COMMITTEE ON COMMODITY PROBLEMS
Rome, 30 January - 2 February 2001
REVIEW OF REPORTING
1. In its review of the follow-up to Conference Resolution 2/79 at its last session, the Committee noted that this Resolution "had been passed twenty years ago." The Secretariat was asked "to review its reporting activities on this Resolution in light of the Uruguay Round Agreements and other developments since 1979" (paragraph 10 of document CL 116/6). A number of suggestions were made for further information to be provided in future Secretariat reports on protectionism, including "more precise indicators of the levels of protectionism in non-OECD countries drawing on existing sources."
2. The preamble of Conference Resolution 2/79 (Annex I) refers to preceding Conferences and Resolutions on similar topics, particularly the World Conference on Agrarian Reform and Rural Development, various UNCTAD meetings and resolutions on the Integrated Programme for Commodities, and to the Tokyo Round of Multilateral Trade Negotiations (MTNs). Running throughout the preamble is the concern at the extent of protectionism in agriculture and the impact this was having on the developing countries.
3. There are 10 operative paragraphs to the Resolution. The first three call for action to halt the growth of agricultural protectionism and to improve market access for the developing countries. Paragraph 4 enjoins the CCP to (i) assess the impact of the Tokyo Round of MTNs; (ii) review developments in protectionism and (iii) examine ways of expanding trade among developing countries. Paragraph 5 refers to the Guidelines for International Agricultural Adjustment. Paragraph 6 refers to the Common Fund for Commodities. Paragraph 7 calls on FAO to give support to help UNCTAD expedite the Integrated Programme for Commodities "particularly the conclusion of International Commodity Agreements" (ICAs) whereas paragraphs 8 and 9 refer to bringing into force the ICAs on sugar and rubber. Paragraph 10 calls on the Director-General to present a report on this Resolution to the next (53rd) session of the CCP.
4. From this brief summary it is clear that certain of these operative paragraphs are no longer topical. Paragraph 4(i) on the Tokyo Round is dated, although reporting on the Uruguay Round Agreements and the current round of MTNs is covered by the CCP under another agenda item. Paragraphs 5 and 6 are monitored in other ways; i.e. reporting the Guidelines for International Agricultural Adjustment is reviewed by Conference, currently every four years, and reporting on activities of the Common Fund is covered under another agenda item by the CCP. Paragraphs 8, 9 and 10 are clearly dated, referring to action taken in the early 1980s.
5. What remains of topical concern and of relevance to this agenda item therefore are three subjects: agricultural protectionism (operative paragraphs 1, 2, 3, and 4(ii)); promoting trade among developing countries (paragraphs 4(iii)); and ICAs (paragraph 7). These issues are reviewed below to determine whether reporting on them needs to be modified to take into account developments since 1979. Section II reviews the developments in agricultural protectionism since 1979, extending as possible the coverage to non-OECD countries. It also reviews how the Uruguay Round has influenced reporting on this issue. Section III discusses developments in agricultural trade among developing countries and the extent that new trading arrangements have altered the type of reporting that is required. Section IV reviews developments in agricultural ICAs, discussing separately the role of "economic clauses" from the other functions of such Agreements. Section V draws some conclusions and makes some draft recommendations for the CCP's review and decision.
6. A number of related measures may be used to monitor support and protection to agriculture. The Producer Support Estimate (PSE)1 expresses the sum of transfers from consumers and taxpayers to farmers, whether the support is provided via prices or other transfers. This measure is available only for the period 1986-1998; therefore the previous indicator, Producer Subsidy Equivalent2 (hereafter referred to as `PSE-old') is used for the period from 1979 until 1986. Due to the different coverage of countries and commodities, the two time series are not strictly comparable; however, they indicate general trends in agricultural support and protection in OECD countries. Both measures are reported here for 1986-88. Data are reported for two groups of countries, i.e. the OECD-24 and the rest of the world. For reasons of data comparability, the five most recent members of the OECD are included in the rest of the world: Czech Republic, Hungary, Republic of Korea, Mexico and Poland.
