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Agricultural Export Subsidies and Developing Countries' Interests

image of Agricultural Export Subsidies and Developing Countries' Interests

A new impetus has been given to faltering WTO trade discussions by the recent EU mandate supporting the liberalisation of agricultural trade policies and removal of export subsidies on agricultural products, within an environment in which all countries start reforming their trade policies. Until now, discussions have centred on agriculture in general, rather than at specific commodity level. This paper rises to the challenge laid down by the EU in identifying the specific commodities for which developing countries would gain benefit in any subsequent reforms. Agricultural Export Subsidies and Developing Countries’ Interests outlines the nature of export subsidies. It discusses the effect of reform on developing countries, indicating the scale of any changes. The policy implications of removing agricultural support in the EU are given and the consequences for net food exporting and importing countries examined. Finally, the paper considers the impact of EU agricultural policy reform on other policies, such as the Protocols of the Lomé Convention.

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Developing Countries and Agricultural Trade Reform

Developing countries' current interests in access to export markets lie primarily in agricultural products or natural resources (minerals, etc.) or in light manufactures such as textiles, clothing and footwear. As can be seen from Table 3.1, at the end of the Uruguay Round negotiations the average tariff equivalent (of tariffs and non-tariff barriers combined) on mineral and energy products was relatively low into both high-income and low-income countries, low on manufactured goods into high-income countries (except for a few areas such as textiles, clothing and footwear – see Chart 3.1), and highest for agricultural products entering both high- and low-income countries from both sources. In general terms developing countries have an interest in agricultural trade reforms (in particular in the industrial countries, but also globally - see Chart 3.2), which as we established in Chapter 2 will increase export market opportunities in volume terms and increase export prices (where they reduce over-production and subsidised exports).

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