

Comment: The gross inequities in the Agreement on Agriculture trouble all developing countries and are perhaps nowhere more glaring than in the provisions regarding domestic support and calculation of AMS. I agree with the proposal by Mr Das to eliminate all such subsidies and supports, but we have to be realistic. I suggest incorporating the blue box into the AMS calculation and setting a limit on the total AMS as a percentage of total production, of course providing for a little more for developing countries as special and differential treatment. Also, green box support has gone up immensely in developed countries, and setting a limit on such expenditures, as for the AMS, should be considered.

Comment: Export subsidies should be banned because they tax producers in other countries to defray the costs of support in developed countries. Basically, if a country pays its farmers a certain sum for a ton of produce and is unable to sell it domestically, the government has to absorb the entire sum. If it can be sold in the world market, it defrays part of the cost. That is a tax on developing country producers that have been displaced; they should not be competing with the treasuries of the developed countries, a situation which is basically unfair.

Question: If the developed countries wish to provide domestic support above a certain percentage of production, in all fairness developing countries should be allowed to raise their tariffs. Governments used to be able regulate imports to ensure ample food reserves, but they are less able to do so now under the Agreement, while at the global level there is no mandatory commitment to assist the NFIDCs, which hardly seems fair.

Question to Mr Das: The suggestion to create a fund to assist NFIDCs, financed essentially by the major developed countries, is rather like robbing Peter to pay Peter, instead of robbing Peter to pay Paul. Unless there is a readiness to tax the commercial exports of profitable exporters and put the proceeds into a fund, it is doubtful whether there will be any new money. So how could such a fund be effectively financed?

Response: My suggestion was to establish a fund to which contributions would be mandatory for the major agricultural exporting developed countries, those whose farmers and economies have benefited so far from the system. They bear a responsibility to make a special contribution to this fund.

Comment: Food aid disciplines allow donor countries to provide food aid as money and the developed countries that are the main donors should do just that. The legal system, the Agreement on Agriculture and the guidelines on surplus disposal all allow it and there is no need for any new machinery. It is only to allocate the money. As regards financing for rural development, developing countries have neither the money nor the human resources to pursue rural development programmes. The World Bank did a lot in this area in the 1970s, but funds were cut off in the 1980s. Developing countries should ask the World Bank and the regional development banks to increase the share for agricultural programmes. The money is there.

Question to Mr Dioum: The World Food Summit Plan of Action speaks of the eradication of poverty and inequality; of improving access as far as food security is concerned; of trade policies which are more fair and equitable. These declarations cannot merely be statements of intention; there must be a bridge to implementation. Perhaps we will have to accept the principle of differentiation and of specificity of low-income countries and food-deficit countries. Why not also envisage in the negotiations a special box which would be reserved for food security? What role could a coalition like the Conference of African Ministers for Agriculture play in that regard?

Response: We need to have a conception of development based on market performance. If we want to open up to the world market, equally we want to provoke homogeneous development, and that means contributing not only our natural and financial resources, but also our intellectual resources. The idea of the Conference of African Ministers for Agriculture was to develop what the English call advocacy - i.e. to know what is at stake and understand the rules of the game. If we agree that food security is a major concern, that concern must be reflected, ipso facto, in the WTO negotiations. Above and beyond trade, there is the issue of physical access to food. You have to produce the food and you need financial resources to make market access possible. So we insist upon saying: Negotiate, yes, but let us also remain partners in this development enterprise. We must continue this dialogue so that, beyond what was said at the World Food Summit, this idea can be reflected in a balanced commercial agreement which defends the interests we identified at the Summit.

Comment addressed to Mr Das: The Agreement already provides wide latitude for developing countries to support agricultural development and food security. Under Article 6 the items are excluded from the calculation of their AMS are: support for agricultural and rural development provided as an integral part of a development programme, investment subsidies generally available to agriculture; agricultural input subsidies generally available to low-income or resource-poor producers, etc. Annex 2 exempts public stockholding for food security purposes, domestic food aid, direct payments to farmers, a long list of general services, etc. Some governments may not have the financial resources for such support, but that it another matter. All these things could be put into a s0-called development box, but they are already in the Agreement.

Response: Under the Agreement developing countries can buy food at market prices and supply it at lower prices, but that is not real food security. For developing countries real food security is a simple matter of producing the food needed to satisfy domestic consumption. The question is one of food availability. If food is available elsewhere in the world very cheaply, can poor countries without foreign exchange reserves buy it? Whatever economists may say about the efficiency of production, resource use and so on, food security, like national security, is something which has to be totally, autonomously and internally managed in terms of production and distribution. That means domestic production for domestic consumption. Naturally, that does not exclude trade in food which, unlike self-sufficiency, is a commercial matter. If any provision of the Agreement comes in the way of real food security, then, like national security, there should be an exception.

