State of Agricultural Commodity Markets 2006
Developing countries, agricultural trade and the Doha Round
he removal of trade barriers through multilateral agricultural trade policy reform has been widely seen as a potential stimulus for trade and growth. Some developing countries, assisted by supportive economic structures, natural resource endowments and a commercial orientation, are already highly competitive and successful in exporting agricultural products. These more advanced and competitive exporting countries are well placed to reap the benefits of a freer global trading system.
However, many lower-income countries, especially in sub-Saharan Africa, are less well placed to gain from increased trade liberalization. Supply- ide constraints make their agriculture sectors uncompetitive and they are unable to capitalize on new trade opportunities. Some developing countries may even be adversely affected by trade liberalization. Reducing tariffs means increased competition from imported foods for the locally produced products. These countries’ agriculture sectors, which are the mainstay of employment, income generation, food security and development, may be unable to withstand increased import competition and, as a result, domestic agricultural production, rural incomes and food security could be vulnerable and development efforts may be compromised. At the same time, even for those agricultural products in which countries are more competitive, domestic production may become more vulnerable to competition from short-run import surges.
Developing countries will need to be allowed some flexibility in the implementation of new trade rules, and should also be given assistance (at least in the short run) while they adjust to the new market conditions arising from liberalization. In the language of the World Trade Organization negotiations, they need significant special and differential treatment. Various mechanisms have been proposed to mitigate the risks associated with further opening of markets to international trade. These include the designation of certain special products that will be shielded from the full extent of agreed tariff reductions, or the possibility of imposing an additional tariff in the face of sudden increases in imports – a special safeguard mechanism.
The State of Agricultural Commodity Markets 2006 focuses on the question of why the development and food security needs of developing countries need to be better reflected in the design and implementation of new agreements on further liberalization of international agricultural markets, and describes mechanisms under discussion to achieve this goal. In the WTO Doha Development Round, how to safeguard the interests of developing countries, especially the lower-income countries, has proved to be highly topical but is also problematic: the issues and arguments are complex and sometimes controversial. The stalling of the Doha Round in July 2006 provided an opportunity to revisit the issues of how future reductions in import tariffs on agricultural products will affect different developing countries, whether there might be any negative repercussions of further liberalization and, if so, how these might be addressed in the formulation of new trade rules.
