Agriculture in the GATT: A Perspective from the United States

Abstract

When the trade ministers of the member nations of the General Agreement on Tariffs and Trade (GATT) gathered in Punta del Este in September 1986 to kick off the Uruguay Round of GATT trade negotiations, agricultural trade tensions were running high. Weak demand and good harvests had contributed to a rapid buildup in surplus agricultural stocks, and government agricultural support budgets were running out of control, particularly in the United States and the European Community (EC). There were intense pressures on trade ministers to bring agricultural program budgets and agricultural trade tensions under control.Thus began the Uruguay Round, which promised to be different from past rounds with regard to agriculture. For the first time, countries recognized the need to reform their domestic agricultural policies in order for trade liberalization to take place during the GATT negotiations on agriculture.BACKGROUND TO THE APRIL AGREEMENT In July 1987, the United States tabled its bold and sweeping proposal for agricultural reform in the GATT. It called simply for elimination of all agricultural subsidies and import access barriers to agricultural trade within a 10-year period, the so-called "zero option." Other negotiating groups, namely the EC, the Cairns Group, Canada, Japan, and the Nordic countries, quickly followed with their own proposals.The EC focused on short-term measures to calm the international agricultural markets and to reduce budget costs by increasing international agricultural prices. For the long term, they proposed significant reductions in trade-distorting agricultural support, but certainly not elimination of all trade-distorting government intervention.The Cairns Group proposed a short-term freeze and early reductions in tradedistorting support to show the seriousness of their commitment, with a long-term phasing out of trade-distorting subsidies and access barriers. The Japanese suggested that the main trade issues were a problem of the exporting countries and that major food importers should receive special consideration, including guarantees of access to sources of supply for food security reasons. The Nordic coun-

The political economy of international agricultural protection

“…In case where negotiations are based upon the estimations of the distortion provided by the producer subsidy equivalent measures, the trade distortionary version of this measure would provide more meaningful information. The use of PSEjo has recently received considerable support in trade negotiations (Bray, et al 1992;Meilke and Warley, 1989;Rossmiller and Elliott, 1989;Tangermann, 1989;Tangermann, a/., 1987). The measures proposed earlier by the Canadian government (trade distortion equivalent, TDE) and the E.G.…”