Comment: Although developing countries may not need anything more from the Agreement on Agriculture because development-oriented policies are already allowed, many of them are coming up against the de minimis AMS. Is it because spending more will not tolerated? If a country claims that all, or at least 90 percent, of its farmers are by any definition of the term poor, can it start increasing the AMS to well above de minimis without hurls of protest? There are many issues here which need to be brought out into the open and clarified.

Response by a participant: If you have a programme that is really targeted to poor producers, there is a lot that can be done, including input subsidies. There is the whole green box area, you can build rural roads and do irrigation work (much of which is not included in the AMS). The programme has to be well tailored and defined.

Mr Das: I would make a simple suggestion that the subsidies of developing countries, which are now prohibited beyond the de minimis limit, should be allowed and then disciplined in some way, thus putting things on a level playing field. What is important is that food should be provided, and that there should be agricultural diversification and economic development.

Mr Aldington: What is important is not what developing countries are allowed to do, but what is imposed on them. The idea brought out in the World Food Summit about a fair and market- oriented trading system rather than just liberalization of markets is worthy of consideration. The question is therefore what action can be taken by the developing countries to countervail against the potentially massive forces of globalisation and liberalization of trade that we will be imposing on very vulnerable groups.

Comment: On the importance of sequencing in negotiations, there are two views. One says address export subsidies and domestic support, then go to market access, because otherwise you will be giving access to subsidised products; the other says precisely the opposite: go to market access first, and then to export subsidies and domestic support because once you have access, subsidies will be very expensive to maintain. It is important to analyse these issues clearly from the perspective of developing countries.

Comment: The linkages between the agricultural agreement and other agreements (SPS, TBT and TRIPS) are extremely important because trade liberalization has been frustrated by technical standards.

Response by Mr Aldington: Underlying the SPS and other agreements are the country-level regulations that are needed to implement them. It is here that the international donor community can assist the developing countries. As Professor Deep Ford has said, it is not countries that trade but individuals, companies and the business sector, and they have to work in a regulatory field. The question is how effective is the market in transmitting the incentives provided by the free and market-oriented market system, which is what we are groping towards, and how can it be regulated to protect food security? It is necessary to put into place these micro-level regulations to back up what is done at the international level.

Comment: The background papers give the impression that the GSP is no longer important, and would not be beneficial in the future, but there are still some tariffs that reach 400 percent and there are in-quota tariffs that are above 30 percent. So there is a role for the GSP, particularly for weaker members.

Response by Mr Thomas: The point is that continuing multilateral trade reforms will reduce the scope for preferential treatment in the longer term, and countries that rely on preferences need to bear that in mind in shifting to a more competitive type of environment. In the meantime, the concerns of countries that benefit from these preferential schemes will need to be taken into account.

Comment: We've done an assessment of decoupled payments, and the whole idea that you can delink payments to farmers from their level of production has proved totally invalid. What do economists have to say about that? In the United States production has increased as prices collapsed, partly because the farms consolidate and people go out of business, and partly because of technology. The theory that because prices fall, farmers will grow less has not proved valid. The link between a farmer and the world price is very tenuous. A farmer in the United States does not sell his produce on the world market, but say to Cargill or to ADM. It is important for a more complex analysis of those mechanisms to be made so that the assumptions about price and demand and supply are based on what happens in the market and not on a model.

Response by Mr Das: One basic problem that arises with the questions that have been raised is that we tend to be in a fixed frame of mind. How did these boxes - the exceptions, the AMS and all that - come about? We all know. From 1947 to 1994 there was nothing; any talk of discipline in agriculture was immediately thought to be irrelevant. There were hush-hush discussions in Geneva, but so much secrecy, so much resistance, so much hesitation until 1994. Then came the Agreement, but that is not a Bible. The challenge is to think above the current frame of the Agreement and not just of these boxes. Leave the boxes to negotiators and let the intellectual world and the activists extend their vision.

Question to Mr Aldington: The Swiss Government has made extensive use of the concept of the multifunctional character of agriculture in the formulation of agricultural policy, and developing countries might well be able to benefit from some of the lessons which we in Switzerland have learned over the last few years. Professor Parikh, for instance, when he referred to the employment guarantee scheme in Maharastra, may not have been fully aware that it involved the social dimension of multifunctionality. There are watershed development programmes which receive support, so the environmental factor of multifunctionality is also in evidence. So does Mr Aldington's paper seek to encourage discussion on this aspect of relevance for developing countries within the green box instruments?

Response: In my research on multifunctionality, I found that the developing countries often ignored it, apart from India, where agriculture was regarded as being a way of life in the rural communities. The importance of Multifunctionality reminds us of the positive externalities of agriculture relating to food security, environmental services and rural communities. They can be promoted by development policies which are allowed under Article 6 in a developing country context; sensible development policies would emphasize these positive externalities. Therefore there is no need for a separate item in the green box; they can be included under development policies of developing countries. Of course, for developed countries multifunctionality has a slightly different connotation. Granted, putting these development policies into a separate box might make things more transparent, so perhaps it is nevertheless a good idea.

