8 - Agriculture

Summary

I. Introduction

Agricultural trade is regarded as a sub-category of trade in goods for the purposes of bilateral, regional and multilateral trade agreements. But in virtually all such agreements, it is subject to special treatment. This treatment in bilateral and regional trade agreements can range from exclusion from the schedule of tariff reductions to import restrictions by quota over a transition period, and often includes specific safeguards and new institutions such as committees to which problems can be referred. In multilateral agreements specific treatment for agricultural products has also been the rule: exceptions for primary products were included in the General Agreements on Tariffs and Trade (GATT 1947) and an Agreement on Agriculture was negotiated in the Uruguay Round that perpetuates the special treatment of the sector.

The reason for such exceptional treatment lies in the sensitive nature of agricultural imports. Most governments share a concern for the security of their country's food supply and the level and stability of the income of their rural sector. This concern has translated itself in importing countries into caution about relying on imports for basic foodstuffs and a conviction that protection from overseas competition is necessary for the health of the rural economy. Those countries with export potential in the agriculture sector have long decried such sentiments, arguing that they can provide a regular supply of foodstuffs at lower prices and that supporting inefficient domestic production is not a sound basis for development. But, as one might expect in a sector where governments still have considerable control over markets, negotiations to open up trade in farm products have tended to proceed at the pace of the most reluctant importers.

Within the past two decades, this cautious attitude towards trade in farm goods has begun to give way to a more confident approach that sees imports as complementary to domestic production and exports as a natural extension of domestic markets. Consumers are becoming used to the greater choice of foodstuffs that comes with trade, and producers are setting their sights increasingly on foreign markets for new sources of revenue.