The Uruguay Round marks a significant turning point in world agriculture. For the first time agriculture has featured in a major way in one of GATT's rounds of multilateral trade negotiations. It changes the way in which national agricultural policies will be undertaken by most countries and, though representing only a partial liberalization, its effects will be felt for years to come.
In order to assess the impact of the Uruguay Round on the markets for the principal agricultural commodities, the FAO Secretariat has modified its recent projections to the year 2000 to allow for the effects of the Uruguay Round agreements. These effects include the boost to world income deriving not only from agriculture but also concessions in other sectors as well as the reduction in agricultural tariffs, the establishment of minimum access in some markets and the cut in export subsidies.
The resulting impact on world agricultural markets suggests a positive effect on prices and rather smaller impacts on the quantities produced, consumed and traded. Based on the pattern of agricultural imports and exports as well as the responsiveness of the agricultural sector to these price changes, the study estimates the impact on agricultural trade balances of the main regions.
The study also examines a number of special issues that are of concern to countries. These include an estimate of the loss of potential value from preferential agreements; the impact of taking a much higher (double) income assumption; the effect of the Uruguay Round on world market price stability and the effect on tariff escalation for selected commodities.
While the study is not exhaustive it provides the basis for a number of policy conclusions for countries to consider, in particular the need to review national food policies with a view to profiting from potentially higher world food prices and to offsetting the increase in food import bills that is one of the most likely consequences for most countries.
This is the first of the Secretariat's detailed analyses of the impact of the Uruguay Round on agriculture. It is planned to extend this work to cover other agricultural commodities in the future. We would welcome comments by readers on this study.
R.J. Perkins Director Commodities and Trade Division FAO