7. The PSE (new and old) is expressed in terms of current prices and exchange rates. With a few exceptions, the PSE is a nominal measure, excluding the effect on protection of support given to other sectors of the economy. Moreover, it is an "objective" measure including all transfers, whether significantly trade distorting or not. As a result of these special features the PSE has three characteristics worthy of note: (a) the same level of PSE can have different effects on trade depending on the type of support given; (b) the level of the PSE tends to fluctuate from year to year depending on commodity prices and exchange rates; (c) the PSE can be misleading when there are large biases in the domestic terms of trade between agriculture and other sectors - for example, an apparently positive level of support to agriculture via input subsidies may actually only offset the effects of a highly protected domestic inputs industry, as is often the case for developing countries.
8. During the Uruguay Round negotiations on domestic support these three factors were recognized. First, total support was divided into different "boxes" according to the degree of trade distortion associated with particular policies. Green Box box policies are those that are considered to be minimally trade distorting. Blue Box policies include direct supports provided to agriculture under supply restricting conditions. Amber Box policies are considered trade distorting and are subject to disciplines under the terms of the Agreement on Agriculture. Amber Box policies are quantified using the Aggregate Measurement of Support (AMS). Secondly, the AMS was isolated from changes in world prices and exchange rates by the use of a fixed external reference price. Thirdly developing countries were allowed, under certain conditions, to exempt the use of input subsidies as a means of addressing sectoral biases against agriculture. Thus, while the AMS is a much narrower concept than the PSE, it provides a more accurate indicator of the trade-distorting effects of domestic support policies. An additional important difference between the AMS and the PSE that should be noted is that the AMS does not include the effects of border measures, thus it measures trade-distorting support but not protection to agriculture.
9. Total support and protection to agriculture in the OECD-24 as measured by the PSE-old (table 1) doubled from the period 1979-81 to 1986-88 from almost US$74 billion to over US$156 billion. Measured by the new PSE, support rose from US$212 billion in 1986-88 to US$244 billion in 1990-92. Support declined on average for the period 1996-98 to US$230 billion, but peaked in 1999 at $252 billion. The increase in 1999 reflects the effects of low world prices for many commodities in the calculation of the PSE as well as an expansion of government payments to agriculture in several OECD countries.
10. For the OECD-24, the average PSE-old measured as a percentage of the value of total gross farm receipts (i.e. value of total production at farm gate prices plus budgetary support) increased from 30 percent in 1979-81 to 48 percent in 1986-88 (table 2). The average percentage PSE (new) decreased from 40 percent 1986-88 to 33 percent 1996-98 before rising again in 1999 to 40 percent. The percentage PSE followed a similar pattern in most of the individual OECD countries: rising to peak levels in the late 1980s, declining between 1986-88 and 1996-98, but rising again in 1999. The percentage PSE varies widely among the OECD-24, ranging from less than 10 percent in Australia and especially New Zealand to well over 50 percent in several European countries and Japan.
11. Levels of support and protection in the OECD countries vary widely by commodity (Table 3). On average, the percentage PSE for all commodities fell from 41 percent in 1986-88 to 33 percent in 1996-98, but rose again in 1999 to 40 percent. Rice receives the highest level of support and protection which has changed little over the decade, falling from 81 percent in 1986-88 to 74 percent in 1996-98 before returning to 81 percent in 1999. Other high percentage PSEs are found in milk, sugar, wheat and other grains, all ranging between 48 and 57 percent in 1999, near or exceeding their 1986-88 levels. Relatively low levels of support and protection are found in poultry, eggs and wool, with percentage PSEs between 6 and 14 percent.
