What Are the Reasons for the WTO's Agricultural Agreement?
The World Trade Organization's, or WTO, Agreement on Agriculture (AoA) was put into practice in 1995 after the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). The WTO agreement focused on reducing trade barriers and was the first codification of global rules for agricultural trade. With the Uruguay agreement in place, negotiations on agricultural trade have continued in the Doha Round, which started in Doha, Qatar, in 2001, and was still in process as of March 2011. Developed-world agricultural subsidies remain the largest point of contention, along with the resulting competitive disadvantage faced by developing countries.
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Uruguay Round
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The Uruguay Round agreement in 1994 concluded seven years of negotiations on international agricultural trade. Participants were primarily interested in reducing surplus production resulting from existing subsidies and supports. The resulting agreement focuses on reforming four areas: market access, domestic support, export competition, and sanitary issues. Market access was improved through accords on reduction of tariffs. Participants agreed to cap subsidies and reduce supports that distort production and trade. The AoA also gave preferential treatment to developing countries, allowing for lower reduction commitments and longer implementation periods.
Specific Accomplishments of the Uruguay Round
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In the AoA, WTO members agreed to convert non-tariff trade barriers to tariffs to improve transparency, and to reduce the overall burden of tariffs. Developed countries committed to a 36 percent reduction on tariffs within six years. Developing countries agreed to reduce tariffs 24 percent in 10 years. Support policies were categorized according to market impact, with specific limits on levels of "distorting" support. While the Uruguay Round was successful in simplifying the global trade environment and achieving partial reductions in trade barriers, protectionist policies remained prevalent after the AoA, and substantial disagreements remain between developed and developing countries during the Doha Round.
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Disagreements Regarding Subsidies and Tariffs
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Despite the AoA achievements, the United States, the European Union, and Japan continue to heavily subsidize domestic agriculture. Critics charge that the Uruguay Round also allowed developed countries to shield entire categories of tariffs from reduction. Developing countries allege that these remaining trade barriers distort the market by driving prices down. The result is increased poverty, as small farmers in developing countries struggle to compete with larger, subsidized agricultural corporations. Because of the central role that agriculture plays in most developing economies, the WTO negotiations have become a catalyst for solidarity among developing world nations.
Doha Round
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The Doha Development Round is the trade negotiation round of the WTO following the Uruguay Round. Talks commenced in November 2001. Participants reached a framework agreement in 2004. As of March 2011, Talks were in a "modalities" phase, defining specific targets and methods of achieving goals. The Doha Round stalled repeatedly over issues relating to agricultural trade barriers that favor developed countries, with talks breaking down completely on several occasions. The European Union has committed to significant reductions during the Doha Round, while the United States has been more resistant to change.
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The challenge of WTO to developing countries is one thriving every momoment of west is steping up.
