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FAO symposium in Geneva links agricultural trade to food security

Increased food security will need to be considered a key indicator of the success of multilateral trade reform, said participants at the FAO Symposium on Agriculture, Trade and Food Security, which ended in Geneva on 24 September. The critical relationship between agricultural trade, economic development and food security was the principal topic of the Symposium, and participants agreed that the upcoming WTO trade negotiations in Seattle this November will need to address seriously all issues relating to the international trade in food.

"The credibility of the World Trade Organization (WTO) and the trading system, and whether it will survive or not as a credible system, will depend on how agriculture is treated in any new negotiations that may be launched," said Rubens Ricupero, Secretary General of the UN Conference on Trade and Development (UNCTAD) during a speech at the FAO Symposium.

Issues in multilateral trade negotiations

Exports from developing countries have stagnated...
FAO/19028/R. Fiadutti

Participants at the Geneva Symposium noted that progress had been made in reducing domestic agricultural support mechanisms as outlined in the WTO Agreement on Agriculture (AoA). They regretted, however, that in several major developed regions very high levels of support and protection remained in place. These policies were met with general condemnation, with the continued use of export subsidies being singled out as the most trade-distorting practice. In developing countries with strong agricultural export potential, the export subsidies of the developed countries severely limit the ability of commodity producers to compete on the international market. During the Symposium, it became clear that for many developing countries, the move towards market-based trade reforms has been less difficult than expected. This is largely the result of 1980s domestic structural adjustment programmes carried out in collaboration with international financial institutions, such as the World Bank and the International Monetary Fund, which had already led to widespread liberalization of national economies. As a result,developing countries did not have to make significant changes in domestic agricultural policies in order to meet WTO reduction commitments on such trade-distorting instruments as tariffs, domestic support measures and export subsidies. Simply put, developing countries had few support instruments in place to begin with. WTO trade regulations primarily targeted trade policies in developed countries, which have more established systems of domestic agricultural support.

...and imports have risen.
FAO/19029/R. Faidutti

Under the AoA, WTO member countries have been given a transition period during which they can gradually move towards meeting the new trade regulation requirements, and this has so far minimized the impact of trade reforms on agricultural markets in both developed and developing countries. Nevertheless, participants were clearly concerned that agricultural exports from developing countries had stagnated,while their food imports had risen.

Policy options for the future

Due to the generally underdeveloped agriculture sector of developing countries and past policy biases against agricultural producers, there was general agreement that these countries would continue to require special and differential treatment during future WTO negotiations, including an ongoing review of the appropriate length of the phase-in period. Many domestic producers will need time to adjust their economies before they can take advantage of the new trading opportunities that liberalization offers. During this interval, they face tremendous difficulties competing with imported commodities.

One of the policy options under consideration is the creation of a 'development box' similar to the 'green box', which is a provision in the WTO agreements that allows national governments to establish domestic support policies in such areas as research, disease control and infrastructure. 'The development box' would permit developing countries to tailor their domestic programmes in order to meet goals related to a broad range of issues, including rural/urban income disparities, rural development, structural adjustment, the environment and food security. As with the 'green box', any support measures included in the proposed 'development box' would be exempt from reduction commitments, as long as these measures have no, or very little, trade-distorting or production-related effects.

Small-scale producers and net food-importing developing countries

As Mr Hartwig de Haen, Assistant Director-General of FAO's Economic and Social Department, pointed out after the Symposium, "In any trade negotiations there are winners and losers, and so far the losers have been the small producers." Symposium participants recognized that in many regions, any threat to the livelihood of small farmers increases the risk of local food insecurity. Participants saw the need to establish some kind of support mechanisms to either cushion the effect of trade reforms or provide compensation to small producers. Such mechanisms could include targeted programmes to increase productivity and competitiveness as well as stimulate rural economic diversification. The Symposium also agreed that social safety nets need considerable improvement in many developing countries.

When the Uruguay Round negotiations came to a close in 1994, the Ministers involved anticipated that the reforms could hurt the economies of some countries. With this in mind, they reached the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least Developed and Net-Food Importing Countries. Under this decision, WTO member countries agreed to give full consideration to requests for technical and financial assistance from least developed countries. At the Geneva Symposium, many participants regretted that this technical and financial assistance to the least developed countries had not been effective. They proposed that future WTO negotiations should examine ways of better delivering these types of assistance programmes.

The Uruguay Round: Five years later

The Symposium also reviewed how the Uruguay Round negotiations had affected the economies of developing countries during the last five years. Participants felt that the effects specific to the Uruguay Round negotiations were difficult to identify and distinguish from other events, such as the Asian financial crisis and El Niño, that had influenced economic performance. Nevertheless, economic indicators suggest that, so far, the effects of current trade reforms on developing countries have been minimal.

However, if the impact of these reforms has not been extensive from a quantitative point of view, their qualitative impact has been significant. "The spirit of market-based reform has profoundly altered the approach governments are taking towards agriculture trade policies, rural development and food security," says de Haen.

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19 October 1999

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