Trade and markets
 

Marrakesh Decision

Background
One of the subjects extensively debated during the Uruguay Round (UR) negotiations was the possible negative impact of agricultural trade liberalization on least developed and net food-importing developing countries. This reflected a concern that the impact would be relatively greater on world market prices of food commodities, which are imported in large and growing quantities by these countries, than on tropical agricultural products, which are the main agricultural exports of these countries. Other possible negative impacts were erosion of trade preferences as tariffs are reduced and the difficulties of Least Developed Countries (LDCs) and net food importing developing countries (NFIDCs) to increase agricultural exports because of supply-side constraints.

These concerns were recognized at the political level with the adoption of the Marrakech Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries. The Marrakesh Decision states that:

"Ministers recognize that during the reform programme leading to greater liberalization of trade in agriculture least developed countries and net food-importing developing countries may experience negative effects in terms of the availability of adequate supplies of basic foodstuffs from external sources on reasonable terms and conditions, including short-term difficulties in financing normal levels of commercial imports of basic foodstuffs."

To deal with the possible negative effects, the Decision provided for action through four response mechanisms:

  • Food aid
  • Short-term financing of normal levels of commercial imports
  • Favourable terms for agricultural export credits
  • Technical and financial assistance to improve agricultural productivity and infrastructures

There are currently 50 LDCs and 25 NFIDCs (March 2005). The list of NFIDCs is reviewed annually (during the March session of the CoA). Net food importing developing countries may join the group by submitting to the WTO Secretariat the supporting statistical information establishing their net food import position. The CoA reviews this information and decides on their eligibility.

LDCs (50 countries): Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Cape Verde, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Lao People's Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, Sudan, Timor-Leste, Togo, Tuvalu, Uganda, United Republic of Tanzania, Vanuatu, Yemen, Zambia.

NFIDCs (25 countries): Barbados, Botswana, Côte d'Ivoire, Cuba, Dominica, Dominican Republic, Egypt, Gabon, Honduras, Jamaica, Jordan, Kenya, Mauritius, Mongolia, Morocco, Namibia, Pakistan, Peru, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Sri Lanka, Trinidad and Tobago, Tunisia, Venezuela.


The Annual Review Process

The annual review by the CoA of the implementation of the Marrakech Decision includes Notifications made by several donors as well as an update of a WTO Secretariat Note on the monitoring of the implementation of the Decision. Summaries of the discussions in the CoA on the implementation of the Marrakesh Decision can be accessed in the WTO website under Agriculture {Search Documents Online: Annual reports of the committee to the General Council (Document code varies) and Summary reports (minutes) of regular meetings of the Agriculture Committee (Document code G/AG/R/*). See also agriculture negotiations documents}.

FAO reports regularly to the CoA during the annual review of the Marrakech Decision on the current global supply/demand balance and trends in the cereal import bills of LDCs and NFIDCs. 

The implementation of the Marrakesh Decision has remained unsatisfactory and a matter of concern for all, both donors and beneficiaries, despite the political commitment that has been stressed from time to time at major international conferences, such as the World Food Summit, UNCTAD and the Ministerial sessions of WTO.

 


WTO Roundtable in the Framework of the Marrakesh NFIDC Decision (19 May 2003)

At its meeting on 27 March 2003 the Committee on Agriculture agreed to convene a roundtable with the task to:

    i. to explore, in the context of the Marrakesh NFIDC Decision, the need for a safety net to be established to assist the LDCs and NFIDCs during the reform process leading to greater liberalization of trade in agriculture, including an examination of objective criteria and trigger mechanisms to determine a need;

    ii. to identify, in the light of (i) above, appropriate mechanisms within the framework of the Marrakesh NFIDC Decision, taking into account their technical feasibility, as well as their financial and institutional implications on potential donors and beneficiaries.

The following organizations were invited to designate experts to participate in the roundtable: FAO, the International Fund for Agricultural Development (IFAD), the International Grains Council (IGC), the IMF, UNCTAD, the World Bank and the World Food Programme (WFP).2

2 The panellists were Mr. Harmon Thomas (FAO), Mrs. Mylene Kherallah (IFAD), Mr. Alexei Kireyev (IMF), Mr. Lamon Rutten (UNCTAD), and Mr. Allan Jury (WFP).


