The Agreement on Agriculture (AoA) is one of the most significant agreements negotiated in the Uruguay Round. As with the other Uruguay Round Agreements, it came into effect in 1995 under the new World Trade Organisation (WTO) regime.

The AoA regulates the liberalisation of agricultural products. This issue of liberalising agricultural trade is of interest to huge segments of the world population because agriculture is the means of livelihood for many in the North and South.

Particularly in the developing South, the structure of agricultural production to a large degree determines whether, and to what extent, people have access to the food they need. Large numbers depend on subsistence farming and also on cash crop farming for their livelihoods. Lower income resource poor countries, as well as net food importing countries, are very vulnerable to world food price fluctuations and to the competing imported products from the North making their way into their borders.

The Agreement on Agriculture was meant to remove some of the protections Northern governments provide, open up markets, and bring the highly protected agricultural sector into the free market.

However, as it turned out, the AoA did not significantly reduce Northern protections, but in many instances, legitimised them (although some countries, like the US, have reduced them more than others, such as the EU). The OECD countries in 1997 alone, provided supports to their farmers to the tune of US$280 billion. Subsidised products from the North, competing in the same markets with products from developing countries, are destroying the viability and livelihoods of farmers in the developing world. Small farmers in the North too, are slowly being pushed out as they find themselves in competition with the big agri-businesses which governments are supporting.

These transnational corporations control inputs, have industrialised production, have established large-scale contract farming in developed and developing countries and are the main players in the processing and marketing of food. In short, they are the main beneficiaries of the system of globalised food trade the GATT / WTO, as well as its sister organisations, the IMF and World Bank, are institutionalising. Food production is becoming a business monopolised by a few.

The South is losing its ability to produce its own food. When it does, its production is geared towards the export market, totally dissociated from the food needs of its own people. It is a reality now that countries export food while their own people are starving. This system of agriculture therefore only feeds the rich and sends the poor away hungry. The other mortal sin, of course, is the destruction to the environment due to intensive farming, monocropping, the heavy usage of chemicals, the increasing use of transgenic plant varieties and its detrimental consequences on biodiversity, as well as the long-distance transportation of foods at every stage of their production.

Real food security raises questions such as who has access to the land, who produces, who makes the decisions, who will eat, and whether or not the food produced is culturally appropriate. Ultimately, real food security can only come about through food self-sufficiency, locally, nationally or regionally. Hauling agricultural produce from one corner of the earth to another may sometimes be inevitable, but should be the exception rather than the rule. This does not mean autarchy or isolationism, but self-reliance, sovereignty, environmental resource sustainability, employment, and importantly, adequate access to food for all. After all, we know only too well from experience, that food security is not just about having enough food at the global level. Today, some regions suffers chronic food surpluses while others chronic shortages. Adequate food production at the global level, as rationalised by Washington and by WTO proponents, is superficial, bordering on irrelevant.

As stipulated in the text of the AoA, the Agreement must be reviewed a year prior to the end of the implementation period in 2000. In view of this, many non-governmental and public interest groups have demonstrated strong sentiments against the destruction wrought by opening their markets in the manner stipulated by the WTO.

This guide to the AoA intends to support interested organisations and individuals in voicing their concerns in their campaigns as the AoA review approaches. It flashes out the basic provisions of the Agreement and looks at the ‘tricks’ used by the developed countries, primarily the EU and the US, to side-step their commitments in the implementation of the Agreement so as to maintain their agricultural trade barriers and expand their markets.

2. Background to the Agreement (return to index)

Why Agriculture Was Brought into GATT

Prior to the Uruguay Round, agriculture was de facto outside GATT discipline, mainly because the United States had sought in the 1950's a waiver from Article XI of the GATT, which prohibited quantitative restrictions on imports.  With the US threatening to leave GATT unless it was allowed to maintain protective mechanisms for sugar, dairy products, and other agricultural commodities, Washington was given a "non-time-limited waiver" on agricultural products.  This led to GATT's lax enforcement of Article XI on other agricultural producers for fear of being accused of having double standards.

The US and other agricultural powers not only ignored Article XI but they also exploited Article XVI, which exempted agricultural products from GATT's ban on subsidies.  One effect of these moves was the transformation of the EU from being a net food importer into a net food exporter in the 1970's.  By the beginning of the Uruguay Round in the mid-eighties, the
EU's Common Agricultural Policy (CAP) had developed into what experts Michael Trebilcock and Robert Howse described as "a complex web of price and sales guarantees, subsidies, and other support measures that largely insulated farmers' incomes from market forces."

With domestic prices set considerably above world prices and no controls on production, European farmers expanded production.  The mounting surpluses could only be disposed off through exports, sparking competition with the previously dominant subsidized US farmers for third-country markets.  The competition between the agricultural superpowers turned fierce with the US loosing its position as the leading agriculture exporter to the EU in the 1970s, and US farm exports dropping from US$44 billion to US$26 billion.

However, it was not so much their subsidized farmers that suffered. Since over 80 per cent of agricultural support was in the form of market price supports, these large scale supports easily led to the lowering of international prices. As both the US and EU were large net exporters of agricultural products, the effect of their protectionist policies were borne by the rest of the world. The victims were largely third country farmers, such as the small-scale cattle growers of West Africa and South Africa who were driven to ruin by low-priced EU exports of subsidized beef.

With state subsidies mounting to support the bitter competition for third country markets, the EU and the US gradually came to realize that continuing along the same path could only lead to a no-win situation for both. The cost of supporting agriculture in the developed world amounted to US$300 billion per annum in the 1980s.

By the late eighties, close to 80 per cent of the EU's budget was going to support agricultural programmes. At the start of the Uruguay Round in 1986, US was subsidising its producers to the tune of US$88 billion. The US had inaugurated a whole new set of expensive programmes, for example, the Export Enhancement Program, to win back markets such as the North African wheat market from the EU.

This mutual realization of the need for rules of engagement in the struggle for third country markets is what led to the EU and the US to press for inclusion of agriculture in the Uruguay Round.  Rather than seriously advancing a mechanism to promote free trade, the two superpowers resorted to the rhetoric of free trade to regulate a condition of monopolistic competition, with each seeking advantage at the margins.

The manner in which the Agreement came into being lends support to this interpretation.  The final Agreement was essentially the Blair House Accord, which was negotiated only between the US and the EU in November 1992. At that time, a trade war was brewing between the US and EU over a dispute on oilseeds. The Blair House meeting was a last ditch attempt to avoid this. Both sides managed to resolve the oilseeds disputes as well as outstanding issues in the agriculture negotiations. The Accord was then promptly re-labeled the GATT Agriculture Agreement and tossed to other GATT members for endorsement.

‘Creative’ Implementation (return to index)

Following the Accord, countries had to smoothen out their country schedules and implementation details in accordance with the ‘Modalities’ paper which provided the formulae on how tariffs and reductions were to be calculated. Surprisingly, there was little supervision in the process. Countries ‘creatively’ interpreted the agreed guidelines and in many cases, developed countries found innovative ways to circumvent any significant liberalisation commitments in order to product their interests.