The WTO negotiations on agriculture: post-Seattle major issues, analytical needs and technical assistance requirements[111]

1. Introduction and summary

An informal meeting of interested agencies and a number of agricultural trade experts was organised by FAO, and held in Rome on 12 and 13 June 2000. Fourteen experts, including representatives of international agencies and regional commissions of the United Nations, together with FAO staff, participated in the meeting.[112] The purpose of the meeting was to exchange views on the critical issues in the negotiations on agriculture for which international agencies and research institutions could be of assistance in providing analytical support and technical assistance. A related objective was to explore the possibilities for synergies and collaboration among agencies in the provision of this assistance.

Background

The Seattle Ministerial Conference of the World Trade Organization (WTO), held from 30 November to 3 December 1999, was unable to launch a comprehensive round of negotiations. However, on 7 February 2000, Members agreed at the WTO Council to go forward with the negotiations on agriculture and services as mandated in the respective Uruguay Round Agreements. With respect to agriculture, it was agreed that the negotiations would be conducted in the Committee on Agriculture (CoA), in special sessions held in conjunction with regular meetings of the Committee.

The first special session of the CoA, which was held in Geneva, on 23-24 March 2000, adopted a programme of work on the first phase of the negotiation process. The first phase, which would last for about a year, would be devoted to submissions of negotiating proposals and discussions of technical background papers within the framework of Article 20 of the Agreement in Agriculture (AoA). It would end with a stocktaking meeting in March 2001, by which time a decision would be needed on the procedure for the further negotiations. Special sessions to discuss technical papers and negotiating proposals were to be held back-to-back with the regular meetings of the CoA in June, September and November 2000, with the possibility of an additional meeting provisionally set for the last week of January 2001.

As part of the agreed programme, and in preparation for the first phase of the negotiations, the special session in March requested the WTO Secretariat to prepare a number of technical papers, that were made available in advance of the June 2000 special session: (i) revised and updated background papers based on notifications on tariff quotas, domestic support and export subsidies, as well as a table showing Members’ usage of domestic support categories, export subsidies and export credits in a common currency; (ii) an updated background paper on the agricultural trade performance of developing countries; (iii) a background paper in the context of Article 20 (b), that is, the effects of the reduction commitments on world trade in agriculture; and (iv) a background paper on implementation of 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 the first phase proceeds, the CoA may wish to have additional technical papers on a variety of other issues.

In anticipation of this need, and in order to be prepared to provide analytical support to the negotiation process, particularly on major issues of concern to developing counties, FAO invited a number of international agencies and agricultural trade experts to reflect on the major post-Seattle issues of concern to countries (developed and developing) and to identify analytical work that could contribute to a better understanding of the issues as well as of alternative ways of dealing with them.

Outcome of the informal meeting

The following are the general conclusions of the meeting:

1. While noting the diversity of interests and positions among WTO Members, the meeting identified three areas of great importance, particularly for the developing countries, in the negotiations:

• a more level playing field in agriculture;
• better market access for agricultural products; and
• Special and differential treatment for developing countries that is relevant, concrete and targeted.

2. International agencies and research institutions need to collaborate more closely in providing analysis and technical assistance in support of the negotiations. Each agency should focus on its area of comparative advantage, while cooperating with others. Coordination among the agencies through the sharing of information on contemplated technical assistance activities and where possible the undertaking of joint activities was considered essential in order to avoid unnecessary duplication of activities and overlap in the programming of events for the same countries.

3. Priority areas for technical assistance:

• Improvement in knowledge of the multilateral trading system, particularly the Agreement on Agriculture - how it operates, experience with its implementation and the impact it has had;
• Assistance in preparing proposals for negotiations - in particular analytical support in identifying national interests;
• Understanding the implications of alternative proposals;
• Strengthening of national institutions (for trade policy formulation and coordination related to the negotiations, trade monitoring and analysis, the legal and regulatory systems affecting trade, etc), as well as countries’ ability to participate effectively in the WTO system, including the dispute settlement mechanism;
• Enhancement of the export capacity of developing countries, particularly the least developed countries, to take advantage of market openings and opportunities (attracting investment in export activities, product development and marketing, SPS/TBT upgrading, production-related infrastructure and services, etc).

