Synthesis of the Findings of 23 Country Case Studies^[3]

1 Introduction

1.1 Context

As mandated under Article 20 of the Uruguay Round (UR) Agreement on Agriculture (AoA), negotiations to continue the reform process designed to achieve the long-term objective of substantial progressive reductions in agricultural support and protection resulting in fundamental reform began in early 2000. These negotiations take into account the experience of implementing the reduction commitments under the AoA; the effects of these commitments on world trade in agriculture; non-trade concerns; special and differential treatment to developing country members of the World Trade Organization (WTO) and the objective to establish a fair and market-oriented trading system and other objectives mentioned in the Agreement’s preamble; and further commitments necessary to achieve the Agreement’s objectives.

The Doha Declaration sets a time frame in which virtually all the linked negotiations, including agriculture, are to end by 1 January 2005. Modalities for a revised AoA should be agreed by March 2003 with a view to participants submitting comprehensive draft Schedules based on these modalities no later than the date of the Fifth WTO Ministerial Conference in September 2003. The Declaration also confirms that special and differential treatment for developing countries should be integral to the negotiations, both in countries’ new commitments and in any relevant new or revised rules and disciplines. It further states that the outcome should be effective in practice and should enable developing countries to meet their needs, in particular in food security and rural development.

Developing country participation in these negotiations should be grounded in an analytical and empirical understanding of the effects of the Agreement to date. FAO initiated a major exercise in 1999 to evaluate the experience with the implementation of the AoA in developing countries. Fourteen country case studies were commissioned, and an overview paper synthesizing these experiences and the lessons to be learned was prepared (FAO, 2000). FAO has now updated this exercise, drawing on a wider set of countries and more recent data. Sixteen country case studies were commissioned in the summer of 2002 to review national experiences. In some cases, the case studies revisited countries included in the 1999 sample, but the opportunity was also taken to widen the sample by including additional countries. This synthesis chapter draws on the countries included in both sets of studies - 23 in all - to develop a synthesis of their experiences. However, the emphasis in the textual commentary is on the second set of 16 case studies completed in 2002. References to the experiences of individual countries in this synthesis chapter are based on the individual case studies unless otherwise stated.

1.2 Country sample

The selection of the 23 countries was based on a number of considerations, such as broad geographical balance, the need to include different categories of countries such as least-developed countries, net food-importing countries and agricultural exporters, and availability of national consultants to complete the studies by a specified deadline. Table 1 lists the countries included in the exercise and on whose experience this synthesis chapter draws.^[4]

Agriculture plays an important role in the economies of all the countries covered, as can be seen from Table 2. For all countries in the sample, agriculture contributes on average 20 percent of GDP, ranging from 4 percent in Botswana to 44 percent in Uganda. Agriculture remains much more important as a source of livelihoods accounting on average for 46 percent of total employment in the sample, ranging from 17 percent in Brazil to 80 percent in Uganda. Agriculture contributes on average just under 30 percent of all earnings from merchandise good exports for countries in the sample, with a range from under 3 percent in Bangladesh to 76 percent in Malawi.

Table 1. Sample countries included in this study

Notes: LDC: least-developed country, as recognized by the UN; LIFDC: lowincome food-deficit country, defined by FAO as those countries with a GNP per capita less than $1 445 (2000) and which are net importers of food defined on a calorie basis; NFIDC: net food-importing developing country, as defined by the WTO Committee on Agriculture.

^a World Bank classification, World Development Indicators CD-ROM 2002.

^b See FAO (2000).

Table 2. Role of agriculture in the sample countries

Source: FAOSTAT; and World Development Indicators CD-ROM 2002.

1.3 Objectives of the study

This synthesis chapter and the accompanying case studies set out to provide answers to four questions concerning the impact of the AoA on developing countries:

• Have the AoA commitments led to changes in domestic agricultural policy in developing countries, and if so, what has been the nature of those changes? If not, why were the commitments not binding? How much flexibility do developing countries currently have under the current Agreement? What are the sensitive areas for individual countries in the current negotiations? Note that the case studies cover not just the commitments under the AoA but also those relating to the Agreement on Sanitary and Phytosanitary Standards (the Sanitary and Phytosanitary [SPS] Agreement) as well as rights and obligations under Article 27(3) of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) covering plant varieties protection.