12. Analysis of support and protection in countries other than the OECD-24 is faced with two severe challenges: the limited availability of data and inconsistencies within the available data. OECD data are available over the period 1986-99 for its five most recent members (Czech Republic, Hungary, Republic of Korea, Mexico and Poland), as well as for some non-OECD countries over the period 1986-1997 (Estonia, Latvia, Lithuania, Slovakia and the area of the former USSR). For other countries, estimates of support and protection are limited and somewhat dated. Use is made here of selected USDA PSE-old estimates from 1983-85 to 1989-91, which are of only limited coverage. More recent PSE estimates for these countries are not available.
13. In many of the countries for which OECD data are available (tables 4 and 5) support to agriculture has fluctuated strongly over the past decade as a result of the reform process towards a market economy and pronounced swings in the exchange rate (with the exceptions of Mexico and the Republic of Korea). Broadly speaking, support in these countries went down during the late 1980s, reached its lowest point in the early- to mid-1990s, when in some countries protection became nominal or even negative. Most striking is the case of Lithuania, where the average percentage PSE exceeded 86 percent in 1986-88, while four years later the average was minus 100 percent. Since then, support increased in Estonia, Latvia and Lithuania, while it generally decreased in the Czech Republic, Hungary and Slovakia. Like the OECD-24 countries, support is estimated to have increased in 1999 for the new OECD members, ranging from 20 percent in Hungary to 75 percent in the Republic of Korea.
14. The USDA data for selected developing countries show a wide range of support and protection both across countries and over time, with a number of countries taxing rather than supporting their agricultural sector (table 6). During the period 1986-88, average support in the countries for which USDA estimates are available ranged from highs of 64 percent and 71 percent respectively in Senegal and Venezuela to a low of -108 percent in Zambia. By 1989-1991, average support had fallen even further in Zambia to -242 percent and had turned sharply negative for Argentina (-47 percent) and India (-44 percent) as well. More recent data are not available, but the sweeping economic reforms undertaken by many developing countries during the period since these estimates were made suggest that current levels of support (or taxation) to agriculture are likely to bear little resemblance to these outdated estimates.
15. Since 1995, with the implementation of the Uruguay Round Agreement on Agriculture, notifications on the Aggregate Measurement of Support (AMS) provide another tool to monitor support to agriculture. Of the 137 members of the WTO, 28 have Total AMS reduction commitments. Of these 11 are non-OECD countries. Table 7 shows the AMS commitments and current levels for these countries since 1995, from which two main conclusions can be drawn. First, the figures indicate that current AMS levels were well within commitment levels. Second, the majority of countries show a decrease in current AMS (in local currency). Exceptions to this trend include Israel and South Africa, which provided higher support in 1997 than in 1995-1996 (in US dollars).
16. Agricultural trade among developing countries (table 8) has increased almost 7 percent per annum since 1980, from US$27 billion to US$84 billion. This growth accelerated in the 1990s, to 10.5 percent per annum, with trade among developing countries growing faster than their trade with the rest of the world and faster than global trade. Agricultural exports from developing countries to developed countries increased on average 3 percent per annum during the 1980s and more than 6 percent per annum during 1990-97. Exports from developed to developing countries grew almost 2 percent per annum during the 1980s and almost 6 percent per annum in the 1990s.
17. Intra-regional agricultural trade in Latin America increased on average by 4 percent per annum during the 1980s, to almost US$4.9 billion in 1990. Following the formation of the Mercado Commún del Sur (Mercosur) and other trade liberalization initiatives in the region, this trade grew on average by almost 14 percent per annum, to more than US$12 billion in 1997. The share of intra-regional trade in Latin American total agricultural exports increased from 13 percent in 1990 to more than 18 percent in 1997.
18. In South/East Asia, intra-regional agricultural trade increased almost 5 percent per annum during the 1980s to US$19 billion, and almost 11 percent per annum thereafter, to US$39.5 billion. This trade accounts for almost half of global agricultural trade among developing countries, and intra-regional trade accounts for about 45 percent of South/East Asian total agricultural exports. Trade flows among the countries of West Asia are considerably smaller but have show equally impressive growth rates, expanding 5.5 percent in the 1980s and more than 12 percent per annum since then to $4.3 billion.