4. Further analysis and technical work to assist developing countries in the negotiations:

Market access

• The potential impact of various approaches to cutting tariffs (Swiss formula, across the board, zero-for-zero, etc.) on tariff structure and trade flows;
• Analysis of the potential trade impacts, by products and countries, of an expansion of tariff quotas;
• The impact of alternative ways to administer and allocate tariff quotas on quota fill rates;
• Assessment of the problem some developing countries face in coping with instability in world market prices and associated import surges that damage the production base of domestic producers and threaten the livelihoods of poor rural households;
• Analysis of alternative temporary import relief instruments that could be triggered in such situations (e.g. use of safeguards, price bands, a tariff averaging system);
• How to achieve further liberalization of protected markets in a manner that facilitates an adjustment for developing countries substantially dependent on such markets through trade preferences? How to devise equivalent alternative trade benefits, or other compensating measures, for them?

(The Agricultural Market Access Database, AMAD, which is being developed through a joint cooperative effort of a number of international and national agencies, could be useful for some of the analyses indicated above.[113])

Domestic support

• Assessment of the relative distorting effects on production and trade of particular products as a result of various types of domestic support policies;
• Alternative criteria for reclassifying, capping and reducing domestic support;
• The implications for production and trade of capping AMS on a product-specific basis;
• The potential impact of alternative ways of offsetting a negative product-specific AMS against a positive non-product-specific AMS.

Export competition

• Evaluation of the impact of various rates of reduction, or complete elimination, of export subsidies on commodity prices and trade flows;
• Assessment of the potential impact of reduction/elimination of export subsidies on low-income food-importing countries;
• The effects of various factors such as export subsidies, export credits, state trading enterprises, and large private enterprises on export competition in agricultural markets;
• Evaluation of alternative export rules to guard against export restrictions, particularly those that potentially endanger the food security of import-dependent countries.

Non-trade concerns

• Assessment of the nature of the food security concerns of developing and developed countries;
• Alternative policy instruments to address the food security concerns of developing countries and developed countries, and their impact on trade;
• Alternative policy instruments to achieve particular public objectives associated with the multifunctional role of agriculture in the least trade-distorting manner.

Special and Differential Treatment (SDT)

• Analysis of the reasons why particular categories of developing countries require SDT in agriculture, and the types of SDT that would be most effective in those situations;
• The extent to which current forms of SDT in agriculture are relevant or adequate to encourage full participation of developing countries in, and secure them the full benefit of, the world trading system;
• Alternative criteria of eligibility for different types of SDT in agriculture;
• Elements of an integrated package (e.g. covering market access, trade rules, technical assistance, and effective implementation mechanisms) to address the SDT needs in agriculture of different categories of developing countries;
• The potential impact of duty-free, quota-free access to major markets for all agricultural products of LDCs.

Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries

• Identification of instances where “negative effects” have actually occurred and can be linked to the reform in the rules on international trade in agricultural products;
• Ways to improve the operational effectiveness of the Decision (e.g. how to define more precisely the problem addressed, identify an automatic trigger mechanism, specify the responsibilities of the different parties, and establish an effective implementation procedure);
• Alternative modes of assistance and compensation mechanisms (e.g. assistance to increase agricultural productivity, establishment of an appropriate revolving fund or a modified IMF compensatory financing facility without unrelated conditionalities attached).

2. Overview of the negotiations - Seattle and beyond

The meeting began by reviewing the political context in which the negotiations on agriculture had begun and considered what would be the likely key issues as well as the potential for significant progress on them. Two points were highlighted in this regard: the implications for the sectoral negotiations on agriculture of the failure to launch a comprehensive round in Seattle; and the diversity of interests, aspirations and approaches of WTO Members in the negotiations. It was felt that although the first year or two of the negotiations would probably be slow, considerable room existed for progress on agricultural issues.

