Today we live in a globalized world and anybody can buy any product from any country in the world. But that is not completely true. Trade is not as free as many of us always think it is. There are still so many trade barriers which make international trade sometimes such an adventure. The World Trade Organization (WTO) was established to liberalize trade by reducing or eliminating tariffs and any other trade barriers. Therefore, all members have to contribute to that undertaking and make concessions. In the current round, named the Doha Development Agenda this does not work as it was meant to. A crucial issue in that conflict is agriculture. Developing countries and least developed countries complain about large amounts of subsidies paid by high-income countries such as the EU. In contrast, developed countries want developing countries to make concessions in terms of trade related intellectual property rights and trade related investment measures. So each country blames the other one instead of taking action and making the first step.
This essay is structured into two main parts. The first part informs about some basics of protectionism and what happened so far in terms of agricultural liberalization. Chapter two gives a short overview of the existing types of protectionist measures to get a first impression how manifold opportunities for protectionists are. In this case, measures were divided into border measures and non-border measures. Chapter three informs about the outcome of the Uruguay Round, namely the Agreement on Agriculture to give an impression what was the state of WTO negotiations before the Doha Round started and what the impact of the URAA was. All previous rounds are not stated here because the Uruguay Round was the first round to achieve major results in liberalizing agriculture.
The second part of the work describes the actual situation. Chapter 4 starts with the investigation why agricultural issues delay the Doha Development Agenda. Therefore, both sides, namely the developed countries´ view and developing countries´ view, are treated to deliver a balanced picture. Extent and gravity of agricultural tariffs and subsidies are explained in chapter 5. In chapter 6 the results of two major studies are presented to get an impression how much benefits are at stake for negotiation partners. In the last chapter I make some concluding remarks and try to give a future outlook how the fiasco of trade negotiation might be resolved.
Table of Contents
1 Introduction
2 Types of protectionist measures
2.1 Border measures
2.2 Non-border measures
3 Outcome of the Uruguay Round
3.1 Export subsidies
3.2 Market access
3.3 Domestic support
3.4 Impact of URAA
4 Agricultural issues delay the DDA
4.1 Developed countries’ point of view
4.2 Developing countries’ point of view
5 Extent and gravity of agricultural subsidies and tariffs
5.1 Agricultural tariffs
5.2 Agricultural subsidies
6 Beneficiaries of liberalization in agriculture
6.1 Analysis by Anderson et al. (2006)
6.2 Analysis by Adler et al. (2009)
7 Concluding Thoughts and Outlook
8 References
Objectives & Topics
This work examines the persistent trade barriers in the agricultural sector and their detrimental impact on the progress of the Doha Development Agenda (DDA). The primary research aim is to investigate why agricultural issues remain a central point of contention between developed and developing nations and to evaluate the potential economic benefits of further trade liberalization.
- Analysis of different protectionist measures (border and non-border) in global agriculture.
- Evaluation of the Uruguay Round Agreement on Agriculture (URAA) and its long-term impacts.
- Examination of conflicting viewpoints between developed and developing countries regarding agricultural subsidies and tariffs.
- Assessment of the extent of agricultural protectionism and its gravity in modern global trade.
- Discussion of welfare gains from liberalization based on major economic studies.
Excerpt from the book
3.1 Export subsidies
Export subsidies are a huge problem and a major source of distortion in agricultural trade. By granting export subsidies a country is able to offer a specific product at a lower price on the world market than that prevailing in its domestic market. Furthermore, export subsidies depress world prices, particularly if the exporting country accounts for a significant share of world trade (OECD, 2001). Therefore, export subsidies were a major provision of the URAA. According to the URAA they had to be cut from a 1986-1990 base period by 36 per cent and by 21 per cent for each product in terms of volume. However, there is a certain amount of flexibility for some products (European Parliament, 2000).
Least developed countries (LDC) were supposed to cut export subsidies by 24 and 14 per cent respectively over a ten year period (Balaam, 2004, p. 170). For the US and the Cairns Group that outcome must have been very unsatisfactory as they both sought the complete liberalization of trade in agriculture. Particularly the US was concerned about export subsidies (Hoekman & Kostecki, 2002, p. 215). Export subsidies as nontariff barriers had to be converted in tariff equivalents to be quantified and then to be cut equally to tariffs.
Summary of Chapters
1 Introduction: Provides a background on globalized trade, the role of the WTO, and the specific deadlock regarding agricultural issues in the current Doha Round negotiations.
2 Types of protectionist measures: Categorizes and explains various instruments used to distort trade, distinguishing between border measures like tariffs and non-border measures like domestic subsidies and output quotas.
3 Outcome of the Uruguay Round: Reviews the history of agricultural trade negotiations, detailing the three pillars of the Agreement on Agriculture and assessing its overall impact on global trade.
4 Agricultural issues delay the DDA: Investigates the underlying reasons for the current stalemate in the Doha negotiations, contrasting the perspectives of developed versus developing nations.
5 Extent and gravity of agricultural subsidies and tariffs: Quantifies the current levels of protectionism, including detailed examinations of tariff bindings and the Producer Support Estimate (PSE).
6 Beneficiaries of liberalization in agriculture: Presents and compares two significant economic studies that model the welfare gains resulting from full trade liberalization in the agricultural sector.
7 Concluding Thoughts and Outlook: Discusses the necessity of concluding the Doha Round to maintain the credibility of the WTO and suggests a path forward toward a fairer, rules-based trading system.
Keywords
Doha Development Agenda, Agricultural Protectionism, WTO, Uruguay Round, Export Subsidies, Trade Liberalization, Market Access, Domestic Support, Producer Support Estimate, Tariffication, Trade Barriers, Global Welfare, Agricultural Policy, GATT, Developing Countries.
Frequently Asked Questions
What is the core subject of this paper?
The paper examines the intersection of agricultural policy and international trade, specifically focusing on why the agricultural sector remains the primary obstacle to finalizing the Doha Development Agenda.
What are the primary thematic fields covered?
The key themes include the history of trade negotiations, the taxonomy of protectionist measures, the analysis of specific agricultural policies (tariffs and subsidies), and the economic modeling of welfare gains from liberalization.
What is the main research question or objective?
The primary objective is to understand why agricultural trade remains highly distorted despite previous negotiation rounds and to assess how resolving these issues could unlock significant economic benefits for the global community.
Which methodology does the author employ?
The work utilizes a descriptive, comparative analysis, synthesizing existing economic theory, policy documents from the WTO, and empirical research findings from major institutions like the OECD and the Peterson Institute of International Economics.
What does the main body address?
The main body breaks down the different forms of trade distortion, evaluates the past URAA framework, explains the geopolitical deadlock between developed and developing nations, and discusses the findings of quantitative studies on trade liberalization.
Which keywords characterize this work?
The work is best characterized by terms such as Doha Development Agenda, agricultural protectionism, market access, export subsidies, and global trade welfare.
What is the significance of the "water" between bound and applied tariffs?
The "water" represents the gap between the maximum tariff rate a country is legally permitted to apply (bound rate) and the actual rate it currently charges (applied rate). This gap is often used by countries as a "free safeguard" to increase protectionism whenever they deem it necessary.
Why are export subsidies considered particularly harmful?
Export subsidies are deemed highly distortive because they allow countries to sell surplus agricultural goods at artificially low prices on the world market, thereby depressing global prices and harming farmers in developing nations who lack comparable government support.
- Quote paper
- B.A. Stefan Hemm (Author), 2011, Agricultural Protectionism, Munich, GRIN Verlag, https://www.grin.com/document/193427
