WTO Agreement on Agriculture: Suitable model for a global food system

The recent food summit and the U.S. farm bill have placed the issue of international agriculture trade and US farm policies at the centre of several disputes at the World Trade Organisation. Sophia Murphy reports.

The Agreement on Agriculture (AoA) is a product of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations (1986-94). The AoA provides the rules governing international agricultural trade and, by extension, production. It bans the use of border measures other than tariffs, and it puts tariffs on a schedule of phased reduction. Under the AoA, domestic support programs are categorized as either acceptable or unacceptable, with the latter also scheduled for reduction, and export subsidies, while effectively legalized by the agreement, have also been disciplined and slated for reduction. The content of the AoA reflects the shared agenda of the U.S. negotiating team and the non-European Union (EU) grain exporting countries (known as the Cairns Group) to push for as much liberalization of agriculture as possible.

The AoA permits countries some leeway to determine the support measures they want for their agricultural sectors. Unlimited spending is allowed for programs that support low-income and resource-poor farmers in developing countries as well as for insurance programs, infrastructure provision, and public food stocks (at world prices) in all countries. Programs that link government payments to specific crops and production levels are permitted under the so-called Blue Box (Article 6.5 of the agreement), which allows rich countries to pay farmers to reduce production.

This policy space is circumscribed, however, by the AoA's broader framework, which promotes a liberalized and integrated world market in agriculture. Although the preamble of the AoA refers to food security, the agreement itself represents an inadequate framework for achieving that goal. The AoA is simply premised on the notion that the fewer trade barriers that exist, the easier it is for demand for food to be met. Export subsidies provide a perfect example. The AoA legalizes the use of export subsidies, but under Article 13, the agreement restricts governments from invoking the WTO rules designed to provide protection from dumping (the sale of goods at less than cost-of-production prices) through the use of export subsidies. This places farmers at the mercy of international markets dominated by a few transnational corporations.

The renegotiation of the AoA beginning June 2002 offers a new opportunity to reorient global trade rules in a manner that promotes food security, resilient ecosystems, genetic diversity, and vibrant economies. Such a transformation would require rules that recognize how agricultural production and trade differ from the production and trade of other goods and services. It would also require rules that outlaw dumping and increase transparency in world commodities markets. Finally, it would require a move away from "one size fits all" policies to rules that enable a diversity of agricultural trade policies to consider each country's level of development, degree of trade dependence, and agricultural production profile. The starting point has to be devising multilateral rules for agriculture that reflect the ecological and economic realities of agricultural production and markets: low elasticity of supply and demand, production levels that are not closely linked to demand, political sensitivities related to ensuring an adequate food supply for each country's citizens, and production that is not dependent on ever increasing quantities of agrochemicals.

Sophia Murphy writes for Foreign Policy In Focus (FPIF) and is the director of the Institute for Agriculture and Trade Policy's trade program. Her work includes advocacy, research, and writing related to the World Trade Organisation and the UN. The above article is an extract from a new FPIF policy brief which is available in its entirety at this website  A related article, World Food Summit: What Went Wrong by Peter Rosset, is at this website To keep up to date with the negotiations referred to, go to this website