This article examines the main provisions of the Agreement on Agriculture of the Final Act of the Uruguay Round (UR) and presented a brief overview of specific commitments on cereals made by a selected sample of countries. It also covers a detailed account of commitments on cereals, namely wheat, rice and coarse grains.
Reduction in domestic support to agriculture
The UR required signatories to commit a reduction in expenditures on farm support in terms of the "Total Aggregate Measurement of Support" (Total AMS), which mainly captures the value of market price support and non-exempt direct payments. The base-period (1986-88) AMS must be reduced by a total of 20 percent over the 1995-2000 implementation period (13.3 percent over the 1995-2004 period for the developing countries). Once reduced, it must be bound at its final level at the end of the implementation period. The least developed countries are exempt from the reduction commitments.
As these commitments are made in terms of the Total AMS, countries can decide, during the implementation period, the specific areas where to cut and by how much. Thus, at this stage, it is not possible to identify the individual commodities that would be affected by such reductions. However, it is highly likely that countries would not choose to reduce support to those commodities that are politically more sensitive. These, in the developed countries, could be commodities that had historically enjoyed high degrees of price support as indicated, for example, by the producer subsidy equivalents. For similar reasons, many developing countries, when required to cut, are likely to spare basic food staples, such as rice in Asia, white maize in southern and eastern Africa and yellow maize in Latin America.
Market access commitments
The second area where commitments were made is in market access, which includes "tariffication" of all non-tariff border measures, the binding of all tariffs, reduction of the bound tariff as per a "tariffication formula" and minimum access commitments. The Schedules of commitments relating to the first three elements are reviewed next followed by minimum access commitments.
The first step required for all UR signatories, including the least developed countries, was to tariffy 100 percent of the agricultural tariff lines by converting all non-tariff border measures to simple tariff equivalents (ad valorem or specific or both). The second step to be followed was tariff reduction, for which the UR Modalities provided different rules according to product type (e.g. previously bound or unbound) and economic grouping (e.g. developed, least developed). The "tariffication formula" requires the developed countries to reduce tariffs for all agricultural products on average by 36 percent from the base tariff rate with a minimum reduction of 15 percent per tariff line over a six year period (for the developing countries by two-thirds of that applying to the developed countries over the 10 year implementation period).
Different rules were provided for products with duties that were already bound prior to the UR Agreement and products with duties that were unbound. For the former, tariff reductions were applied to the bound rate. For the latter, tariff reductions were applied to the normally applicable rate (or a tariff equivalent) in September 1986. In the case of products subject to unbound ordinary customs duties, developing countries had the flexibility to offer ceiling bindings on these products.
Minimum access commitments
Besides tariffication, a number of countries also committed themselves to provide market access for a minimum volume of imports at a specified duty (in-quota tariff), which is set lower than the normal (over-quota) bound rate. The UR agreement calls for a minimum access commitment for imports equal to 3 percent of domestic consumption in the base period (1986-88), rising to 5 percent by the end of the implementation period. In most cases, the quota established new commitments to import (minimum access) but, in a few cases, it also included volumes under existing bilateral agreements (current access). The latter, however, account for a small share of the total minimum access.
Commitments to reduce export subsidies
Countries are required to reduce commodity specific volumes of subsidized exports from the average level in the base period (1986-88) by 21 percent over six years for the developed countries and by 14 percent over 10 years for developing countries, while the budgetary outlay would have to be reduced by 36 and 24 percent respectively. Table 2 shows the key statistics on export subsidy reduction commitments for some 21 countries which include almost all the countries offering such commitments. It shows that the total volume of permitted subsidized exports for all cereals in the first year of the implementation period (1995) amounted to about 93 million tons (or 47 percent of the average volume of world trade during 1991-93, falling to 67 million tons by the end of the implementation period. The bulk of the 26 million tons reduction (85 percent) would be made by the developed countries. By commodity, most of the cut would be in wheat (71 percent) followed by coarse grains (27 percent) and rice (2 percent).