Chapter 6
OPTIONS FOR ENHANCING THE AGRICULTURAL PRODUCTION, TRADE AND FOOD SECURITY OF DEVELOPING COUNTRIES IN THE CONTEXT OF THE WTO NEGOTIATIONS ON AGRICULTURE

panos Konandreas ²⁵: It is instructive to recall the problems that the Agreement on Agriculture was called upon to address. The main problem was the prevalence of production- and trade-distorting policies in developed countries, which led to an excess supply in the world market. By and large, developing countries had the opposite problem, producing well below their needs often as a result of disincentive policies. By subscribing to the production-limiting measures embodied in the Agreement, developing countries agreed to a set of measures to address a problem that they did not have. It is essential, therefore, to redress the fundamental imbalances in the Agreement in the following areas: enhancing the capacity to produce, improving market access, safeguarding domestic market stability and building institutional capacity.

In the area of domestic support, many developed countries were able to legitimatize their production- and trade-distorting measures while developing countries have neither the right nor the ability to use such measures. Therefore, a two-pronged approach is supported by many developing countries aimed first at limiting production and trade-distorting measures of developed countries and second at adding more flexibility to existing provisions in the areas of interest to developing countries, in the form of special and differential treatment. Some ideas in this area are: recalculate the AMS and revise the country schedules, raise de minimis levels for non-product specific AMS, give credit for negative product-specific AMS, extend the green box to include food security measures, and clarify certain methodological issues and definitions in the Agreement.

Developing countries have been disappointed by the lack of access to markets since the conclusion of the Uruguay Round. Their exports are largely in primary commodities and not much diversification has taken place into processed high value products. Some areas for improvement on market access have already been mentioned in this Symposium - tariff peaks, tariff escalation, administration of tariff rate quotas (TRQs), etc.

Domestic market stabilization is particularly important for developing countries because they depend on the world market for much of their food consumption and spend a large share of their export earnings on food imports; a large part of the population depends on agriculture for a living, so large fluctuations in agricultural prices imply large fluctuations in their income; and many households spend much of their income on food. Some mechanisms for improving market stabilization have been mentioned, but a comment is necessary on the special safeguard clause. If the time allowed for recourse to this clause were to be extended, it would be only right that this facility be available to all WTO members, but perhaps only for a limited number of sensitive basic foodstuffs and perhaps with some tightening of "triggers" so that there is no abuse.

The two fundamental problems with the Marrakesh Decision - the heavy burden of proof and the lack of clarity regarding who is to do what and when - could be addressed by the following: make the Decision a legally binding instrument; provide a mechanism for automatic eligibility for assistance under some agreed trigger variables; create a fund to provide technical and financial assistance to eligible countries, especially for increasing agricultural productivity; and clarify the respective roles and responsibilities of WTO and of other actors involved in the implementation of the Decision.

My final point concerns capacity building. Of 38 sub-Saharan African countries, something like 8 have permanent representation in Geneva. As a result, they face serious limitations in negotiating and implementing agreements. There is a need for technical capacity in the countries themselves to enable them to compete internationally. There is a need for effective implementation of the Integrated Framework for LDCs and help is needed for countries in the process of accession, most of which are developing countries.

In conclusion, the list presented attempts to include what is widely shared by a large number of countries, but clearly, it is neither a comprehensive nor a priority list of reforms for all concerned.

luis abugattas:²⁶ There are six basic issues on which developing countries should concentrate. One is this whole package of issues related to tariff peaks, tariff escalation, tariff rate quotas, dirty tariffication, but especially this last, as well as inflated aggregate measurements of support. The question is whether the next round of reductions should take as its basis these overstated tariffs and domestic supports, or whether an exercise should be undertaken to "clean" them before negotiating new commitments.

A second issue is that the Agreement on Agriculture has had very little impact even on policy formulation in most developing countries. Policy reform in these countries has taken place more in the context of adjustment programmes and commitments with IMF, which have reduced the bias against agriculture and recently show some positive impact in terms of agricultural production. No trade negotiation will do much to enhance production, which is part of domestic reform. Those reforms were necessary, but it is clear that they are not sufficient. Some active policies are needed to fill the gaps that the market does not: investment, credit and services. There is an acute problem of finance, especially in those countries where drastic financial reform was introduced, eliminating development banks. There is simply no credit for the agricultural sector and no money to engage in agricultural production. The market is not delivering quickly enough all the services connected to agricultural production. A structural asymmetry is developing in the international trading system. The types of policy instruments that are legitimate, in the context of multilateral disciplines, require a high level of institutional capacity which is basically lacking in most developing countries, while the policy instruments that can be used without major institutional difficulties are being eliminated. A major goal of developing countries during the next round is to safeguard their freedom to implement policies in support of the agricultural sector.

An issue that has come back many times during the discussion is that of market stability. The legitimacy of price stabilization mechanisms should be clarified, particularly Article 4 and the footnote, to clarify that it is legitimate to use variable levies as a price stabilization mechanism.