19. Intra-regional agricultural trade in Africa grew on average almost 6 percent per annum during the 1980s but, in contrast with other regions, this growth slowed in the 1990s to only a little more than 3 percent per annum to reach $US1.9 billion by 1997. African agricultural exports to other developing regions increased faster than intra-African trade in the 1990s (12 percent to Latin America, 5 percent to West Asia, and 8.5 percent to South/East Asia), to US$3.6 billion in 1997. Among developing countries, the largest markets for African agricultural exports are in South/East Asia.
20. Regional Trading Agreements (RTAs) have proliferated in the 1980s and 1990s in all parts of the globe, involving countries at all levels of economic development. Overall, more than 200 RTAs have been notified to the GATT or WTO over time. Currently (September 2000) over 130 agreements are in force, for which the Committee on Regional Trade Agreements of the WTO has the task of monitoring developments. Several RTAs exist outside the WTO framework as well.
21. Major RTAs in developing areas that have an important agricultural component include Mercosur (1991), as noted above, and the Andean Group (1969) in Latin America; SADC (1992) in Southern Africa and ASEAN (1967) in Southeast Asia. A recent FAO paper regarding the impact of RTAs in Latin America3 shows the steady increase of total trade and of the agricultural trade in the share of intra-regional commerce in Latin America. For example, from 1994 to 1997 total exports from Mercosur increased at an annual rate of 9.3 percent, while intra-group trade increased at 17.6 percent during the same period. In 1996, Mercosur's intra-group share of agricultural exports in total exports represented 27 percent, up from 24 percent in 1993. The paper concludes that the implementation of regional trade agreements has fostered agricultural trade in the Latin American region.
22. The 1970s were marked by considerable financial and economic turmoil, and international agricultural prices fluctuated widely. ICAs were negotiated as a way of reconciling exporter and importer interests: i.e. greater assurance of sustainable supplies in return for stable and remunerative prices to exporters. By 1979, negotiations under the UNCTAD's Integrated Programme for Commodities and under the auspices of the GATT, had produced agricultural ICAs for grains, dairy products, beef, olive oil, sugar, coffee, cocoa, jute and rubber. By 2000, however, the arrangements on dairy products and meat had been terminated while those on jute and rubber were in the process of being closed, and none of the remaining agreements had "economic clauses" (i.e. market management functions). Yet many of the problems that affected these commodities in the 1970s continue - fluctuating prices, occasional fears over the sustainability of supplies, together with generally depressed level of prices in most recent years, and the continuing reliance of many millions of farmers around the world on these commodities.
23. The overall objective of agricultural ICAs - to achieve a balanced growth of supply and demand - embodies a number of subsidiary objectives such as reducing price instability, dealing with structural imbalances, fostering growth of consumption, raising productivity and boosting export earnings. The agreements often have other more commodity specific objectives, e.g. on labour standards and food security, and they all provide a forum for discussion of issues and exchange of information. Although market management was not a principal feature of most agricultural ICAs, it did play an important role in some agreements, and the perceived failure of market management under international auspices has damaged the general atmosphere concerning ICAs. Market management activities were essential components of the various agreements on rubber, cocoa, coffee and sugar, the first two relying on stocks to stabilize prices (although the 1993 Cocoa Agreement also included production controls) while the coffee agreements relied mainly on export quotas and the sugar agreements used both stocks and export quotas.
