Apr 6, 1984


GENEVA, APRIL 4 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The international trade in agriculture is now "highly restrictive on the import side, and permissive on the export side", according to Aert de Zeew of Netherlands, the chairman of the GATT Committee on Agriculture.-

In his "non-paper", presented to the Committee, the chairman had said that trade in agricultural commodities was not "really integrated" into the multilateral trading system.-

Countries applied an abundance of (...) both on imports and exports, such as deficiency payments, export subsidies, QRs, import and export monopolies, variable levies, export restrictions, and health and quality requirements.-

There were also restrictive measures applied under waivers, accession protocols and the "grandfather clause" (the protocol of provisional application of the General Agreement, under which "existing" legislation, when the agreement was provisionally agreed to be applied in 1947, was saved).-

As a result of various measures, access to markets is very restrictive, conditions of competition in world markets unsatisfactory, and the mounting direct and indirect costs of support and protection are a matter of major concern to governments.-

Apart from the issue whether measures being applied are consistent with GATT, if the various "grey-zone" measures are also taken into account (barter, buy-back, voluntary restraint, and gentlemen's agreements, etc.), the day to day reality is of a highly restrictive trade on the import side and a permissive one on the export side.-

All the restrictions are intimately linked to domestic policy objectives of governments - stabilising producers' incomes at levels comparable to non-agricultural incomes, maintaining levels of production for strategic or other reasons, stabilisation of consumer prices, etc.-

With strict income-stabilisation policies and internal prices not related to world market prices, production is no longer related to market prices or demand.-

While the GATT system of liberalisation of trade has sought to link domestic prices to world market prices, these are not practised in agriculture in order to protect incomes of farmers.-

The stabilisation of prices on domestic markets of both importing and exporting countries have "destabilised international market", which is now characterised by "a large degree of instability at mostly low prices".-

The present situation could not be improved by mere re-interpretation of existing unsatisfactory rules about import protection and export-subsidies.-

There must be a commitment to reduce the level of domestic price support, if such support has led to persisting structural surpluses or reduce access to domestic markets.-

While price stabilisation and price and/or income support to farmers is indispensable to achieving basic goals of agricultural policy in almost every country, the real issue is the level of protection and the instruments that could be permitted.-

In Zeew's view, improved or better framework for trade in agriculture must involve:

-- Relating domestic income and price support measures to access and competition.-

The support policies and measures that directly or indirectly reduce imports or increase exports, and their effect on production and trade, should be taken into account in determining conditions under which Contracting Parties would be entitled to restrict imports or subsidise exports.-

-- Market forces must play a larger role both in competition on domestic markets and competition between exporters in world markets.-

-- For competition on domestic markets, trade restrictive measures affecting market access should be subject to greater GATT rules and disciplines. These must cover variable levies, voluntary export restraints, unbound tariffs and QRs.-

-- The use of these instruments should be linked to the effects of domestic policies and applied to strengthen interaction between world market prices and national prices.-

Comparative advantage must play a larger role, and there should pie more willingness to bind tariffs and levies, and effect controls on internal production and export levels and minimum import levels, where QRs are used and at the same time domestic prices are isolated from world market prices.-

-- Export subsidies should be prohibited except under strict conditions - such as when producers bear its cost themselves, and internal support for compensating for the difference between domestic support price and world prices, are limited by effective discipline.-

-- The developing countries have important interest in better access to markets and in fairer conditions of competition in world markets, particularly in areas where they enjoy comparative advantage. The special needs of the developing countries, including their limited capacity to compete with highly subsidised exports, should be fully taken into account.-