The framework of the negotiations

Some of the experts felt that the failure to launch a comprehensive round of negotiations in Seattle had jeopardised the prospects for rapid progress in the negotiations on agriculture. They noted that some major participants in the agricultural negotiations had made it clear that, from a domestic political point of view, the only way they could make meaningful concessions in agriculture would be through reciprocal concessions in other areas (e.g. industrial tariffs, investment, competition policy).

Some experts argued that the size and complexity of the proposed agenda in Seattle was part of the reason for the failure of the Ministerial Conference. While a broader agenda could create room for trade-offs, these experts noted that it was important to bear in mind the capacity of different WTO Members to negotiate simultaneously on multiple issues - not all of them could handle 10 or 15 negotiating issues at the same time. Moreover, some experts felt that certain issues, notably labour standards, were so contentious that they could undermine the whole process of the negotiations. They noted that differences over the inclusion of labour standards had not narrowed and that political realism dictated that the issue be handled in a very low-key manner. Some experts observed that the negotiations on services might provide sufficient opportunities for trade-offs with agriculture because it was an area where the developed countries, including those which felt that they had the biggest concessions to make in agriculture, were expected to be the principal gainers.

Diversity and commonality

The meeting noted that there was a great deal of diversity among WTO Members (both developed and developing countries) in their agricultural situations, their interests in the negotiations and their approaches to the reform process. It was felt that the major differences among countries had to do more with the depth and pace of reform than with the general direction of reform. Formidable challenges remained nevertheless.

With respect to the developed countries, it was noted that the United States and the OECD members of the Cairns Group shared broadly similar views and aspirations focused on the three main areas involved (market access, export subsidies and domestic support). On the other hand, the EU, Japan, Norway, Switzerland and some other OECD countries had so far emphasized specific needs relating to food security, food safety and non-trade concerns associated with what they considered to be the diverse roles or functions of agriculture. Some of these countries had also emphasized the need for greater balance in the rights and obligations of exporting and importing countries through strengthened export rules. One expert commented that while these countries would consider trade-offs between agriculture and other sectors, they would be unwilling to accept a reform process that implied the destruction of their domestic agriculture. In this context another expert observed that the fundamental attitude of the EU toward agricultural trade had changed since the Uruguay Round, citing the 1992 reform of the Common Agricultural Policy and Agenda 2000 as steps toward a more liberal approach to the sector.

With respect to the developing countries, the meeting noted that countries could be broadly classified into three groups: net exporters of basic food products (e.g. the developing country members of the Cairns Group), structural net food importers, and countries with a large number of subsistence farmers. Many developing countries, however, had interests which straddled these three categories. Many had some trade interests in common with the Cairns Group (e.g. better market access for their exports and the elimination of export subsidies) and others had interests which they could identify with the NFIDCs and with countries that had large agrarian populations (e.g. regarding food security and rural development). The meeting noted that most developing countries viewed trade as an essential component of their development strategies.

Notwithstanding the diversity of interests among developing countries, it was felt that there was some commonality of interests and convergence of views. The meeting observed that there seemed to be common ground among developing countries on three issues:

• Levelling the playing field in agriculture in terms of reducing the disparity between developed and developing countries in the use of support and protection;
• Improved access to markets for products of export interest to developing countries; and
• Special and differential treatment to allow developing countries to pursue their agricultural development objectives.

It was noted, however, that there were two important fault lines among developing countries that would require attention. One related to trade preferences (how to achieve further liberalization of protected markets without damaging developing countries highly dependent on preferential access to those markets); and the other related to the concern of LDCs and NFIDCs that they would suffer from the possible negative effects of the reform programme.

Many experts felt that important compromises on the differences among the developed countries had been achieved in the draft Seattle text on agriculture. In addition, they felt that the Seattle text had also reflected the concerns of developing countries, including the least developed countries, to a significant extent. Thus the Seattle text was seen as a useful indicator of issues that were close to agreement and those where compromises might prove difficult. One expert commented that although the Seattle text had no formal status, “everyone knows what was in it.”