A fourth issue is that of safeguards. Introducing a permanent agricultural safeguard in the Agreement would be to the benefit of developing countries.

Another issue that has been mentioned is the relation between agriculture and other areas of negotiation. Developments in the TRIPS and TRIMS Agreements have much more impact on the agricultural sector of developing countries than the Agreement on Agriculture, in two areas: the extension of the field of patentability of plant varieties and animals and the control of technology and parallel imports. Those have a strong impact on the cost of basic inputs for the agricultural sector. Data show already that there has been a large increase in input prices, putting them beyond the reach of the poor and the small farmers. In the discussions on investments, there is consensus to have an investment agreement, but undoubtedly the TRIPS discussion is going to be put on the table again. Already the prohibition of local content requirements has affected many agricultural sectors, especially milk.

Finally, there is the issue of competition. Although a country may negotiate a right to export food products to another, business licences may prevent the supplying of those products from one market to another. There is this whole issue of market distribution relating to licence holders of patents and franchises that really hampers exports. There is also a problem of intra-firm trade with the expansion of the large companies after the opening of all investments in agriculture. This is an issue that should be analysed.

Hesham Youssef²⁷: The Marrakesh Decision on net food-importing developing countries was important because it enabled a number of developing countries to agree to the package of the Uruguay Round Agreements, a point that should not be overlooked.

There are five principal elements of the Decision: (i) to establish a level of food aid commitments sufficient to meet the needs of developing countries during the reform programme; (ii) to ensure that an increasing proportion is given on concessional terms; (iii) to provide technical and financial assistance to improve agricultural productivity and infrastructure; (iv) to ensure preferential treatment for net food-importing developing countries in the area of export credit; and (v) to secure financing for normal levels of imports through either international financing institutions or through such facilities as may be established.

In order to receive assistance under the Decision, developing countries were asked to prove that they were negatively affected by the Agreement on Agriculture. We have seen that it is virtually impossible to isolate the effects of the Agreement, but developing countries were asked to prove a causal link between the Agreement and the difficulties they were facing. In addition, some net food-importing developing countries are not necessarily unique because all kinds of countries are face these problems. But a number of studies by FAO and others have indicated that there is a clear difference between NFIDCs and other developing countries in terms of per caput income, under-nourished populations, cereal production, cereal imports and the share of food imports in total imports. So they are a unique group with a unique problem in relation to this issue.

As regards implementation, absolutely nothing has happened. The situation in food aid is devastating. From 1994 to 1997, food aid in cereals for LDCs declined 37 percent, for NFIDCs 65 percent and for Egypt 77 percent. We were expected to get some differential treatment but nothing has materialized. Technical and financial assistance from a number of donors -Australia, Canada, Japan - has also declined. Assistance from the United States has been on average unchanged for this period. The EC is quite interesting; they did not make a notification in 1996 or 1997, so it seems that they also are in need of technical assistance in this area. New Zealand shows an increase but it started from a very modest base. Similarly there is an increase for South Africa. Norway, as usual, stands out.

As regards prices, we have been talking about prices and finance for some time during this session. The volume of cereal imports of net food-importing developing countries has been increasing since 1993 and so has the value. Of course, 1995/96 was an unusual year, which explains the peak in 1995/96, but imports have been rising throughout the period. It has been argued that the change is not that big, but it is significant. Studies by FAO have shown that 40 percent of this increase in the food bill was due to volume and 60 percent to other factors. There have been many problems with the international financial institutions in relation to financing imports of NFIDCs. It was agreed in Singapore that WTO members would work with international financial institutions to see whether existing facilities could be enhanced or new ones created but there too, nothing happened. When prices were so high in 1995/96, few developing countries were able to get finance from either the contingency or the compensatory financing facilities of IMF. The issue of finance needs complete reconsideration.

For the future, a fundamental difficulty with the Decision is that we have been treating the problem as a transitional one, but it is not. There are some countries - very small countries with very limited capacity for export and for enhancing production - that will continue to be vulnerable regardless of what we do. A further consideration is that the responsibility for implementing the Decision has been scattered all over the world. There is the Food Aid Convention in London for aid, the OECD in Paris for export credit and there are international financial institutions in Washington; but very little is being done in Geneva, where the balancing of rights and obligations was supposed to take place. More can be done by FAO in Rome, especially on productivity and various aspects of agricultural production. As regards food aid, the most important point is that the aid has so far been inversely related to world market prices; when prices are high and assistance is most needed, there is no assistance, but when prices are low and it is less difficult to buy food on the market, the assistance is great. We also have to address commitments to increase technical and financial assistance, and this is where a fund can be useful. Export credits have to be addressed in a serious manner.