24. Throughout most of the 20 years during which the International Rubber Agreements (INRAs) were in effect, prices were kept within the specified limits, the floor being better defended than the ceiling. The price level was set wide enough to allow normal commercial stock holding to take place and, under the first INRA, the sales and purchases were made at a profit.4 There were, however, difficulties over exchange rate movements, with the prices set in currencies that fluctuated against those of the main importers of natural rubber. The International Cocoa Agreements (ICCAs) were moderately successful in maintaining prices within the specified range, despite entering into force on a falling market without the largest producer and largest consumer being members. Intervention under the 1986 ICCA foundered on the lack of agreement to lower the price range in the face of structural over-supply in the market and a lack of finance to accumulate further stocks. The "economic clauses" lapsed in 1988, and the 1993 ICCA has no price ranges specified. The International Coffee Agreements relied from 1980 on export quotas to keep prices within agreed limits. Prices were held within the limits for all but a short period in the early 1980s, but the drought in Brazil in 1985/86 led to the suspension of controls in February 1986. They were reintroduced again for a short period before being suspended in 1989. Studies showed that the working of the Coffee Agreements stabilized prices and raised export earnings for some exporters5, but that certain problems arose due to the change in consumer preferences, oversales to non-member countries and among producers over quota shares6. Market management measures were hampered in the International Sugar Agreements by the lack of participation of one of the largest producing countries, and the programme ended in 1983.
25. While there had been broad agreements until the end of the 1970s in favour of ICAs with market management functions, this consensus subsequently disappeared. Three main problems have been identified.7 First, several ICAs tried to stabilize prices in a period when most agricultural commodity prices were falling. Secondly exporting countries and importing countries held different views over the price range including the extent to which target prices should reflect quality differentials. Thirdly, the governments of some of the (often larger) importing developed countries no longer support the concept of the regulation of international commodity markets.
26. Despite the termination of direct market management functions, the objectives of the remaining ICAs and other international arrangements affecting commodity markets have not really changed - to promote balanced growth of the commodity sector - but currently more emphasis is placed on methods other than market intervention8. These functions are several. First ICAs stress the importance of exchanging views, generating information and developing data systems and undertaking analyses of the market situation and outlook. Second, they provide a forum for discussions of policy issues. Third they engage in commodity development activities, most of them having become International Commodity Bodies for sponsoring projects to the Common Fund for Commodities. Fourth some of them have specialized functions such as the Food Aid Convention, which is linked to the International Grains Agreement.
27. What then is the outlook for ICAs and what reporting needs to be undertaken in connection with Conference Resolution 2/79? First it is clear that many of the objective problems that prompted negotiations on ICAs in the past remain; e.g. price instability (both short-term and multi-year cycles) and fears over the sustainability of production. This means that countries will continue to seek solutions that may or may not involve ICAs. There is great interest at the moment in risk management instruments for dealing with these problems. Simultaneously, negotiations at the WTO are looking at a combination of freer trade and safeguards (mainly for importers) to reduce the incidence of price instability. Moreover, countries have used and continue to examine compensatory financing schemes to attenuate the macro-economic impact of commodity price instability.
28. Consequently, as price instability remains a feature of world agricultural markets, policies and methods to deal with price instability, including ICAs, would seem to require monitoring. The other aspects of ICA activities - supply and demand promotion and efforts to improve transparency - are of considerable value to commodity sectors, both consumers and producers, and will presumably continue to be the subject of international efforts that can be reported on when innovative developments and those of wider concern to other commodity sectors take place.
29. The above review of the reporting on Conference Resolution 2/79 indicates that while several of the operative paragraphs of that Resolution are no longer of current interest or are reported on in other ways, there are three parts still of concern - the extent of protectionism in agriculture, agricultural trade among developing countries and ICAs and other international arrangements affecting commodity markets. The CCP may accordingly wish to decide whether reporting on follow-up to Conference Resolution 2/79 should continue but concentrate only on these three issues.
30. The extent of support and protection given to agriculture, despite years of policy reform, is still large, especially in a number of developed countries. Extensive reporting on support and protection to agriculture in developed countries is provided by the OECD. Information on levels of support in the developing countries is scarce, however, and the evidence that exists is less clear cut. Some information on support to agriculture is provided by the WTO for those countries that have AMS reduction commitments.
31. Agricultural trade among developing countries rose sharply during the 1990s, faster than global agricultural trade and faster than their agricultural trade with the rest of the world. Of considerable importance to the future will be the expansion of trade among members of regional trading arrangements.
