On the basis of this trade analysis, the main conclusions are:
1. Trade preferences have contributed significantly to the expansion of exports of raw and processed agricultural products from preference-receiving countries. Several among them have expanded their exports and production, raised their market shares in preferential markets and acquired leading market positions for some products, frequently in contrast to the performance of exporters that were subject to MFN duties.
2. MFN duties are still high for many agricultural products, and preference schemes are offering substantial price advantages to exporters for numerous eligible products. This is especially the case, on a wide scale, in favour of LDCs, as well as under special preferential arrangements of the EU and the United States in favour of most African, Caribbean, Central American, Andean and Pacific countries. Preferences have been particularly effective in stimulating trade and production in such countries where preference margins were sizeable (e.g. 6-8 percent and above); and in particular, if preferences resulted in the total removal of tariffs on preferential imports so that exporters can compete freely with third countries and domestic producers alike.
3. Several other countries subject to the general GSP provisions found the value of GSP preferences for raw and processed agricultural products substantially curtailed by the frequent exclusion of broad sectors. Furthermore, minimal preference margins had made the utilization of the EU’s GSP scheme unattractive for many products after the modulation of the preference margins post-Uruguay Round: the recent establishment of a minimum preference margin of 3.5 percentage points should revive the significance of GSP preferences. On the other hand, their exports continued to expand for products for which effective preferences continued to apply.
4. The removal of MFN duties from major tropical products such as raw coffee and cocoa by all major markets has eliminated the discrimination of relatively few large producers, but in turn removed the past preferential advantages of LDCs in Andean, Caribbean, Central American and Pacific countries. To some extent, this affected their exports of like products. As a result of the removal of tariffs, production and trade should, on the other hand, become more efficient and consumption should grow.
5. Trade preferences still have a promising future in agriculture and food industries, even if the Doha Round achieved substantial tariff reductions. For many products, MFN rates will continue to exceed 10 percent even after this Round. For staple food, for which present MFN tariffs are prohibitive and tariff quotas insufficient, MFN rates may remain at peak levels, inaccessible for developing country exporters.
6. New trends in consumer demand in the EU, the United States and other countries are continuously creating new trading opportunities for fresh products, readily prepared food and organic products, including fresh fruit and vegetables, flowers, fish and other seafood, as well as industrial speciality food products and beverages. Preferences will be a valuable support to export expansion
7. The European Union, the United States, Canada, Japan and other developed countries can significantly enhance the pace and scope of the future expansion of agricultural and fishery markets for developing countries by opening their markets for the major food sectors, e.g. meat, rice, maize and other cereals, sugar and dairy products. Such products constitute the largest segment of their production and consumption but the smallest scope for imports from third countries. The preferential opening of the markets for LDCs and other countries with limited market size (such as those mentioned above) would provide substantial scope for enlarging domestic consumption and creating new export earnings for their poor. Full preferential removal of duties and tariff quotas for sugar, rice, maize, bananas, beef and poultry, etc., as well as their processed products, would also be an effective means for the EU to compensate ACP countries for preferential benefits lost due to MFN liberalization for other products. Preferential liberalization would be particularly effective because producers from these countries could get an early entrance advantage over competitors from other countries still subject to MFN duties. Progress by the Doha Round in the reduction of subsidies would further enlarge these markets for third country suppliers.
8. In spite of important market opportunities and duty-free preferential market access, progress in diversifying the structure of agricultural production and the commodity pattern of exports has been relatively slow and limited to a few products in least developed and other smaller developing countries. Traditional export crops continue to dominate in their total exports so that the recent severe decline of commodity prices has overcompensated the increase achieved in non-traditional exports. Governmental diversification policies should focus on strengthening supply capacities and competitiveness in sectors with growing market prospects. They should support farmers and exporters in developing the capacity to perceive new opportunities, to organize the sourcing of technology and know-how for producing and marketing new products, and to respond rapidly to changes in consumer demand and regulations. Otherwise, diversification policies risk being trapped into promoting the production of staple commodities, for which other suppliers already hold firmly established positions on export markets with stagnating demand and little scope for rising export earnings. It is unlikely that diversification of agricultural production and food processing will advance decisively in LDCs, unless strong, direct support is given to new initiatives. This support would be given either by domestic investors or foreign cooperation partners for broadening the supply base in addition to full, durable and reliable market opening.
