Agricultural trade reform:

the development perspective

By Tjalling Dijkstra

Sustainable Economic Development Department

Ministry of Foreign Affairs

The Hague

• %-wise developing countries gain more than OECD

countries; LDCs gain most

• Largest proportion of gains arises because of

agricultural trade liberalisation

• In OECD: modest impact on av. farm household

• In DCs: poverty falls for agr and diversified

households, rises for non-agr households

Full trade liberalisation:

• Overall gains reduced and distribution altered

• SSA, Bangladesh a.o. will lose

• Major reasons why some countries lose: Negative

terms of trade effect for net food importers,

Preference erosion, Increase underemployment

when smallholder production replaced by imports.

More realistic Doha scenario:

1. Special and Differential treatment

2. Support for net food importers

3. Compensate preference erosion

4. Aid for trade

Turning losers into winners:

SDT in agriculture: smaller reduction of tariffs,

longer implementation periods, more sensitive

products, special products on basis of food

security, livelihood strategy and rural

development, 100% DFQF market access for

LDCs, front loading cotton.

But Arguments for SDT must be clear.

1. Special and Differential Treatment

• Implementation Marrakesh decision (1994)

• Little recent progress; discussions on: ex-ante

financing mechanism aimed at food importers (2002);

multilateral Food Import Financing Facility (2003)

• Alternative solution: improve domestic food

production and trade (+ SDT)

2. Support to net food importers

Africa: agricultural issue related to CAP reform

Compensation questions:

• Take the value of specific preferential access

agreements or to net adverse effect of MFN

liberalisation over all?

• Bilateral or multilateral responsibility?

• Focus on specific crops or diversify?

3. Preference erosion

Definition: Trade policy and regulations, Trade

development, Trade-related infrastructure,

Building productive capacity, Trade-related

adjustment.

Strengthen: The demand side, The donor response

(incl. Paris agenda), The bridge between demand

and response, Monitoring and evaluation.

4. Aid for Trade

1. Consequences of different scenario’s for

different groups of DCs, e.g. 20-20-20, five and

five, 60% and 15 bln. (answers required quick

but not dirty)

2. Weighing offensive and offensive interests of

each group of developing countries (e.g.

Agriculture versus Mode 4 for SSA)

What policy makers in DCs (+ DGIS) need Knowledge on (1):

1. What is the development friendly upper limit of

specific SDT measures for individual countries

(e.g. % special products, G33: 20%)?

2. Analysis of conflicting interests of different

developing country groups (e.g. Latin America

versus ACP countries for tropical products)

Knowledge on (2):

1. Institutional changes required to tackle supply

side constraints in specified countries

2. Diversification scenarios in relation to

preference erosion

3. (lack of) complementarity between multilateral,

regional and bilateral trade agreements

Knowledge on (3):

Coordination and alignment also in research

Building analytical capacity in the South

Thank you.

In addition: