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1、The green barrier to free tradeC. P. Chandrasekhar Jayati Ghosh As the March 31 deadline for completing the modalities stage of the proposed new round of negotiations on global agricultural trade nears, hopes of an agreement are increasingly waning. In this edition of Macroscan, C. P. Chandrasekhar
2、and Jayati Ghosh examine the factors and the players constraining the realisation of such an agreement. AT THE END of the latest round of meetings of the agricultural negotiations committee of the WTO, the optimism that negotiators would meet the March 31 deadline for working out numerical targets,
3、formulas and other modalities through which countries can frame their liberalisation commitments in a new full-fledged round of trade negotiations has almost disappeared. That target was important for two reasons. First, it is now becoming clear, that even more than was true during the Uruguay Round
4、, forging an agreement in the agricultural area is bound to prove extremely difficult. Progress in the agricultural negotiations was key to persuading the unconvinced that a new Doha Round of trade negotiations is useful and feasible. Second, the Doha declaration made agricultural negotiations one p
5、art of a single undertaking to be completed by January 1, 2005. That is, in a take all-or-nothing scheme, countries had to arrive at, and be bound by, agreements in all areas in which negotiations were to be initiated in the new round. This means that if agreement is not worked out with regard to ag
6、riculture, there would be no change in the multilateral trade regime governing industry, services or related areas and no progress in new areas, such as competition policy, foreign investment and public procurement, all of which are crucial to the economic agenda of the developed countries. The fact
7、ors making agriculture the sticking point on this occasion are numerous. As in the last Round, there is little agreement among the developed countries themselves on the appropriate shape of the global agricultural trade regime. There are substantial differences in the agenda of the US, the EU and th
8、e developed countries within the Cairns group of agricultural exporters. When the rich and the powerful disagree, a global consensus is not easy to come by. But that is not all. Even if an agreement is stitched up between the rich nations, through manoeuvres such as the Blair House accord, getting t
9、he rest of the world to go along would be more difficult this time. This is because the outcomes in the agricultural trade area since the implementation of the Uruguay Round (UR) Agreement on Agriculture (AoA) began have fallen far short of expectations. In the course of Round, advocates of the UR r
10、egime had promised global production adjustments that would increase the value of world agricultural trade and an increase in developing country share of such trade. As Chart 1 shows, global production volumes continued to rise after 1994 when the implementation of the Uruguay Round began, with sign
11、s of tapering off only in 2000 and 2001. As is widely known, this increase in production occurred in the developed countries as well. Not surprisingly, therefore, the volume of world trade continued to rise as well after 1994 (Chart 2). The real shift occurred in agricultural prices which, after som
12、e buoyancy between 1993 and 1995, have declined thereafter, and particularly sharply after 1997. It is this decline in unit values that resulted in a situation where the value of world trade stagnated and then declined after 1995, when the implementation of the Uruguay Round began. As Table 1 shows,
13、 there was a sharp fall in the rate of growth of global agricultural trade between the second half of the 1980s and the 1990s, with the decline in growth in the 1990s being due to the particularly poor performance during the 1998 to 2001 period. Price declines and stagnation in agricultural trade va
14、lues in the wake of the UR Agreement on Agriculture were accompanied and partly influenced by the persisting regionalisation of world agricultural trade. The foci of such regionalisation were Western Europe and Asia, with 32 and 11 per cent of global agricultural trade being intra-Western European a
15、nd intra-Asian trade respectively (Chart 3). What is noteworthy, however, is that agricultural exports accounted for a much higher share of both merchandise and primary products trade in North America and Western Europe (besides Latin America and Africa) than it did for Asia. Thus, despite being the
16、 developed regions of the world, agricultural production and exports were important influences on the economic performance of North America and Western Europe. It is, therefore, not surprising that Europe is keen on maintaining its agricultural sector through protection, while the US is keen on expanding its role in world agricultural markets by subsidising its own farmers and forcing other countries to open up their markets. The problem is that the US has been more successful in