The last point is that if we are serious about achieving the objectives of the World Food Summit - halving the number of undernourished people by the year 2015 - more political will must be exerted. The Decision has not been implemented, and if we approach the other WTO commitments in the way we have approached the Decision, there will be big trouble. There will be no more Blair House agreements. Developing countries are taking a much more aggressive role in addressing their concerns and will continue to do so. Agreements between the EU and the United States will always be welcome, but they will not be determinants of further agreements in the future.

ademola Oyejide²⁸: Let me start with a quotation, "You don't get what you deserve in a negotiation. You get what you negotiate". Developing countries should not go into negotiations on the assumption that the other side is made up of nice guys who will concede everything they want. They must take their own destiny in hand and recognize that the capacity to negotiate effectively in the WTO is of fundamental importance. Second, if you read through the entire Marrakesh Agreement establishing the WTO, and not just the Agreement on Agriculture, you will find an asymmetry between mandatory obligations and voluntary or `best endeavour' offers of assistance. Developing countries signed up on the basis of an offer that developed countries were going to do `something', but nothing has happened. If there is a lesson to be learned, it is that in future both sides of these agreements are clearly mandatory.

It is important to recognize that there are at least two types of costs involved in a trade agreement: implementation costs and adjustment costs. In developing countries, implementation requires the creation of new institutions and new human capacity. Whenever there is a policy change, the economy will have to adjust and there will be gainers and losers. The fiscal system can compensate the losers, but in international trade the gainers and losers are not necessarily in the same country. The computation of these implementation costs and adjustment costs will force everyone to recognize who are the gainers and who are the losers, and therefore may force the system to come up with some way of compensating the losers. In the forthcoming negotiations, developing countries should perhaps be asking that a particular agency be given the task of computing these costs, separately from WTO itself. For agriculture, who else should it be but FAO?

The second issue is that of special and differential treatment. This is an old issue, but the Uruguay Round Agreements have messed it up thoroughly. It is in the interests of developing countries to negotiate some kind of multilateral agreement on what the concept means prior to negotiating the other issues. The current practice of classifying countries is weird. It is based on a set of criteria that reflect political considerations rather than trade competitiveness, food security or any other objective criteria. Developing countries should insist on a multilateral negotiation on the criteria to be used. The next stage would be to negotiate what kind of provisions are needed. In the area of market access, the GSP concept should be extended to require the developing countries to offer preferences to the LDCs. The developing countries - especially those who benefited from previous trade preferences - ought to be giving something back. But the least-developed countries should not be free-riders. They must have a rational regime of agricultural production and trade. Nearly all the sub-Saharan African countries have a uniform tariff of 150 percent on every product, but I doubt whether any country really needs tariffs in excess of 40 percent, for either protection or revenue purposes. Many of the African countries do not have the capacity to participate effectively in the WTO process, but have important interests to protect. I hope FAO will be willing to offer some kind of support - for example, regular seminars with our representatives. Assistance is also needed to finance the travel costs of African participants in the negotiations, and they need help in understanding fully the provisions of the current Agreement and how they compare with their own agricultural production and trade regimes.

zaid Bakht²⁹: The Agreement on Agriculture had three underlying concerns. The first was about bringing trade-distorting agricultural policies under multilateral rules and disciplines, essentially an exercise in `getting prices right'. Considerable progress has been achieved in that direction, but much remains to be done. The major issues that need to be taken up for the next round of negotiations include: imbalances in the existing provisions of the AMS with respect to particular uses of the green box and the blue box; persistence of tariff peaks, tariff escalation, tariff complexities and export subsidies; asymmetry with regard to the special safeguard measures; and the emerging use of social clauses and other non-tariff measures as new forms of protectionism. The complete list of what needs to be taken up seems to be fairly long and fairly contentious, so all will not be plain sailing, but we must hope for the best.

The second underlying concern was to provide flexibility to the developing countries in their agricultural development policies. That was thought to have been achieved under the provisions for special and differential treatment, but most countries did not have high levels of trade-distorting agricultural policies and whatever they had was largely corrected under SAPs. Consequently, the provisions for smaller cuts and longer transitions were meaningless. The relevant question is whether these countries have the flexibility they need in terms of recourse to support measures? Bangladesh, for example, bound its agricultural tariffs at 200 percent, but the applied rate is much lower, so it has the right raise tariffs should the need arise. But operationally the flexibility is simply not there, largely because of the strong arm-twisting and the pressure exerted by the other, better known institutions, namely the World Bank and IMF. In the next round of trade negotiations, developing countries need to see greater coherence of the views of WTO and the other institutions.

As regards preferences, the GSP seems to have been critical in promoting export growth in many countries. Long-term export growth cannot rely upon such preferences, but since the export base generally remains extremely narrow, mainly because of various supply constraints, it is imperative to seek a continuation and extension of the preferences.