Prospects for the negotiations

The meeting noted that the negotiations had started well, despite the initial problem, subsequently resolved, of electing a Chairman to preside over them. The first session, in March 2000, had set up a programme of work and Members had agreed to submit their proposals by the end of the year, with flexibility to March 2001. Moreover, a number of the proposals were expected to be tabled at the special session of the Committee on Agriculture scheduled for the end of June 2000. In addition, the technical work for the negotiations had been greatly facilitated by the information generated through the analysis and information exchange (AIE) process and preparations for the Seattle Ministerial Conference, including the information assembled in the documentation of the WTO Secretariat.

In addition to the scope of the negotiating agenda and the potential for trade-offs among sectors discussed above, the meeting noted that a number of factors were likely to affect the pace and progress of the negotiations. The expiry of the “peace clause” (Art. 13 of the Agreement on Agriculture) at the end of 2003 was seen as providing an important impetus to the negotiations. The meeting considered it doubtful that a consensus would be found to extend the peace clause in the absence of an overall agreement. Thus, the prospect of facing retaliation against agricultural export subsidies and domestic support (currently not allowed under Art. 13), as well as of having to provide compensation to other WTO Members for loss of their markets, was likely to encourage governments to reach an agreement before the end of 2003.

The meeting also observed that many OECD countries were facing internal pressures to reduce budgetary expenditures on agriculture. In the EU, for example, the pressure was particularly strong to reduce support in advance of a major expansion of the EU membership by 2004. The meeting noted that the climate for further liberalization was likely to improve in many OECD countries if global commodity prices rebounded in the medium term - as could be expected on the basis of a recovery in world economic growth. Finally, with respect to developing countries, the prospects for having their points of view and needs taken into account in the negotiations would depend upon how technically well prepared they were and on their ability to build coalitions among themselves and with developed countries.

3. Key issues in the negotiations and analytical needs

In order to help the assessment of the technical cooperation needs of developing countries, including in particular their analytical needs, the experts considered what where likely to be the key issues in the negotiations in relation to the three main pillars of the AoA as well as non-trade concerns, special and differential treatment for developing countries and the Marrakesh Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries. They discussed areas where further analysis might be useful in clarifying problems and evaluating options within the current framework of the negotiations.

Market access

Key issues related to market access

The experts observed that simplification and liberalization of the market access conditions for agricultural products would enable countries to benefit more fully from trade. The meeting observed that while in principle widespread support existed among WTO Members for further reforms in market access, it might be difficult to make significant progress with respect to “sensitive” commodities (e.g. rice, sugar and dairy products). The meeting discussed a number of options for improving market access in agriculture:

