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Obstacles to Progress in Multilateral Agricultural Trade Negotiations: Accommodating the Needs of Developing & Transition Countries

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By Don McClatchy

Although the WTO Agreement contained many provisions for “special and differential” treatment, it is now generally accepted that developing countries have yet received rather few real benefits from the Uruguay Round. The hunt is on to find ways to better address the needs of these countries in the new Round; some suggest the credibility and viability of the WTO itself is at stake. Several suggestions already exist about what further might be done. This paper proposes an additional step which might be taken in the agricultural field.

Developing and transitional country governments have a need to protect their farmers (and, often, consumers) against external shocks, particular arising from world market price swings. Typically lacking fiscal resources, their only feasible approach to do this may be through the use of border measures to moderate price transmission to the domestic market. With non-tariff barriers and export subsidies now effectively removed from the choice set for most, what remains are variable tariffs, variable import subsidies and variable export taxes (and, to a limited extent, controls on export quantities).

Many developing countries emerged from the Uruguay Round with bound tariffs quite high relative to applied tariffs. This gives them considerable room to vary the applied tariff as a domestic price stabilizing measure. Some have formal policies in place to do so systematically. Others have done it on a more ad hoc basis. However, questions have been raised about the WTO-legality of such practices because the Agreement on Agriculture explicitly bans some types of variable tariffs (variable import levies and minimum import prices). The reality is that such “banned” schemes are still in operation in the EU and Japan, and some other existing forms of variable tariffs (e.g., ‘seasonal’ tariffs) have not been challenged, and appear to be widely acceptable.

It is concluded that clarification is needed about which types of variable tariff practices are to be allowed and which are not. Rather than opposing developing countries’ use of “sliding scale” tariff schemes and lamenting their high levels of tariff bindings, the OECD group could recognize these countries needs, not exaggerate the costs to themselves, and endorse the practice of varying the applied tariff as a stabilizing measure for import-competing agricultural producers and for consumers of the same commodities. As a special and differential concession, developing and transition countries could be allowed to retain tariff bindings at a level high enough to provide a capacity for using variable tariffs as a safety net measure. Conditions and incentives could be attached to ensure transparency, predictability, and a principally stabilizing (not permanently protective) tariff use. Any new disciplines on export taxes or controls should take into consideration the logical linkage and be made consistent with such a concession.
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WTO Negotiations

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The World Trade Organization (WTO) is a unique international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly and freely as possible, unhindered by political or technical barriers. The WTO was created in 1995 as a result of the Uruguay Round of GATT Negotiations that lasted from 1986 to 1994. Agricultural trade barriers were addressed in a substantive way for the first time in the Uruguay Round. The WTO has a current membership of 147 nations and is growing. The headquarters of the organization are in Geneva, Switzerland. The WTO is founded upon a body of international law encompassing the GATT, as modified by the Uruguay Round, and all agreements and arrangements concluded under its auspices.

The WTO Ministerial Conference held in Doha, Qatar in November 2001 resulted in the launch of a comprehensive new series of trade negotiations, with agriculture as a key topic of negotiation. But the road to a new WTO agreement has been rough, and agriculture remains one of the most contentious areas in the negotiating process.

Developing Countries

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Agricultural trade is important for many developing countries – as a source of foreign exchange and a source of food supplies. Developing country exporters are concerned about their ability to access markets, the barriers that prevent them from taking advantage of market opportunities, and securing good prices for their exports. Developing country importers are concerned about obtaining secure supplies of food at reasonable prices. All developing countries are concerned about how agricultural trade can contribute to their development objectives. How can trade contribute to economic growth, employment, and the well-being of the population?

Developing countries face a number of challenges in international markets. Individually, they are less able to exert pressure on other countries, particularly richer countries, to “play fair” in international trade. Greater dependence on agriculture for income and employment, and on agricultural exports for foreign exchange, may make them vulnerable to changes in supply, demand, and prices in international markets.

Human-to-Human Infection by Bird Flu Virus Is Confirmed

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ROME, June 23 — An Indonesian who died after catching the A(H5N1) bird flu virus from his 10-year-old son represents the first confirmed case of human-to-human transmission of the disease, a World Health Organization investigation of an unusual family cluster has concluded, the agency said Friday.

The W.H.O. investigators also discovered that the virus had mutated slightly when the son had the disease, although not in any way that would allow the virus to pass more readily among people.

“Yes, it is slightly altered, but in a way that viruses commonly mutate,” said Dick Thompson, a spokesman for the agency in Geneva. “But that didn’t make it more transmissible or cause more severe disease.”

The greater importance of the slightly modified virus is that it allowed researchers from the W.H.O. and the Centers for Disease Control and Prevention in the United States to document that the virus almost certainly was passed from person to person.

In previous cases where human-to-human transmission was suspected, researchers could not test samples from the patients, or the virus in the patients was the same as that in poultry in the area.

The genetics work vindicates some Internet flu watchers who had disputed statements by a W.H.O. official and the Indonesian Health Ministry soon after the cluster was reported, saying it was possible the whole family had been infected by a barbecued pig, poultry or chicken manure.

The independent flu watchers, relying on local Indonesian news media, had argued that the pattern of dates on which different family members fell ill suggested that the virus had jumped from human to human to human.

Scientists have long said the A(H5N1) virus, which has killed or led to the culling of hundreds of millions of birds worldwide, does not spread easily to humans or among them. But they have worried that it might mutate to acquire that ability, setting off a devastating pandemic.

More than 200 people have contracted bird flu worldwide, almost all of them after very close contact with infected birds.

International health officials have been in Indonesia for much of the past month, investigating a family outbreak that affected seven relatives in Kubu Sembilang, a remote village in the mountainous Karo district of Sumatra. Six of the seven died, and one is still hospitalized.

Although Indonesia has been struggling all year to control bird flu outbreaks among poultry, the family on Sumatra had no known direct contact with sick birds, although the first to die was a woman who sold vegetables in a market that also sold birds.

But scientists have long suspected that A(H5N1), though an avian virus, could also spread between people in rare cases, if there was prolonged close contact.

The family members in the cluster had a banquet in late April when the vegetable merchant was already ill and coughing heavily. Some spent the night in the same room with her, and some nursed sick relatives.

The first five family members to fall ill had identical strains of A(H5N1), one found in animals in Indonesia. But that virus had mutated slightly in the sixth victim, a child, and he apparently passed the mutated virus to his father, who cared for him in a hospital without proper protection, said Dr. Tim Uyeki, an American epidemiologist on the W.H.O. team.

Still, Mr. Thompson said there was no evidence that the mutated virus was better adapted to human infection. To the contrary, the agency has been following 54 relatives and neighbors for a month and none have caught it.

“So we know it is not more easily transmitted,” he said.

Donald G. McNeil Jr. contributed reporting from New York for this article.