Developing countries in the world trade regime
Developing countries in the world trade regime

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Developing countries in the world trade regime

3.1.1 Agriculture

According to the UR Agreement on Agriculture, import quotas were to be abolished, but since no country was prepared to expose its farmers abruptly to the rigours of free trade, quotas were to be replaced by ‘equivalent’ tariffs, which were to be reduced over time. However, the calculation of equivalent tariffs is subject to wide margins of error, and since it was left to each country to determine its own tariffs, most were set at extraordinarily high levels – exceeding 200 or even 300 per cent – for many products. This effectively raised the price of imports by the same percentage, making them unable to compete with home-grown produce. The European Union, Japan (which set a tariff of 550 per cent on rice!) and the USA were the worst offenders in this process, which came to be known as ‘dirty tariffication’. Reducing tariffs as agreed was quite meaningless when they were set at such high levels to begin with.

This effective denial of market access in agriculture was compounded by another loophole in the agreement. These same developed countries vastly increased the amount of money they paid their farmers in the form of subsidies, enabling them to compete against farmers in developing countries who could produce the same products more cheaply, but whose governments could not afford these levels of support. Most commentators agree that, as a result of these various circumventions of the UR agreement, there has been no significant liberalisation of trade in agriculture.

This issue was hotly debated at the 2002 Earth Summit in Johannesburg, and negotiations were under way at the WTO to reduce these subsidies, but at the time of writing it remains to be seen whether the European Union in particular will be willing to confront its politically influential farm lobby. To be fair, this issue is not one that pits all developed countries against all developing countries: some of the former, such as the USA, Canada, Australia and New Zealand, are leading the charge to open the European market for their agricultural exports, while many developing countries import rather than export food and would actually be losers if developed countries reduced their subsidies.

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