• Cutting tariffs. Most of the experts felt that within the context of the negotiations it would be possible to achieve substantial reductions in bound tariffs for most agricultural products. Many countries were seen as having sufficient “water” in their tariffs to enable them to reduce their bound rates without significantly affecting their applied rates. Therefore, it was felt that they could afford to take an aggressive stance in favour of substantial tariff cuts. In this context, there was some discussion of whether future tariff cuts should be based on the bound rates or on the, often lower, applied rates. This approach was considered potentially counter-productive, however, because it would punish those countries that were unilaterally applying lower rates than their bound tariffs and might discourage countries from using similar reduced rates in the future.
• Tariff peaks and tariff escalation. Most of the experts felt that there was a need to reduce the dispersion of tariff rates for agricultural and food products both across commodities and across countries, although they acknowledged that certain countries would have difficulty in reducing tariff peaks for sensitive commodities. They noted that tariff escalation was particularly problematic for developing countries, because it discouraged the diversification of their exports into value-added processed products.
• Simplifying complex tariffs. The meeting noted that specific tariffs and complex tariffs made it difficult to compare market access conditions across countries. Also, specific tariffs tended to rise in ad valorem terms as import prices fell. Most of the experts agreed that simple ad valorem tariffs were preferable in terms of market efficiency.
• Special safeguards and other price stabilization measures. The meeting was reminded that only countries that had “tariffied” during the Uruguay Round and had reserved their rights to invoke the SSG for particular products were eligible to do so- notably Canada, the EU, Japan and the United States. Thus very few developing countries and no newly acceding countries had access to this measure. This was seen as a fundamental imbalance in the AoA that was likely to be an issue in the negotiations. Furthermore, the meeting observed that few developing countries had the institutional capacity to apply contingency measures such as the general safeguard and anti-dumping and countervailing duties, and that those measures involved such a lengthy and costly implementation period that they were of little practical value in the case of agriculture. Several experts expressed the view that the SSG should be eliminated, but others noted that current beneficiaries would be unlikely to give it up and that its elimination would not help those developing countries that were eligible to use it and lacked alternative means for regulating import surges.
• Using tariffs to offset price instability. It was noted that in order to attenuate the disruptive effects of fluctuations in world prices on their domestic markets some developing countries applied variable tariffs within their ceiling bindings. Some experts initially viewed this practice as a form of variable levy and felt that it should be prohibited; however, upon being reminded that developing countries had few alternatives for dealing with import surges due to a fall in world prices, the meeting agreed that this was an issue that required further analysis of what could be done to address the needs of developing countries in this regard (see section on SDT below).
• Expanding TRQs and reforming their administration. The meeting noted that although expanding TRQs might be an effective way of improving market access, there might be strong resistance to a substantial expansion. Overcoming the problems that had been experienced in TRQ administration, on the other hand, appeared to be an area of general consensus, with most experts agreeing that reforms were both needed and possible in the context of the negotiations.
• Trade preferences. It was noted that trade preferences for developing countries, or at least for some of them, was an issue that required attention. The GSP, Lomé Convention and trade preferences for LDCs were the main schemes that required further analysis.

Analytical needs on market access

The meeting agreed that a number of issues related to market access required further analysis. One of the most useful areas for analysis would be the potential impact of various approaches to cutting tariffs (Swiss formula, across the board, zero-for-zero, etc.), including the impacts on both tariff structure and trade flows. The meeting suggested that analysis was also needed to find politically feasible alternatives for liberalizing tariff quotas. In the area of safeguards and market stabilization, it agreed that analysis was needed to identify tools that would be more transparent, less disruptive to global markets, and appropriate for agricultural products.

On the issue of who should undertake such analyses, the experts agreed that more structured cooperation among national and international research and development institutions on analytical work and research tools would be desirable. The Agricultural Market Access Database[114] was given as an example of such cooperation. The meeting considered ways to coordinate efforts to make the data available for policy analysis in support of the negotiations.

Export competition

Key issues related to export competition

The experts noted that export subsidies were perhaps the most trade-distorting of policy instruments used in the agricultural sector. They also recognized the potential for exporters to circumvent disciplines on export subsidies by engaging in other anti-competitive practices. While the meeting noted that export credits were covered under Article 10 on circumvention, this was identified as an area requiring further attention. The meeting also noted that export rules, which some viewed as having received inadequate attention in the past, needed further consideration. In addition, it was recognized that both private and state trading enterprises could engage in unfair trading activities. Thus it was agreed that the market behaviour of both types of enterprises in the agricultural sector should be analyzed. It was acknowledged that some low-income food deficit importers had become dependent on subsidized exports which had played an important role in their access to imported food. Therefore ways and means needed to be considered to deal with their problems as export subsidies were withdrawn.

Analytical needs on export competition

The meeting identified a number of issues on export competition that required further analysis. It was agreed that all forms of export competition needed to be analysed in order to clarify which forms were most trade-distorting and therefore in need of disciplines. Export credits and state trading were singled out in this regard. The meeting agreed that analysis was needed on various approaches to the elimination of export subsidies, such as the impact of alternative rates of reduction on commodity prices and trade flows. The potential impact of the elimination of export subsidies on low-income food-importing countries, in particular, should be analysed. The meeting agreed that it was still unclear what effect, if any, the Uruguay Round had had on commodity prices.

