OECD review of the impact of agricultural support on trade
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CTA. 2002. OECD review of the impact of agricultural support on trade. Agritrade, October 2002. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52686
A November 2001 OECD Policy Brief on the impact of...
A November 2001 OECD Policy Brief on the impact of agricultural support on agricultural trade is now available on the web. The policy brief sets the scene by noting that in OECD countries 'farmers receive more than one-third of their receipts from government programmes. The value of agricultural support in OECD countries is more than five times higher than the total spending on overseas development assistance and twice the value of agricultural exports from developing countries'. It argues that 'many current policies reduce economic efficiency and disrupt international markets - at the expense of competitive suppliers, including those in developing countries'. What is more, these policies 'often fail to achieve their objectives, in particular those of supporting low-income farmers' and protecting the environment. The brief acknowledges that OECD Ministers recognise the need for fundamental reform, but claims that 'only modest progress has been made'. Nevertheless three major qualitative shifts under the Uruguay Round Agreement are noted: the virtual abolition of non-tariff barriers and their conversion to tariffs; the application for the first time of disciplines to export subsidies; the establishment of the principle that internationally agreed rules should be set on domestic support to agriculture. While this represents a fundamental shift, actual progress in these areas has been limited. The brief notes that 'in practice agricultural tariffs remain high' at around '60% compared to industrial tariffs which rarely exceed 10%'. For politically sensitive products, levels of protection have actually increased since the Uruguay Round Agreement. Growth in agricultural trade has decelerated since the Uruguay Round, while developing countries have 'not managed to increase their share of agricultural exports'. Export subsidies used by a small number of OECD countries reduce prices and make it difficult for developing countries to compete. On the issue of domestic support the briefing concludes that 'in reality, the domestic support disciplines proved the least binding in the sense that most countries have had little difficulty in meeting their commitments'. On the basis of this experience it concludes that 'future progress could be enhanced by a stronger and clearer set of disciplines', and goes on to outline possible ways in which this could be done. The briefing looks in detail at developments with regard to market access for agricultural products and the application of tariff rate quotas and special safeguard measures. Significantly, it notes that 'while there is no doubt that domestic support provided through green box measures is relatively less trade distorting than market price support, there are grounds for querying whether many of these measures can be deemed to be minimally trade distorting'. On-going OECD research suggests that many apparently non-trade distorting measures 'nonetheless have production and trade effects'. Greater clarity in the use of concepts is therefore needed, particularly with regard to multi-functionality, where the OECD is seeking to develop a practical concept which provides a framework for weighing the benefits to society against the direct and unintended costs to other trading partners. The brief also touches on food safety issues and SPS measures by highlighting the findings of sectoral studies which show that 'technical regulations in developed countries can constitute a considerable obstacle to agricultural and food exports of developing countries'.