Agriculture and trade liberalisation. Extending the Uruguay Round Agreement

This report provides information on the average tariff levels and on the use of tariff-rate quotas, export subsidies and export credits by selected OECD countries for temperate-zone agricultural products. The implications of further liberalisation of the various instruments over the medium term are examined.

The effects of further trade liberalisation of agricultural markets over the medium-term depend significantly on the modalities and prevailing market conditions against which the liberalisation scenarios are compared. On market access, although the largest impact on world prices is from tariff reductions, each of the current trade policy instruments (i.e. out-of-quota tariffs, in-quota tariffs, and tariff-rate quotas) would have to be liberalised to obtain the greatest impact. On export subsidies, their current use is already at levels much lower than Uruguay Round commitments, and elimination would have modest effects for most commodities (except dairy products). This situation could change and further discipline on their use would prevent back-tracking. Export credits used by certain countries are also found to distort trade, although the effects on world markets and average prices remain relatively small, due to the small share of trade facilitated by these programmes and their small per-unit effect. Disciplines are necessary, however, to avoid even greater use of all forms of export competition policies.

Countries have embarked on a new round of multilateral trade negotiations on agriculture. The challenge facing policy makers is to build upon the foundations of the URAA to further reduce trade distortions. This requires strengthening the disciplines already established and addressing weaknesses of the current agreement, such as those that have been identified in this report.

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