Domestic supports

Key issues related to domestic supports

The meeting observed that despite the disciplines on domestic support agreed in the AoA, they had done little to curb the overall level of transfers to agriculture. Indeed, total transfers to agriculture in the OECD countries had actually risen since 1995, although most of them had utilized less than half of their permitted AMS commitments during 1995-1999.[115] Thus, they had the potential to increase support levels further. The meeting observed that a fundamental imbalance existed in the AoA because few developing countries had the financial means and institutional capacity to operate the types of support programmes (“green box” measures) permitted under the Agreement. For these reasons, many of the experts considered that a substantial simplification and tightening of the domestic support provisions, particularly on exempted policies, was needed. The meeting was also reminded that many countries viewed agriculture as more than a productive activity for “food and fibre” and would resist disciplines that restricted their ability to address the multiple functions of agriculture (see below, under “Non-trade concerns”). A number of other issues relating to domestic support were also noted”, including the measurement of domestic support (AMS vs PSE), the fungibility of product-specific and non-product-specific support, the impact of inflation and exchange rates on AMS and the production and trade effects of decoupled payments.

Analytical needs on domestic supports

The meeting agreed that further analyses of the issues mentioned above regarding domestic supports were needed, in particular as regards the potential impacts on production and trade flows of alternative proposals for reclassifying and reducing domestic supports. For developing countries, analysis was needed on the potential impact of offsetting a negative product-specific AMS against a positive non-product-specific AMS. For developed countries, the “problématique of decoupledness” was of fundamental concern. Various types of support policies needed to be evaluated to determine the degree to which they distorted production and trade, because in many cases the issue was not clear-cut. Non-trade concerns, in particular, required analysis in the context of domestic supports (see below).

Non-trade concerns

Key issues related to non-trade concerns

Non-trade concerns were seen as a potentially divisive issue in the negotiations since there was wide disagreement on the definition and scope of these concerns. In this context, the meeting felt that it would be more productive if countries would identify, as precisely as possible, their specific non-trade policy goals and the instruments envisioned to address them, rather than debate the concepts of non-trade concerns or multifunctionality in abstract terms. Most of the experts viewed the “green box” as providing an appropriate framework through which countries could be allowed to implement policies in pursuit of the various functions of agriculture. The central question was how to devise policies in pursuit of the desired non-trade goals in the least trade-distorting fashion. It was noted that although food security was of concern to both developed and developing countries, it was useful to make a distinction between the non-trade concerns of developed countries and those of the developing countries.

Analytical needs related to non-trade concerns

As mentioned above, the meeting recommended that further analysis be made on the issue of non-trade concerns in the context of domestic supports. The central analytical question was to evaluate alternative policy instruments in the light of their specific policy goals in order to design policies with the minimum trade-distorting effects. Analysis was needed to evaluate alternative policy options for food security, such as international stock-holding, risk management tools, insurance schemes and the like. The non-trade concerns of both developed and developing countries needed to be clarified as the policy measures required to deal with them might differ between the two groups of countries.

Special and Differential Treatment (SDT)

Key issues related to SDT

The meeting noted that the fundamental objective of special and differential treatment should be to encourage developing countries to participate more fully in the world trading system and to ensure that they shared more fully in the benefits of trade. The experts observed that most of the current SDT provisions in the AoA were largely irrelevant. For example, the flexibility to resort to lower reduction rates for export subsidies and domestic supports was meaningless for the vast majority of developing countries that had neither the right nor the financial means to resort to such measures. The meeting noted that, ironically, it was the developed countries - not the developing countries - that were benefiting from special treatment under the AoA (e.g. the creation of new non-tariff barriers in the form of TRQs, “dirty” tariffication, access to the SSG, and the continued right to use export subsidies and production- and trade-distorting domestic supports above de minimis AMS levels). The meeting was reminded that developing countries and newly acceding countries were often held to more stringent standards, in terms of the policy tools available to them, than most developed countries.

The meeting discussed a variety of possible forms of SDT which, in general, were focused on two broad concerns: protection against excessive world price instability and the concomitant import surges that could disrupt local markets; and stable and predictable market access that favoured the poorest countries and covered value-added as well as bulk commodities.