32. Since 1979, the number of ICAs in agriculture has declined and there are none remaining with operative "economic clauses". Yet the problems that led to the negotiation of such agreements are still significant and policies to tackle the causes and effects of market instability are still being developed. It is therefore still relevant to review international policy action to tackle agricultural commodity problems including through ICAs.
33. The CCP may accordingly wish to decide whether reporting on follow-up to Conference Resolution 2/79 should continue but concentrate only on agricultural protectionism, agricultural trade among developing countries and international commodity agreements and arrangements. The CCP may also wish to take this occasion to review the particular monitoring needs of dairy, meat, jute and rubber following the demise of the international arrangements on these commodities.
Table 1: Support to Agriculture by country in million US$ in selected OECD-24 (1979-1998)
Producer Subsidy Equivalent (PSE-old)
Producer Support Estimate (PSE)
|Australia||766||1 948||1 286||945||1 380||1 269||1 375||1 216|
|Canada||2 997||4 333||6 312||5 641||6 657||3 913||3 405||3 903|
|EC-15||25 205**||48 966**||54 418***||99 619||130 472||123 130||114 300||114 450|
|Japan||17 966||20 733||35 499||52 073||51 878||66 458||55 239||58 885|
|New Zealand||615||1 903||516||478||108||98||103||91|
|Norway||1 663*||2 406||2 771||3 417||2 850||2 710||2 695|
|Switzerland||2 529*||4 401||4 998||5 830||5 798||5 327||4 902|
|Turkey||-||-||-||3 686||9 213||6 152||10 262||11 935|
|United States||17 204||28 610||43 205||41 428||35 178||31 155||36 279||54 009|
|TOTAL OECD-24||73 886||115 481||156 501||211 835||244 343||240 971||229 140||252 249|
* Average 1979-1985
Table 2: Support to Agriculture by country in percentage PSE in OECD-24 (1979-1999)
Producer Subsidy Equivalent (PSE-old)
Producer Support Estimate (PSE)
* Average 1979-1985
Table 3: Support to Agriculture by commodity in percentage PSE in OECD-29 (1979-1999)
Producer Support Estimate (PSE)
|Sugar (refined equivalent)||46||50||50||39||56|
|Beef and veal||-||28||30||31||32|
* 1979-85 period includes OECD-24 countries.
Table 4: Percentage PSE in new OECD and non-OECD countries (1986-1999)
|Republic of Korea||71||76||76||65||75|
|Area of Former USSR||95||12||-2||29*||-|
Table 5: Total support (PSE) in million US dollars in new OECD members
|Czech Republic||4 595||2 986||884||592||919|
|Hungary||3 015||1 205||1 067||585||898|
|Republic of Korea||12 264||20 266||23 200||19 724||19 023|
|Mexico||1 383||9 003||6 945||3 707||5 695|
|Poland||3 947||420||2 633||3 916||3 296|
Table 6: Percentage PSE in selected developing countries (1983-1991)
|China, Taiwan Province||23.0*||25.1||28.0|
Table 7: Aggregate Measurement of Support in million US dollars (committed and current; 1995-97)
|Total AMS commitment level||Current total AMS||Total AMS commitment level||Current total AMS||Total AMS commitment level||Current total AMS||Base period AMS as percent of total agricultural GDP|
|Brazil||1 039||874||1 025||363||1 010||307||5.9|
|Venezuela||1 287||542||1 270||331||1 252||n.a.||36.3|
(Data on Cyprus, Morocco, Slovakia, Slovenia, South Africa, Thailand and Tunisia converted into US dollars, using International Finance Statistics, IMF, June 2000).