The last concern has to do with the technical and financial assistance for developing countries to expand their agricultural production and export base, counteract the negative effects of the reform process, meet SPS standards and build capacity to negotiate and implement multilateral agreements. This is one area where the balance sheet is absolutely red. Nothing has been done to address these needs. The Agreement on Agriculture seems to have been preoccupied with getting prices right, but the empirical evidence shows that the non-price factors - the paucity of investment resources, inadequate infrastructure and technology, weak institutions - have been the binding constraints. The provisions for special and differential treatment need to be made more meaningful and a start should be made to implementing the Marrakesh Decision.

abhijet Sen³⁰: In this session, we seem to have significantly widened the discussion, taking in development in the entire Marrakesh Agreement and not simply the Agreement on Agriculture. I shall stay within the Agreement on Agriculture, and flag some of the issues, particularly the issue of food security, within that context. However, there are two background matters that are important - SPS and TRIPS. TRIPS are important because the international help in the dissemination of new technology that used to be available - help of the sort that created the Green Revolution, for example - is simply not available any more. And SPS essentially means that whatever developing countries might achieve on market access for a whole set of goods, the developed countries have a whole set of regulations with which they can control market access. These two matters have to be kept in our mind.

What we have been discussing is an Agreement that is unequal. Some might say that developing countries are essentially asking for increases from the developed countries: they should increase market access and cut down on their subsidies, but allow developing countries to retain controls over their markets and allow them more flexibility on the subsidy side. But there has to be a basis for negotiation, involving some set of principles. The entire WTO Agreement is about reducing barriers to trade in the belief that it will help everyone. We have to focus therefore on where things don't work. and be tough on where they do work. Consequently, the developing countries should concentrate on the cutting of subsidies all round - their own as well as those of developed countries. In other words there should really be a green box containing only two types of items - those where the market doesn't work and which involve either very clear externalities or distributional issues in favour of people whom the market will not reach. This is a trade argument.

Does a `development box' or `food security box' meet such criteria? Clearly, markets on their own won't ensure development, as history has taught us. Nor do they necessarily ensure food security in the sense it was defined. We need to flesh it out. We should not demand open flexibility but define it clearly in terms of what is permissible, because if developing countries have flexibility, so have the other countries and they will be able to use it much more. The real problem relates to certain classifications. The reason why the Agreement on Agriculture raises questions which relate to the entire Uruguay Round outcome is that most developing countries are stuck with one simple fact: most of their population is in agriculture, not because that is where they want to be but because the development process has failed. That is in stark contrast to the developed countries, where subsidies have to be given to keep people in agriculture and money is thrown away to that end. How to bring a semblance of economies of scale to millions of poor people and help them increase their production in a way which does not destroy incentives or create inefficiencies? That is the old development question, and for most people in developing countries that is where the problem lies.

Trade plays only one role in this, but it also creates problems. India, for example, had a fairly respectable agricultural growth after Independence, especially after the Green Revolution, when technology was provided free, but the success was confined to a particular part of the country and it is coming to an end. For 20 years we lived on Punjab Harayana as part of India, and that will no longer be possible. We must soon spread out into the rest of the country, but I doubt if the old subsidy model we used in the past will work. At this point what we certainly do not need is a situation where some other developing countries, who cannot get access to developed country markets, suddenly start achieving access to ours. Because we are at a very very critical time in the development of Indian agriculture, our growth rates are slowing down, and we have to extend our agriculture to new parts of the country, and to new crops. Therefore we do have a concern, but it is not for protectionism. It is for the fact that in agriculture, like in many other things, certain regions of the country are in the infancy stage and so certain types of infant industry protection are necessary. That may not be a fashionable idea any more, but it is no less powerful today than it was before. This `walking on two legs' has to accommodate differences among developing countries, especially if the developed countries keep their doors closed.

Comment by a participant: I am uncomfortable with the discussion about price instability and the suggestion to legalize price bands. With improved rules in the new system there is no need for such large stocks. Nor does price instability necessarily lead to instability in the import bill, because many of the prices are negatively correlated. Too much emphasis has been placed on price stability and too little on the most important issue, which is income stability. Price bands are hard to implement in a neutral manner. They always lead to transfers, to some sort of protection, and their use is difficult to justify in the new trade environment. Price and income instability are better achieved by more market-oriented mechanisms such as futures markets.

Response by the Chairman: The World Bank has taken an initiative in this sense, emphasizing risk management for developing countries, and has convened a round of meetings on the subject.

Question to Professor Sen: He advocated cutting subsidies in both developed and developing countries. In most developing countries, the resource-poor small farmers have limited access to credit while the developed countries have supported their farmers and are technologically and financially more advanced, but if farm support in developing countries is removed, what sort of scenario can be envisaged?

Response: I did not argue for subsidy cuts in developing countries. I said subsidies should be maintained on only two grounds: to provide things that markets cannot and to help people that the private sector will not reach. The necessary institutions should be created to serve them or at worst the subsidies should be specifically targeted to the people concerned.