• World price fluctuations and import surges. It was noted that global agricultural prices were more volatile than other prices and that developing countries had difficulty in applying traditional safeguards and anti-dumping measures. For example, a single shipload of a product could wipe out the domestic producers of a small country long before a traditional safeguard measure could be imposed. As an alternative, some developing countries that applied tariff rates well below their bound rates had on occasion raised the applied rate in response to very low world prices. As long as the applied rate remained below the bound rate, this practice was generally considered acceptable under the AoA. However, it was felt that many countries would be unwilling to reduce further their tariff bindings because that could limit their ability to offset price fluctuations. The issue was considered of whether developing countries should be allowed to raise their applied tariffs above the bound rate in certain circumstances (e.g. extremely low world prices, major import surges) to protect staple domestic food production or many subsistence producers, so long as the average over a period of time remained at or below the bound rate. It was noted that such a system, if it were transparent, automatic and time-bound, and did not encourage production of goods for which the country lacked a long-run comparative advantage, could constitute a useful mechanism for addressing price instability.
• Better market access. Achieving better market access for the exports of developing countries was considered an issue of highest priority for them. For the poorest countries, preferential access to the markets of developed and higher-income developing countries for all products, including processed products, and the binding of such preferences in order to encourage investment in the sector, were considered matters which required attention. One suggestion was that the exports of LDCs should be exempted from TRQs in those markets that applied them, or that LDCs and other developing countries should have first rights in the allocation of TRQs. It was also noted that market access was not by itself sufficient for some countries; technical and financial assistance was also needed to enhance their export capacity and thus take advantage of trading opportunities.
• Other matters considered of particular relevance regarding SDT included assisting developing countries to participate effectively in WTO dispute settlement procedures, the importance of longer transition periods, levelling the playing field in terms of the current imbalance in effective rights and obligations between developed and developing countries in a number of areas (e.g. use of export subsidies, ability to shift between product-specific and non-product-specific support without being effectively constrained by de minimis limits), and the binding of previously “best endeavour” commitments on technical assistance.

Analytical needs on SDT

The meeting recommended several types of analysis on SDT measures. One area of work would be to analyse more closely the effects of current forms of SDT to identify which countries benefited, where problems arose, and which forms were irrelevant or inadequate and therefore should be reconsidered. A fundamental issue revolved around which countries should be eligible for different types of SDT; thus analysis was needed on the various criteria that might be applied. Analysis of the specific measures discussed above was needed to understand fully their implications. For example, the idea of allowing developing countries to average their tariffs for basic food commodities over a period of time to deal with the impact of fluctuating world prices on their producers would require analysis with regard to the potential effects on tariff levels, domestic prices and production, and world prices and trade flows.

The Marrakesh Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries

The meeting noted that although the commitments in the Decision had technically been fulfilled, it had failed to adequately address the concerns of the food-importing developing countries. Several reasons for this failure were identified. First, the Decision did not adequately define the problem. It sought in essence to compensate countries for the “negative effects” of the reform programme, without defining what those negative effects were and thus leaving room for different interpretations. Furthermore, it was noted that the Decision did not assign the rights and responsibilities of various actors. The meeting identified four areas in which further work was required to make the Decision more concrete and binding:

• Defining the problem more precisely. In this regard the meeting generally agreed that the Decision was meant to address the expectation of higher food import bills as a result of lower domestic supports and export subsidies by the developed countries. Most of the experts agreed that the Decision should address the needs of countries to cope with variations in their capacity to import food;
• Identifying an automatic trigger mechanism. It was noted that the Decision required, in effect, proof of damage and causality stemming from the implementation of the reform process, which it was very difficult to establish given the multiplicity of factors that could affect agricultural trade flows and prices.[116] Several experts held the view that consideration should be given to an automatic trigger related to import unit costs “rather than spend three years debating the reasons for the 1995-96 international food price hike;”
• Specifying the responsibilities of the different parties (e.g. WTO, international financial institutions and exporting countries). In this regard, it was felt that analysis should be undertaken regarding whether the WTO could be given a more central role in the implementation of the Decision beyond the mere monitoring of compliance;
• Establishing an effective implementation mechanism. Some experts suggested that the establishment of a special revolving fund should be considered in order to provide assistance and/or compensation. Others suggested consideration of a type of insurance scheme that might be of mutual benefit to importers and exporters;

Other operational difficulties with the Decision were identified having to do with defining what commodities should be covered and what countries should be eligible for assistance. These were areas that required further analysis.

