Agricultural Policies

Paper

Mid-term report for the agriculture sector study

Overseas Development Institute, London, UK Draft report – to be reviewed by the European commission (2005)

The current proposals for multilateral liberalisation of trade in agricultural commodities under the auspices of the Doha Agenda of the WTO offers developed and developing countries potential gains from trade. Exporting countries (potential and actual) are expected to benefit from increased market access as globally barriers to trade are reduced. However, these benefits will not be evenly distributed across countries as some are better positioned to expand exports (both volume and market share) than others, and some countries currently benefiting from preferential access may lose as their margin of preference is reduced. From the perspective of importing countries, the effects are also likely to be mixed. To the extent that multilateral trade liberalisation and the reduction of tariffs by individual countries reduces prices of their imports, consumers will gain from access to a wider variety of cheaper goods. On the other hand, some elements of liberalisation will tend to increase world prices (e.g. elimination of export subsidies by developed countries) for certain commodities, at least in the short-run. Consumers in importing countries will face higher prices, unless domestic tariffs are reduced to compensate and/or domestic producers can expand production and reduce prices. The effect of increased competition from imports on domestic producers depends on their ability to increase efficiency and competitiveness.

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