Comment: Professor Oyejide called for multilateral negotiations on the criteria for country classification and also a sliding scale of differential treatment so that countries would start implementing sound policies as they graduated from one stage to another. This process could be initiated by FAO, in collaboration with WTO, so that at least some preliminary discussion could take place before Seattle. Some kind of guidelines could be drawn up, especially since many of these countries do not even have the capacity to negotiate.

Comment: As a petroleum-producing country, my country finds that it is classified in a way which is not consistent with its real situation. The criterion of per caput income ignores such problems as child mortality, life expectancy, illiteracy and acute poverty.

Response by the Chairman: On the question of providing a forum for negotiations on country classification, I cannot make a commitment on behalf of FAO, because this is more a political than a scientific/technical one. We do, however, provide information on indicators which member countries could use as a basis for classification, including information on the low-income food-deficit countries.

Comment: Two very important issues are related to the Agreement on Agriculture. One is the phenomenon of regionalism, aimed at gaining special exceptions from the principles of MFN treatment and thus to discrimination against third countries. The second issue is the environment, which has important linkages with agricultural policies and production. Environmental issues should be considered in negotiations on agricultural policies that promote competitiveness in agricultural trade.

Question: There has been much talk of a negotiating period of about 3 or 4 years. What can be done during this transition period about the distortions and other problems that exist?

Response: The approach to the negotiations needs to be both offensive and defensive. Countries have to react to other countries' proposals, study their own domestic situation to see what issues they would like to propose, and then form coalitions with other countries, which might be either developing or developed ones. The coalitions should then push the issues as strongly as possible.

Question: On the question of maintaining flexibility to pursue agricultural development, Panos Konandreas suggested that developing countries should have the ability to raise tariffs for sensitive commodities, but that would have two undesirable impacts. It would hurt the poor consumers and, if the tariff gap were maintained in the long term, it would result in a serious distortion of resources. The sensitive commodity sector may be highly inefficient, so for how long can one maintain such tariff differentials?

Response: I was referring to some countries that have committed themselves to very low levels of tariffs for some commodities that are crucial to them. These are cases where some rebalancing is necessary, such as India and Egypt.

Question: The proposal to further disaggregate tariff quotas, i.e. to make them product-specific, would probably mean more managed trade, compared to a situation where traders are free to choose among a range of products which are covered by a basket tariff quota. From the point of view of the consumer, would that be better in terms of tariff quota utilization and market development?

Comment: One important aspect of agricultural development is an increase in the retained value added of the exporting countries. There is a growing concentration of agricultural trade, and regardless of what market access opportunities are given, as long as this concentration continues, the value added that will be retained by agricultural producers and exporters is unlikely to increase a lot. This raises the question of competition policy, but in WTO that is understood to refer only to domestic policy. The situations which would require action domestically are left undisciplined at the international level. There is thus an important issue which at some point needs to be taken up in the negotiations, but many are reluctant to see it negotiated because of its possible implications for domestic policy. The issue is nevertheless a very important one.

Our discussions have revealed a much better understanding of the world agricultural trading system than five years ago. While we concluded that it is premature to identify quantitatively the effects of the Uruguay Round, there appears to be unanimity that there has been a remarkable qualitative shift. This qualitative shift has resulted in the introduction of a rules-based international agricultural trading system, affecting both international and national policy making and concepts and thinking. The full quantitative impact has yet to be seen.

There has been general agreement that trade and further trade liberalization must be conducive to food security, a conclusion of the World Food Summit with its Plan of Action. All who participated and spoke agreed that food security is the development objective of the countries concerned, and that the food insecurity facing still around 800 million people in the developing world is the key challenge for policy makers and also for the negotiations on agriculture.

As an international organization, FAO must be impartial in this process. Its role is to provide a forum for countries to express their positions. Two lines of proposals have emerged from this Symposium: bring more balance into the agreements that exist and try to achieve more flexibility to enable developing countries to pursue their domestic food security and development objectives. It is in this spirit that many or all of the proposals were made. The need to focus on the special interests of the transitional or more permanent losers in the international trading system or its reform, was particularly underlined, as was the need to provide compensation or transition assistance.

As one of the international agencies involved in the agricultural reform process, FAO will continue to analyse and monitor the situation and try to provide information and assistance. Many examples were given of impacts on specific developing countries. Such country-specific studies need to be intensified and further pursued, and in FAO we are ready to assist in this regard. As for Professor Oyejide's request that FAO should be available as a backstopping agent, I am not sure we can do that for a group of countries or for individual countries because we have to service the entire membership. I should like, however, to draw attention to a training programme we have just launched that will be conducted in 14 or 15 subregions, with up to five participants from each developing country and country in transition. It is a one-week course for interested agricultural officials and others, covering not only the Agreement on Agriculture, but also the SPS, the TRIPS and the TBT Agreements, and thus the important issue of food security.