FAO and UNCTAD propose a Multilateral Export Credit Facility in the context of the Marrakesh Decision (2 May 2003)

In the search of effective mechanisms to implement the provisions of the Marrakesh Decision, FAO and UNCTAD elaborated the modalities of a Multilateral Export Credit Facility to help LDCs and NFIDCs to finance basic foodstuffs. The proposal was discussed at the FAO Geneva Roundtable, which first reviewed the experience of net food-importing developing countries in international food procurement, including short-term difficulties they face in financing normal levels of commercial imports of basic foodstuffs. Consideration of the proposal benefited from the participation of representatives of food import agencies, private traders and food import financing institutions, in addition to other relevant international organizations and country representatives to the WTO.

More details on experiences in financing food imports and the proposed facility can be found in the background paper "Mechanisms for Financing Imports of Basic Foodstuffs by Net Food-Importing Developing Countries and Possibilities for Improvement".


Report of the Inter-agency Panel on Financing Imports of Basic Foodstuffs (June 2002)

The Inter-Agency Panel on Short-Term Difficulties in Financing Normal Levels of Commercial Imports of Basic Foodstuffs submitted its Report to the WTO General Council in June 2002. The full Report of the Panel (including the contributions made by FAO, other agencies, the countries concerned and donors) can be accessed in the WTO website under Agriculture {Search Documents Online: Annual reports of the committee to the General Council (Document code varies) and Summary reports (minutes) of regular meetings of the Agriculture Committee (Document code G/AG/R/*). See also agriculture negotiations documents}. The recommendations of the Panel, contained in paragraph 168 of that Report, were as follows:

"168. In the light of our conclusions above and having regard to the Marrakesh NFIDC Decision, we make the following recommendations concerning ways and means for improving access by LDCs and NFIDCs to multilateral programmes and facilities to assist with short-term difficulties in financing normal levels of commercial imports of basic foodstuffs:

    a) that in the context of the impending review of the CFF of the IMF, consideration be given by member governments to

      (i) extending the product coverage of the facility to cover all basic foodstuffs,

      (ii) clarifying access in the context of an existing arrangement with the IMF,

      (iii) providing a greater degree of automaticity without requiring an IMF-supported programme,

      (iv) reviewing the procedures and timeliness of disbursements, as well as encouraging governments to come forward with purchase requests;

    b) that in the light of the limited potential usefulness of an ex-post revolving fund to support food imports in times of need, the feasibility of an ex-ante financing mechanism aimed at food importers be explored;

    c) that the terms of reference of the Diagnostic Trade Integration Studies to be undertaken in the context of the Integrated Framework include, as appropriate and if requested by the beneficiary country, the items of

      (i) food security implications of trade development strategies,

      (ii) availability of, and access to, adequate financing, in particular by the private sector, to support food imports;

    d) that strategies of commodity price risk management from the perspective of developing country food importers be addressed by the Commodity Price Risk Management Group of the World Bank."

 


Inter-agency Panel on Financing Imports of Basic Foodstuffs constituted (WTO Committee on Agriculture, 6 December 2001)

In pursuance to the Doha Decision on Implementation-Related Issues and Concerns, the CoA approved the Terms of Reference (TORs) of the Inter-Agency Panel on Short-Term Difficulties in Financing Normal Levels of Commercial Imports of Basic Foodstuffs, to explore ways and means of implementing certain provisions contained in the Marrakech Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries. Specifically, the Doha Decision stipulated that:

"an inter-agency panel of financial and commodity experts be established, with the requested participation of the World Bank, the IMF, the FAO, the International Grains Council and the UNCTAD, to explore ways and means for improving access by least-developed and WTO net food-importing developing countries to multilateral programs and facilities to assist with short-term difficulties in financing normal levels of commercial imports of basic foodstuffs, as well as the concept and feasibility of the proposal for the establishment of a revolving fund in G/AG/W/49 and Add.1 and Corr.1."

The TORs stipulate that the panel shall take into account, inter alia, submissions made, up to end March 2002, by the countries concerned, donors and the relevant international financial institutions, and it will submit its report and recommendations to the WTO General Council not later than 30 June 2002. The vice-Chair of the CoA (Mr Yoichi Suzuki, Japan) agreed to chair the Panel of Experts1.

1 UNCTAD: Mr. Mehmet Arda and Mr. Lamon Rutten (alternate); International Grains Council (IGC): Mr. Germain Denis and Mr. Richard Woodhams (alternate)); Food and Agriculture Organization (FAO): Mr. Panos Konandreas; World Bank: Mr. John Nash; International Monetary Fund (IMF): Mr. Grant B. Taplin.