Table 8: Intra-regional and interregional agricultural trade* 1980/1990/1997 (in million US$)
|Year||Developed countries||Developing countries, total||Latin America, developing||Africa, developing||West Asia, developing||South/East Asia, developing|
|Developed countries||1980||129 028||46 727||10 834||10 973||8 084||15 248|
|1990||220 000||55 493||10 401||10 172||7 693||24 083|
|1997||270 046||82 275||18 078||11 626||11 409||38 544|
|Developing countries, total||1980||51 504||27 364||3 978||3 287||5 264||14 175|
|1990||68 458||41 648||5 739||4 955||7 426||22 992|
|1997||105 442||83 947||13 626||6 173||13 857||48 990|
|Latin America, developing||1980||20 926||6 967||3 333||969||1 204||1 269|
|1990||27 325||11 128||4 883||1 554||2 201||2 248|
|1997||43 378||22 894||12 085||1 857||2 556||6 243|
|Africa, developing||1980||9 682||2 139||106||881||443||541|
|1990||10 112||3 645||135||1 515||840||1 103|
|1997||13 295||5 471||300||1 901||1 173||1 959|
|West Asia, developing||1980||1 468||1 499||12||137||1 145||208|
|1990||2 856||2 586||40||333||1 944||230|
|1997||4 043||5 912||88||446||4 300||1 013|
|South/East Asia, developing||1980||17 702||16 259||486||1 165||2 370||12 062|
|1990||27 042||23 833||669||1 409||2 343||19 357|
|1997||42 975||48 527||903||1 935||5 805||39 498|
*Agricultural Trade defined as: all food items + agricultural raw materials (i.e. SITC 0+1+2 (except 27 and 28) +4).
Resolution 2/79 of the FAO Conference
COMMODITY TRADE, PROTECTIONISM AND AGRICULTURAL ADJUSTMENT
Recalling the Conference Resolution 7/75 on the Commodity Market, which, inter alia, recommended that developed countries take appropriate measures aiming at effective access to their markets for imports from developing countries,
Recalling further that the World Conference on Agrarian Reform, and Rural Development stressed that a New International Economic Order9, designed to bring about the equitable participation of the developing countries in world economic activity, is essential to the success of national efforts to attain rural development, and accordingly recommended measures concerning international trade,
Noting the Resolution 131 (V) and 124 (V) on Protectionism and Structural Adjustment and on Intergrated Programme for Commodities respectively, the Decision 132 (V) on the Multilateral Trade Negotiations and the Resolution 105 (V) on International Trade in Food Commodities adopted by the United Nations Conference on Trade and Development at its Fifth Session, and also the agreement reached at the Negotiating Conference on the fundamental elements of the Common Fund,
Considering that protectionist policies impose serious obstacles in the process of agricultural adjustment and constitute a major constraint on the expansion of trade in agricultural commodities, with grave consequences for the economic and rural development of developing countries,
Considering further that protectionist policies also pose a very severe constraint to the expansion of the export earnings of both developing countries and those developed countries which depend heavily on agricultural exports.
Considering further the urgent need for developing countries to accelerate their foreign exchange earnings, particularly in order to overcome the rapidly mounting burden of external debt,
Noting that the result of the GATT Multilateral Trade Negotiations had led to important progress in some respects, but expressing deep concern that these negotiations did not provide significant concessions in sectors that are of great importance for agricultural trade, particularly of developing countries,
Stressing the need for agricultural adjustment in all countries, particularly those countries which have high support prices and/or barriers against imports especially those that compete with their domestic products, particularly in order for developing countries to attain an increasing share of world production as well as world trade in agricultural products,
Noting with deep concern the signs of increasing protectionist pressures in regard to agricultural products, which are already subject to import restrictions and export subsidies significantly greater than in industrial trade,
1. Recommends that all countries, particularly developed countries, display the necessary political will by (a) refraining, to the maximum extent possible, from imposing any new tariff or non-tariff barriers to the imports of agricultural products, particularly from developing counties, and (b) progressively improving access to their markets for agricultural commodities taking into account the Programme of Action as adopted at the World Conference on Agrarian Reform and Rural Development;
2. Urges developed countries to adhere strictly to and implement fully the standstill provisions they have accepted, in particular concerning imports from developing countries;
