Some 175 experts meeting in UNCTAD on trade in the agricultural sector concurred with the Secretary-General of UNCTAD, Mr. Rubens Ricupero, (see TAD/INF/2802) that, "agricultural liberalization has socio-economic effects in developing countries, which should be taken into account in the negotiations on the continuation of the reform process".
At the close of a three-day meeting (26-28 April), the experts - from 85 countries and 16 intergovernmental and non-governmental organisations - adopted a set of "agreed conclusions" which the Chairman, Mr. Sandor Simon (Hungary) was confident would be a contribution to the upcoming negotiations in this very important sector. The conclusions highlight the developmental aspects of agricultural trade negotiations and suggest issues that need to be taken into account in order to permit developing countries to compete on a fairer basis.
"We have accomplished a good job", the Chairman said. He hailed UNCTAD’s efforts to help developing countries in achieving a better negotiating position in future trade negotiations.
The "agreed conclusions" (TD/B/COM.1/EM.8/L.1) single out three categories of countries for whom agricultural liberalization will impact on their societies and economies. The first is those developing countries in which the majority of the working population is employed in the agricultural sector, most of whom are small-scale poor family farmers. (In low income countries, the agricultural sector employs over 70% of the total labour force). The experts recognized that, "any fall in agricultural production can lead to problems of food security and to a large negative income effect on farmers and thus to macroeconomic problems (e.g. high unemployment, rapid urbanization resulting in increased poverty, crime, etc.), as well as food insufficiency".
A second group is the "resource-poor countries", such as small island developing countries, where increases in agricultural imports can have a devastating effect on the viability of the agricultural sector. The socio-economic effects of agricultural liberalization should also be taken into account for Least Developed Countries (LDCs) and Net Food-Importing Developing Countries (NFIDCs) which face an acute problem of food security and difficulties in meeting their food import requirements, including through food aid.
In addition to difficulties in meeting obligations arising from the reform process, many developing countries, especially LDCs, were said to lack the capacity " to improve their competitive position and exploit opportunities arising from global agricultural trade liberalization". Therefore, they require the resources necessary to assist their producers to have an improved production infrastructure, improved seeds and chemical inputs, irrigation and better technology.
The expert meeting also agreed that developing countries required access to long-term credit for financing incremental working capital, investment and insurance, together with efficient and cheap freight, including the shipment of small cargoes; as well as technology and information, in order to consistently meet market requirements (including product quality standards, sanitary and phytosanitary (SPS) requirements, packaging and labelling standards); and modern marketing and distribution infrastructures and skills to improve their competitive positions.
Possible actions on issues at stake
Among the actions the experts suggested should be taken into account in the upcoming agricultural negotiations were the definition of measures to provide "special and differential treatment" (S&D treatment) to developing countries. This, they said, should be done "in a manner which responds to their own specific needs, taking into account the level of economic development, the role of agriculture in the economy and society, and differing production conditions".
S&D treatment could focus on specific features of market access, increased productivity, food security, the need to protect small farmers, the special situation of small island developing countries, landlocked countries, small and vulnerable economies and developing countries with large segments of the population dependent on the agricultural sector for employment. S&D provisions could include greater flexibility, particularly with respect to domestic support commitments, and to the safeguarding of their food production.
The meeting agreed that government actions pursuant to the 1994 Marrakech Decision Concerning the Possible Negative Effects of the Reform Programme on LDCs and NFIDCs should be made more concrete.
Action should be taken to improve market access through a reduction in the level of agricultural tariffs and tariff peaks, tariff escalation and in the complexity of tariffs. They also argued in favour of greater transparency in the structure of tariffs and in tariff rate quota administration, and said UNCTAD should continue its research in this area.
The experts agreed that further discussions might be required to identify how developmental aspects of domestic support measures in developing countries could be incorporated in the domestic support commitments. Further consideration should be given also to the fact that many developing countries have been facing policy constraints arising from incoherence between the rules regarding domestic support under the Agreement on Agriculture and measures imposed under the Structural Adjustment Programmes.
Export subsidies had in many cases displaced developing country exports, and had been especially damaging to small-scale producers in developing countries, who had no resources to compete against subsidized exports from other countries. They also increased instability and variability of prices on the world agricultural market, with consequent serious effects on developing countries exporters. UNCTAD should analyze the impact of substantial reduction or elimination of export subsidies, with a particular attention to effects, both positive and negative, on LDCs, NFIDCs and other small and vulnerable economies.