Thursday, 23 September OPENING SESSION
Remarks:	Mr Hartwig de Haen, Assistant Director-General, Economic and Social Department, FAO Ms Gretchen Stanton, Councillor, WTO Mr Rubens Ricupero, Secretary-General of UNCTAD
Keynote address:	Professor Kirit S. Parikh, Director, Indira Gandhi Institute of Development Research, Mumbai, India
SESSION I MAJOR TRENDS OVER THE PAST TWO DECADES IN GLOBAL AGRICULTURAL MARKETS AND THE MEDIUM-TERM OUTLOOK

Panellists:	Nikos Alexandratos, Former Chief, Global Perspective Studies Group, FAO Loek Boonekamp, Head of Trade and Markets Division, Directorate for Agriculture, OECD Eugenio Diaz-Bonilla, Visiting Research Fellow, International Food Policy Research Institute (IFPRI), Washington, DC Keiji Ohga, Professor, University of Tokyo Graduate School of Agricultural & Life Sciences
Discussion
SESSION II EXPERIENCE WITH THE IMPLEMENTATION OF THE URUGUAY ROUND AGREEMENT ON AGRICULTURE Session IIa: Experience relating to World Agricultural Markets
Panellists:	Jim Greenfield, Former Director, Commodities and Trade Division, FAO Samarendu Mohanty, Senior Research Fellow, Food and Agriculture Policy Research Institute (FAPRI), Iowa State University John Finn, Councillor, Agricultural Division, WTO Donald Mitchell, Principal Economist and Commodities Team Leader, Development Prospects Group, The World Bank
Discussion

Session IIb: Developing Country Experience (based on country case studies)
Panellists:	Ramesh Sharma, Senior Economist, Commodities and Trade Division, FAO
	Sub-Saharan Africa: T. Ademola Oyejide, Professor of Economics, University of Ibadan, Nigeria
	Near East: Mahmoud Al Oduimy, Faculty of Agriculture, Ain Shams University, Cairo
	Latin America: Antonio S. P. Brandao, Professor and Agricultural Trade Economist, University Santa Ursula and State University of Rio de Janeiro, Brazil
	Caribbean: J.R. Deep Ford, Professor of Economics, University of Vermont, USA
	Asia: Abhijit Sen, Professor of Economics, Jawaharlal Nehru University, Delhi
Discussion

Friday, 24 September

Remarks:	Mr Hartwig de Haen, Assistant Director-General, Economic and Social Department, FAO Ambassador Ali Said Mchumo, Chairman of the WTO General Council Ambassador Nestor Osorio Londoño, Chairman of the WTO Committee on Trade in Agriculture



SESSION III ISSUES AT STAKE IN THE FORTHCOMING WTO NEGOTIATIONS ON AGRICULTURE FROM THE PERSPECTIVE OF DEVELOPING COUNTRIES, TAKING INTO ACCOUNT THE WORLD FOOD SUMMIT'S PLAN OF ACTION

Panellists:	Harmon Thomas, Chief, Commodity Policy and Projections Service, Commodities and Trade Division, FAO Tim Aldington, Former Senior Technical Adviser and Secretary, Committee on Agriculture, FAO Baba Dioum, General Coordinator, Conference of Ministers of Agriculture of West and Central Africa B.L. Das, International Trade Specialist and Consultant to the Third World Network Nipon Poapongsakorn, Vice-President,Thailand Development Research Institute

SESSION IV OPTIONS FOR ENHANCING THE AGRICULTURAL PRODUCTION, TRADE AND FOOD SECURITY OF DEVELOPING COUNTRIES IN THE CONTEXT OF THE FORTHCOMING WTO NEGOTIATIONS ON AGRICULTURE

Panellists:	Panos Konandreas, Senior Liaison Officer, FAO Liaison Office, Geneva Abhijit Sen, Professor of Economics, Jawaharlal Nehru University, Delhi J.R. Deep Ford, Professor of Economics, University of Vermont, USA Hesham Youssef, Cabinet of the Minister for Foreign Affairs, Cairo, Egyp Zaid Bakht, Research Director, Bangladesh Institute of Development Studies Luis Abugattas, Advisor, Ministry of Industry, Integration and International Negotiations, Peru T. Ademola Oyejide, Professor of Economics, University of Ibadan, Nigeria
Discussion

1 Mr Hartwig de Haen, Assistant Director-General, Economic and Social Department, FAO.

5 Head, Trade and Markets Division, Directorate for Food, Agriculture and Fisheries, OECD.

7 Professor, Graduate School of Agricultural and Life Sciences, University of Tokyo.

9 Senior Research Fellow, Food and Agriculture Policy Research Institute, Iowa State University.

17 Professor and Agricultural Trade Economist, University Santa Ursula and State University of Rio de Janeiro, Brazil.

20 Chief, Commodity Policy and Projections Service, Commodities and Trade Division, FAO.

21 General Coordinator, Conference of Ministers of Agriculture of West and Central Africa.

23 Former Ambassador of India to GATT and former Chairman of the GATT Contracting Parties.

26 Advisor, Ministry of Industry, Integration and International Negotiations, Peru.