GATT Uruguay Round: Outcome for Agriculture
Principal Author: Ronnie Horesh
Overview
The Uruguay Round was the first set of GATT negotiations to consider agriculture comprehensively. For nearly forty years most developed countries’ agricultural policies have been largely exempt from international trade rules. Instead they were driven by a perceived need for self-sufficiency in food. Special status was accorded to agriculture largely because of memories of wartime food shortages, sympathy for farmers and over-representation of farming interests in government decision making.
Soon after the GATT came into being, it banned export subsidies and import quotas on industrial goods. But agriculture was excluded from those disciplines. The result was that unfair trading practices abounded. Most developed countries erected barriers, in some cases insurmountable, to agricultural imports, while their prosperity grew - largely as a result of the relatively open trading system for manufactured goods.
Farmers in the developed countries responded to these trade barriers, and to lavish domestic price support policies, by producing unsaleable surpluses. Governments had to give further subsidies to dispose of these surpluses on world markets.
These subsidies ballooned, so that in 1992 total transfers to OECD agriculture from consumers and taxpayers amounted to US$354 billion. This represented US$21900 for each of the OECD’s more than 16 million farmers (full-time equivalent). Enough to give every farmer, every year, a brand new Toyota Corolla GLX, complete with alloy wheels and an anti-skid braking system.
Expenditure on this scale represented a massive misallocation of the world’s productive resources. By generating surpluses it also depressed world market prices for agricultural exports and so stunted the development of the world’s poorer countries.
Clearly, agricultural policies in the developed countries were becoming extremely expensive, both in financial terms and, because of their effects on would-be agricultural exporters, politically. The economic costs of food self-sufficiency were also becoming too obvious to ignore.
Contact for Enquiries
Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0675
Fax: +64 4 4 894 0745
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