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2. Developing country concerns in the post Uruguay Round period

The UR was a milestone in bringing agricultural trade closer to the disciplines of the GATT. All tariffs were bound and rules were developed to govern agricultural trade policies, and quantitative limits were placed on various subsidies. Notwithstanding this achievement, it is also widely held that the immediate trade impact of the disciplines has been minimal, although it is next to impossible to verify this on an ex post basis (OECD 2001; Diaz-Bonilla et. al., 2001). One major reason for this is that the quantitative limits were set too high for these to be binding on actual policies. This has been the case with domestic and export subsidies, while tariffs on many major commodities were bound at high levels. It is for these reasons that the ongoing round of negotiations is critical for genuine trade reforms that benefit low-cost, non-subsidizing countries.

Although developing countries are not a homogenous group, they share some common features. One is that they provide few trade-distorting subsidies and so would stand to gain from reductions in trade distortions. They are also natural low-cost producers of farm products. Not surprisingly, they have participated intensely during this round of negotiations, and on the whole have called for sharp reductions or even elimination of trade-distorting domestic and export subsidies, as well as improved market access terms.

The international community also feels the challenge. The community has not only expressed concerns over the distribution of gains from farm trade but has also made strong statements calling for measures that ensure that the developing countries gain significantly from trade, especially agricultural trade, in the new round. There are compelling reasons for developing countries to develop their agriculture. Development history shows that very few of the current developed countries reached that status without developing the agricultural sector. The development of this sector is also essential in order to reduce poverty and food insecurity and thus to meet the millennium goals. This would require not only the elimination of present imbalances and inequities in the trade rules but also some effective proactive provisions in favour of these countries. The current Doha Round is called a "development" round, and it is important to ensure that it is truly so.

Improving market access terms is the key objective for all developing countries. The post-UR tariff profile of many developed countries in particular is characterized by relatively high tariffs on temperate-zone food products and lower rates on tropical products. In the UR, tariffs on the former products were cut only modestly compared with the latter products.[61] Developing countries also produce and many also export temperate-zone products. These are also the products where markets are still expanding. Bound tariffs are also high in many developing country markets which will affect negatively other developing countries as intra-developing country trade is high and growing. Many developing countries rely on a narrow range of primary products and so it is critical for them to diversify towards processed exports. This requires inter alia sharp reductions in tariff escalations, the phenomenon whereby tariffs on processed products rise as the degree of processing increases. The UR did not reduce tariffs significantly (Lindland, 1977; OECD, 1997). There are also many issues relating to Tariff Rate Quotas (TRQs) including access to quotas and rules of administration. Last but not least, tariffs have to be simplified as the UR reforms left many complex tariffs, especially in several developed countries.

Despite these common interests, it is also useful to note that in some areas developing country interests are not so similar. In WTO, some country groups were defined formally (e.g. Net Food Importing Developing Countries, NFIDCs) while in other cases alliances developed sharing common interests (e.g. the Cairns Group, Friends of multi-functionality, Small Island Developing States (SIDS) etc.). The NFIDCs, for example, are concerned about the possibility of negative effects in terms of the access to food in global markets on reasonable terms following trade liberalization. Several others are concerned about deteriorations in market access terms and loss of export earnings as MFN (most-favoured nation) tariffs are reduced in preference-giving countries. Loss of tariff revenue, following tariff reductions, is also a common concern for many.

For all these reasons, there is much at stake for these countries in the Doha Round. This is called a "development" round and so it is important that developing country concerns are fully taken into account and that they stand to gain from further reforms. Hopes are pinned in the Harbinson modalities. As the modalities are being debated in order to reach a negotiated agreement, questions are asked whether this package satisfies the "development" criterion. It is not straightforward to answer those questions, for both technical and other reasons. For one thing, the package includes many trade policy instruments and it is often not a simple task to quantify their impacts as there are important interactions among them. It is for this reason that models are essential for such an assessment. Model results are often criticized for not being accurate to the extent desired, but they have been very useful and there is no alternative.

[61] See Table III.2 in WTO (1999) for reduction rates. Some of the reduction rates could be misleading. For example, tariffs on tropical products were reduced the most but from a very low base (e.g. 5 - 10 percent). The effect on trade would be much less than, say, 26 percent reduction from a very high base.

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