The meeting observed that some food-importing developing countries had encountered problems since the implementation of the AoA, including higher expenditures on food imports, pro-cyclical food aid shipments (food aid was abundant when world prices were low but shrunk when prices rose) and declining foreign aid flows. Ways of preventing the reduction of food aid during times of need required identification in the context of both the WTO and the Food Aid Convention.

4. Technical assistance requirements

The meeting observed that the new negotiations on agriculture had enhanced the needs of many developing countries for technical assistance. It noted that the AoA and the related Uruguay Round Agreements were still not well understood and that the complexity of the reporting requirements exceeded the institutional capacity of many developing countries. The meeting was reminded that about half of the current WTO Members had acceded to the WTO during or following the Uruguay Round and had not participated in the negotiations. Thus they had little experience with the Organization and no institutional memory of previous negotiations. The meeting agreed that these countries, in particular, needed practical assistance in the legal and analytical issues relating to the new negotiations.

The meeting urged the various international agencies to work more closely together in providing a coherent package of technical assistance, both to make more efficient use of their limited resources and to better meet the needs of the recipients. It recognized the enormous diversity of interests and needs among developing countries and urged agencies to consider this diversity in the formulation of their technical assistance activities. It agreed that the various agencies should give concrete guidance to donors regarding good practices for capacity building. While recalling the importance of a diversity of views, the meeting agreed that the agencies should coordinate their efforts in analysis and capacity building to avoid excessive duplication.

Bearing in mind a distinction between “hard” (operational and physical capacity building) and “soft” (e.g. informational, training and advisory work) technical assistance, the meeting discussed the following main areas for technical assistance:

• Improving developing countries’ knowledge of the trading system. The meeting observed that there was a continuing need for training in this area, particularly given the relative rapid turnover and inexperience on multilateral trade issues of the professional staff of the agriculture and foreign affairs ministries in many developing countries. It agreed that informational seminars and simulated negotiations were important training exercises, but stressed that capacity building involved much more than that. SPS and TBT issues were identified as particular areas where developing countries needed technical assistance;
• Formulating proposals for negotiations. The meeting observed that many developing countries needed assistance in formulating proposals for the negotiations, based on solid analysis of what would be in their own national interest. The meeting was reminded that providing more comprehensive assistance in policy formulation could not be done in a few days. It required a long-term commitment;
• Understanding the implications of proposals. The meeting agreed there was an ongoing need for analysis of the impact of existing agreements and of the implications of alternative proposals to facilitate the process of negotiations. Few developing countries had the capacity to conduct such analyses. It was noted that some of this type of assistance was being provided on the basis of the analytical work of FAO, UNCTAD, the World Bank, OECD and others. The meeting agreed that a more coordinated effort was needed. It was noted that the agencies should provide developing countries with the information and analysis they needed to evaluate for themselves the implications of alternative negotiating proposals;
• Improving export capacity. The meeting agreed that developing countries, particularly the LDCs, needed “hard” forms of assistance to improve the competitiveness and export capacity of their economies. For these countries, it was felt that trade liberalization and training would not be sufficient to address their complex development needs. The international agencies should combine their relevant expertise to assist countries in this area;
• Strengthening national institutions. It was noted that agricultural trade, however crucial, was only one part of any country’s development agenda. Furthermore, many issues of vital concern to the agricultural sector were of a cross-cutting nature, such as macroeconomic stability, effective legal institutions, adequate infrastructure, education, and technical training. Thus, there was a need also to focus on the broader issues of institutional capacity building. In this context, the meeting agreed that agencies should help to promote better co-ordination among the Ministries of agriculture, industry, trade and finance of developing countries to ensure that a balance of interests was represented in country positions and that the trade agenda was part of a comprehensive development framework.