1 - Introduction

Summary

Half-way through the Uruguay Round of multilateral trade negotiations (1986-1994), the world's most prominent agricultural trade economist published a revised version of his seminal 1973 study entitled World Agriculture in Disarray (Johnson 1991). That book described a world in which the northern hemisphere's high-income countries had been increasingly protecting their farmers for the previous three decades with import restrictions and subsidies, while developing countries assisted industrialists at the expense of their farmers. Global agricultural resources were thus being squandered, with too much farm production and investment in rich countries and too few income-earning opportunities for farmers in developing countries – who constitute two-fifths of the world's workforce and two-thirds of the world's extreme poor (Castañeda et al. 2016) – to expand and possibly export their way out of poverty.

The hope of many was that the Agreement on Agriculture that eventually emerged from those Uruguay Round negotiations, and which came into force with the new World Trade Organization (WTO) on 1 January 1995, would bring agriculture under the trade rules of the General Agreement on Tariffs and Trade (GATT) and reverse that wasteful and globally inequitable situation described by Johnson. The Cairns Group of agricultural-exporting countries, in its first submission to the GATT following the launch of the Uruguay Round, made clear that it expected to “achieve fully liberalised trade in agriculture, to eliminate distortive agricultural policies, and to bind the necessary undertakings under strengthened GATT rules and disciplines” (GATT 1987).

As it turned out, the Uruguay Round Agreement on Agriculture (URAA) fell far short of requiring full trade liberalization and subsidy elimination. However, it did contain new disciplines on domestic support and export subsidies and commitments to replace nontariff barriers with bound tariffs and reduce those tariff bindings over the decade to 2004. This was a significant first step towards fairer competition and less distortions to trade in farm products. Importantly, Article 20 of that Agreement also envisaged a continuation of the farm policy reform process.