Implementation issues of the Agreement on Agriculture and its implications for developing countries

The Agreement on Agriculture (AoA) was an attempt to impose discipline on global agricultural trade by removing trade distortions resulting from unrestricted use of production and export subsidies and import barriers, both tariff and non-tariff. AoA was expected to bring about a structural change in global agricultural trade and a less distorted trading regime in which more efficient agricultural producers would stand to benefit, so has this happened?This article attempts to provide an answer to this question, giving empirical evidence that shows that the actual impact of AoA on agricultural policies has been far less than expected. The authors claim that implementation problems are the main reason for this shortfall. The paper evaluates how effective the three disciplines contained in the AoA have been, in addressing the problems of agricultural trade. The disciplines analysed in turn are domestic subsidy, export subsidy, market access.The author finds that most of the commitments undertaken by developed countries did not prove to be effective because AoA contained too many escape clauses and loopholes to make these commitments really binding. Due to the latitude provided the AoA, most developed countries have managed to fulfill their WTO commitments without introducing any significant reform in their farm sector.The implications highlighted for developing countries include the following:Resultant distortions in agricultural trade are hurting the developing countries mostFor agricultural exporters among developing countries, continuous decline in commodity prices exert a downward pressure on their export earningsTariff peaks and tariff escalations effectively peg developing countries to the bottom end of the value chain and force them to continue as primary commodity exporters thereby denying them the advantages of value additionCheap and subsidised imports from developed countries can create problems for domestic agriculture producers in most developing countries and can lead to a substantial decline in domestic farmers’ incomeDespite these problems, developing countries, especially the agricultural exporters, stand to gain much from further and meaningful liberalisation of agricultural tradeIf the implementation problems of AoA can be resolved, developing countries also stand to gainIf any meaningful trade liberalisation takes place in agriculture, it is likely that food prices will increase, therefore is necessary that developing countries, particularly food-importing countries, are given special privileges to counter this increase in food prices