9. Governments of developing countries should stimulate new investment by appropriate support for the whole chain of relevant factors, including research, training, advisory services, production, quality and health control, transports and warehousing logistics, and the establishment of market presence of growers and exporters in major consumer markets. They should also facilitate cooperation between farmers and industrial processors, as well as the links of producers and exporters with wholesalers and retailers in final consumer markets. Finally, they should encourage a climate of responsibility and initiative among their business community.
10. The results of national and regional research institutes, as well as incentives to R&D can boost large-scale new exports of agricultural commodities.
11. Innovation needs to be emphasized by all actors, because substantial preferential trading opportunities await to be exploited for new products, new tastes, new preparations and presentations. Growers and exporters should intensify their market presence and closeness to consumers, which stimulate awareness of new opportunities and changing demand, and reduce risks and losses of exporting perishable products.
12. Direct links between growers, retail chains and industrial processors reduce the cost of trade, and facilitate new market entry and sharing of tasks and responsibilities. They are the most promising way for introducing ‘novelties’ and niche products in major developed country markets.
13. Governments should emphasize training at all levels. Product-targeted, mobile training should train farmers in their regions on modern production techniques, sourcing and export requirements. Flexible on-the-job training should instruct growers and exporters in export techniques, financing and regulations. Universities should provide courses to operators on integrated production and export management.
14. Effective control of quality and of plant and animal diseases requires support by governments and international cooperation. The commitments for support already pledged under the WTO Agreement on Transfer of Technology, Technical and SPS Standards should be specified, budgeted and implemented in the course of the Doha Round. Exporters should also be supported to develop their own identity and brands on international markets. The Doha Round should not set a precedent for restrictive use of geographical designations.
15. Governments of developing countries should activate their participation in international standard setting organizations for plant and animal diseases and food standards. They should also strengthen trade defence against excessive import restrictions applied without scientific justification for health and sanitary reasons
16. Gaps in infrastructure, feeder roads and cold transport chains and storage facilities need to be eliminated. The World Bank and regional development banks should continue assisting in removing bottlenecks, intensify their direct assistance to establishing new agricultural production facilities, and modernize existing ones.
17. Agricultural growth centres and fishery servicing and processing centres can bundle their services to producers and optimize synergies between training, advisory activities, information and financial and export services.
18. Investment financing and investment incentives should become more easily available for export-oriented investment in production, as well as for trade and commercial investments by ACP growers and exporters abroad. Developed country partner countries [should facilitate the establishment of wholesale companies and joint ventures by growers, exporters and processing industries of ACP and other developing countries. Investment guarantees and insurance should no longer be conditioned by the conclusion of bilateral investment agreements, especially in the case of LDCs, at least under the Cotonou Partnership Agreement and AGOA. Returns on investments benefiting from incentives granted by LDCs should be totally exempt from direct taxes in home countries of foreign investors during the start-up period.
19. The GSP preference schemes should be improved and certain important aspects for investors strengthened, as follows:
a. GSP schemes should assure maximal stability and duration;
b. Sector graduations should only take place after a reasonable payback period of invested capital.
c. Such graduations should be targeted to specific products, not to across-the-board removal of large sectors with unrelated production lines.
d. In LDC schemes, safeguards should replace the role of tariff quotas. Tariff quotas, such as those on rice and sugar in the EU and more generally in the United States for agricultural products, restrict trade in the most important products that LDCs can hope to export in the short- and medium-term. These ceilings can be rapidly removed without excessive risk for domestic producers, since an agricultural safeguard clause can provide the assurances needed.
e. The origin requirements for fishery products should be rendered more flexible, especially in the EU preference schemes, and replaced by a raw material criterion.