3. Urges governments to give further and more urgent consideration to taking appropriate action in competent fora on the commodity trade issues of critical importance especially of developing countries, which have not been resolved in the Multilateral Trade Negotiations, towards the elimination of non-tariff barriers as well as removal of tariffs on tropical products and other commodities of export interest particularly of developing countries;
4. Requests the Committee on Commodity Problems, with the assistance of its intergovernmental commodity groups, and in cooperation as appropriate with UNCTAD and GATT, to (i) assess the impact of the results of the Multilateral Trade Negotiations on the trade prospects of the main commodities concerned, with special regard to the exports of the developing countries; (ii) review systematically developments in protectionism and its effects on the trade of agricultural commodities especially from developing countries in quantified terms where possible; and (iii) examine the scope for and ways of promoting trade between the developing countriesin the commodities concerned; and further requests the Committee to undertake this work so that it complements, and does not duplicate the work in other international organizations, and particularly in UNCTAD and GATT;
5. Proposes that the Guidelines for International Agricultural Adjustment should be reviewed and revised, as appropriate, in the light of developments in world agricultural production, consumption and trade, taking into account the objectives of the new International Development Strategy, to be decided upon by the United Nations General Assembly, and the relevant conclusions and recommendations reached in WCARRD, UNCTAD and other relevant fora;
6. Noting with satisfaction the agreement reached on the fundamental elements of the Common Fund invites governments, within the framework of the Common Fund, to explore ways of utilizing the experience and technical expertise of FAO, and of the inter-governmental commodity groups, in the eventual operations of the Common Fund, especially of the Second Account, in order to finance commodity development measures aimed at improving the structural conditions in markets and at enhancing the long-term competitiveness and prospects of particular commodities, as agreed in the agreement reached on the fundamental elements of the Common Fund;
7. Recommends that, in order to expedite the implementation of the Integrated Programme on Commodities, particularly the conclusion of the International Commodity Agreements, FAO should continue to give full support to UNCTAD;
8. Urges that in order to contribute to the stabilization of the world sugar market, governments which have not already done so should ratify the International Sugar Agreement, and those who have not signed should enter into meaningful and urgent negotiations to accede to it;
9. Welcomes the conclusion of the International Natural Rubber Agreement and urges all governments concerned to ratify it so that it can come into effect on 1 October 1980, as envisaged;
10. Requests the Director-General to present to the Fifty-third Session of the Committee on Commodity Problems a report on actions taken in Pursuance of the present resolution.
1 Defined by the OECD as the annual monetary value of gross transfers from consumers and taxpayers to support agricultural producers, measured at farm gate level, arising from policy measures which support agriculture, regardless of their nature, objectives or impacts on farm production or income (referred to in this document as `PSE'). The PSE includes the effects of border measures and thus captures both support and protection.
2 Defined as for the PSE except fewer countries and fewer commodities are covered and policy measures are defined in more highly aggregated terms (referred to in this document as `PSE-old').
3 "Agricultural Trade in the Latin American Region: Main Trends, Existing Trading Agreements and Emerging Policy Issues," (2000) Working paper prepared for the Umbrella Programme for Training on Uruguay Round Follow Up and Multilateral Trade Negotiations on Agriculture, Santa Cruz, Bolivia, 29 May-2 June 2000, FAO.
4 Touche Ross Management Consultants and Landell Mills Commodities Studies (1990) Evaluation of INRA 1979 prepared for the INRO.
5 T. Akiyama and P.N. Varangis (1990) The Impact of the International Coffee Agreement on Producing Countries, World Bank Economic Review, Vol. 4, No.2.
6 C.L. Gilbert (1995) International Commodity Agreements - An Obituary Notice.
7 Maizels, A., Bacon, R. and G. Mavrotas (1997) Commodity Supply Management by Producing Countries: a case study of the tropical beverage crops.
8 FAO's Intergovernmental Commodity Groups have always shared the same sort of objectives as ICAs but have not been substantially involved in market intervention. The nearest they approached this was in the setting of informal indicative prices for jute and for hard fibres.
9 As adopted in Resolutions 3201 and 3202 of the UN General Assembly.