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Analysis of the potential impact of the current WTO agricultural negotiations on Government strategies in the SADC region
Research Paper No. 2006/106
September 2006
J Hodge and AJE Charman
United Nations University - World Institute for Development Economics Research (UNU-WIDER)


Introduction

The significance of agriculture to African countries and to the central concern of food security were highlighted by the African Group joint proposal on the World Trade Organization (WTO) negotiations on agriculture (WTO 2001b). The proposal noted that while agriculture remained the single most important sector of African economies, it remains seriously underdeveloped which ‘reinforces and perpetuates the low growth syndrome and pervasive poverty including high levels of food deprivation that characterize many African countries’ (pg. 1, para 2). The proposal deals with issues of market access, export competition and domestic support, and it devotes an entire subsection to the special concerns of least developed countries (LDCs) and net food importing developing countries (NFIDCs).

Agricultural trade has grown globally, with developing countries contributing an increasing share of exports in the period 1993-98 from 40.1 per cent to 42.4 per cent. However, LDCs have seen a reversal in their share of the market. Importantly, these LDCs have experienced deteriorating trade balances in food crops and food. In the decade 1990-2000, LDC food imports have increased by 5 per cent per annum, notably in the food groups of oilseeds and oils, meat and meat preparations, and sugar (FAO 2003).

The Agreement on Agriculture (AoA) emerging from the Uruguay Round brought agriculture under the WTO disciplines applied to goods and tropical agricultural products. It focused on the tariffication of agricultural protection measures, the limitations of domestic support programmes and of export subsidies. Its main achievement was not greater levels of liberalization, but rather the establishment of a framework for future agricultural liberalization.

There has been much concern over the possible negative impact of the AoA on agriculture and rural livelihoods in developing countries. Three main issues have arisen: Has the Agreement resulted in changes in domestic agriculture policies in development countries? How much flexibility do developing countries have under the current agreement? And what is the current and potential impact of the agreements on national food security? Researchers have concluded that at present the AoA has not had a significant impact in either constraining government policy options or curtailing agricultural development programmes for the poor (see Matthews 2000).

In the course of the WTO negotiations, different views on how to take into account nontrade concerns have been raised. The most contentious issues concern food security, livelihoods and poverty alleviation, rural development, environmental issues, food safety and animal welfare. LDCs and NFIDCs see a clear link between the case for concessionary modalities towards these non-trade issues and the overarching objective of levelling global disparities through liberalization of agricultural trade.

LDCs have acquired a degree of support for their concerns over the food security issue from a broad spectrum of stakeholders. There is general consensus that a mechanism is required to ensure that food aid does not disrupt domestic production in recipient countries. But what actually constitutes ‘disruption’ is not agreed, and there is disagreement on how the impact can or should be evaluated. In food crisis situations, such as the recent southern African famine, stakeholders accept that WTO agreements should not hinder ‘food aid’ delivery. Furthermore, there were significant differences on the following important issues:

  • The criteria for types of food aid;
  • The provision of grants, thus facilitating regional procurement, verses direct food aid;
  • The issue of genetically-modified organisms (GMOs) and environmental concerns; and
  • The need for a commitment to not reduce food aid volumes when prices increase.
Within the debate there is acceptance that developed countries have a role in providing continued technical and financial cooperation to LDCs for enhancing agricultural productivity, diversifying crop production, marketing information dissemination, export development, and sanitary and phytosanitary (SPS) measures. It is not clear how far this developmental role should go or where its boundaries should end. Furthermore, the implications of financial and technical support in terms of the negotiations on trade have not been fully considered.

Many commentators agree that the provisions of the AoA do not, at the present juncture, constrain countries from implementing policies that can promote and protect national and household food security. One reason is that the agreed market access and subsidy targets have limited impact since the special and differential exemptions (S&D) and de minimis provisions are adequate. However, it has been argued that the AoA provides a framework for the global agreement of trade rules which could constrain country actions with respect to domestic subsidies, tariffs and export subsidies—the three main issues on the current agenda of negotiations.

This study aims to help identify how the AoA could potentially constrain government action to achieve food security in the Southern African Development Community (SADC) countries through the proposed tariff and subsidy reduction modalities. The research focuses squarely on the current agriculture negotiations. The main focus is on the direct effects of the agreement on food security policy in SADC—hence, the domestic subsidy and market access concerns. It is believed that these effects may pose constraints on the policy options of governments, the question that we seek to address in the SADC context. The study focuses on policy constraints and not what optimal food security policies (including tariffs and subsidies) should be.

The paper does not does not substantially consider trade-related aspects of intellectual property rights (TRIPS) agreements and the agreement on SPS measures. Nor does it consider the indirect effect on developing countries resulting from the reduction of export subsidies and preference erosion in developed countries stemming from the AoA. This topic has been extensively analysed. The study does, however, examine the feasibility of the Marrakech Decision in addressing LDC and NFIDC food security concerns.


Footnotes:
  1. Genesis Analytics, Johannesburg, email:
  2. Sustainable Livelihood Consultants, Cape Town, email:

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