• Did the AoA commitments have an impact on trade flows (imports and exports) of developing countries? To the extent that in answer to the first question the consultants find that the AoA has had a limited impact on policy implementation in developing countries to date, it follows that the impact on import flows will also be limited. However, it is interesting to analyse the experience of the case study countries with respect to food imports to identify sensitive issues. Have there been import surges in particular commodities, and how have countries dealt with these? Have developing countries faced problems with dumped or subsidized imports? What about import price volatility? It is also important to look for evidence of improved market access opportunities, which were the quid pro quo for the commitments entered into by developing countries. Have developing countries been successful in increasing traditional agricultural exports or in diversifying into either new markets or new product lines as a result of the Agreement? What has their experience been with SPS barriers and the implementation of the SPS Agreement? Some cases studies also seek evidence on the relationship between more open agricultural trade policies and foreign investment flows into the agrifood sector, but not enough case studies address this issue to be able to draw any generalizations on this subject.

• Have the AoA commitments had an impact on food security? If so, were these impacts positive or negative? If the impact on trade flows to date has been limited, so will be the impacts on food security. The case studies investigate this issue from a number of angles. Trends in per capita dietary intake and in the incidence of undernourishment provide some initial insights into the food security situation at household level. However, these indicators are influenced by a wide range of factors, of which the AoA, and even the UR Agreements (URA) as a whole, are just one. Many of the case studies investigate particular channels through which the AoA might have impacted on food security, including changing self-sufficiency ratios and the capacity to pay for food imports; trends in relative food prices; or identifying those farm groups which have been able to take advantage of improved export opportunities or which have faced additional import competition. While, in the space available, this was inevitably a broad-brush approach, the case studies do provide useful insights into the AoA impact on food security to date.^[5]

• Finally, each of the case studies identifies key negotiating issues and demands of the individual countries, which, together, reflect the range of negotiating positions currently proposed by developing countries. The purpose of this section is to highlight the priorities and main concerns of the case study countries in the negotiations. In some cases, the case studies identified particular areas where technical assistance would be useful, as regards both analysis and policy formulation, as developing countries seek to adapt policy to the new trading rules.

1.4 Methodological approach

Assessing the impact of the AoA, or indeed any trade liberalization agreement, faces a particular methodological problem. While a simple comparison of trends (whether in agricultural trade flows or food security indicators) before and after implementation of the Agreement is the most obvious approach to assessment, it runs into the difficulty that many other factors may be at work influencing these trends, and it may be very difficult to isolate the influence of the Agreement alone. Methodologically, there are a number of ways to circumvent this problem.

Simulation modelling using country models is one possible approach.^[6] A simulation model purports to be a realistic representation of the structure and behaviour of a country’s agricultural sector. By using the model to simulate the impact of implementing the policy changes agreed under the AoA, it is possible to estimate their impact while holding all other factors constant. While conceptually this is an attractive approach, the outcome of model simulations is heavily determined by their built-in assumptions on economic behaviour. Another drawback of country models is that they are often too aggregative to capture the detail of tariff line negotiations.

Another approach is to use cross-sectional statistical analysis to examine the average relationship between trade liberalization, agricultural activity and food security. In a properly specified statistical model, it is possible to control for other factors in a way which allows the underlying relationship between these variables to be identified. The accuracy of the results will depend on whether the assumptions behind the statistical model are valid or not, and specification and data issues are often not easy to resolve.

A third approach used in this study is to rely on case studies to throw light on the impact of the Agreement. The case study approach has the advantages that it allows issues to be examined in their specific context, it is disaggregated, and it makes use of the detailed country-specific knowledge of the individual consultants who prepare the case studies. However, the case study approach also has its limitations of which it is important to be aware when reading this synthesis chapter. First, it is important to choose a representative sample of case studies; many arguments drawn from case studies are based on just one or two wellchosen examples. Second, despite common terms of reference in broad terms, the details of each case study are inevitably different. Not all case studies allow answers to some of the questions raised above. The fact that problems with dumped imports are not discussed in a case study, for example, does not necessarily mean that the problem did not arise. Third, the conclusions drawn from a case study depend on the analyst and the data basis chosen for the analysis. Despite these caveats, however, the case study approach allows the questions raised earlier on the AoA impact to be discussed in great detail and with a richness that is not possible with either the simulation modelling or statistical approaches.

This chapter follows closely the layout and structure of the corresponding chapter in the FAO 2000 volume and is organized as follows. Section 2 summarizes the national experiences in implementing the main provisions of the AoA and country commitments, notably with respect to market access, domestic support measures and export subsidies. It also deals briefly with experiences related to the SPS and TRIPS Agreements. Section 3 reviews the experience of the sample countries with food and agricultural trade before and after implementation of the AoA. Section 4 looks at trends in food security and undernutrition during the AoA implementation period. Finally, Section 5 draws some general conclusions from the discussion on the specific interests and concerns of each of the case study countries in the context of the current Doha Round trade negotiations in agriculture.