Alan Matthews

The Consequences of Agricultural Trade Liberalization for Developing Countries: Distinguishing Between Genuine Benefits and False Hopes

Recent analyses suggest that the impact of agricultural trade liberalization on developing countries will be very uneven. Some simulations suggest that the effects of agricultural trade liberalization will be small, overall, and are likely to be negative for a significant number of developing countries. The Doha Round focuses on tariff issues, but these countries currently have practically duty-free access to European and North American markets under preferential regimes. Multilateral liberalization will erode the benefits of these preferences, which are presently rather well utilized in the agricultural sector. The main obstacles to the exports of sub-Saharan African and least developed countries appear to be in the non-tariff area (sanitary, phytosanitary standards) which increasingly originate from the private sector and are not dealt with under the Doha framework (traceability requirements, etc.). An agreement in Doha is unlikely to solve these problems and open large markets for the poorest countries. It might even increase their handicap relative to developing countries that are more advanced from a technical and commercial standpoint. While this is not an argument to give up multilateral liberalization, a more specific and differentiated treatment should be considered in WTO rules, and corrective measures should be implemented.

Greening agricultural payments in the EU’s Common Agricultural Policy

Environmental objectives have become increasingly integrated into the EU’s Common Agricultural Policy (CAP) since the mid-1980s. Integration has been pur- sued through the attachment of environmental conditions to the receipt of direct payments in Pillar 1 (cross compliance) and the use of voluntary agri-environment measures in Pillar 2. In formulating its proposals for the revision of the CAP post-2013, the Commission opted to pursue further integration largely through Pillar 1 through the introduction of a ‘green’ payment for farmers following a specified set of mandatory farm practices. The legislative process was not concluded in February 2013, but enough is known of the positions of the Council and the European Parliament to indicate that the level of greening ambition in this CAP reform will be very limited. Some explanations for the apparent failure to significantly reshape the CAP to tackle the problems faced by the natural environment are reviewed. It is suggested that, far from being complementary, cross compliance and voluntary agri-environment meas- ures are competing approaches to further greening of the CAP. Advocates of a greater focus on environmental objectives need to choose between these approaches.

The European Union’s Common Agricultural Policy and Developing Countries: the Struggle for Coherence

Abstract Europe’s Common Agricultural Policy (CAP) has long been criticized as an outstanding example of policy incoherence with development objectives. However, successive CAP reforms now mean that the distortions it generates on world markets are smaller than before, although they remain significant for individual commodities. This paper first examines whether the traditional criticism of the CAP as incoherent with the EU’s proclaimed development objectives remains valid. It then asks how the CAP might be further reformed so as to make it still more coherent with the EU’s development policy objectives. Improving the development coherence of EU agricultural policy requires more liberal market access for developing country agri‐food exports than they currently enjoy. But it also requires that the EU put in place policies to protect and assist those developing countries which may not be able to take advantage of improved market access or which may lose out where lower trade barriers lead to preference erosion.

Economic determinants of private afforestation in the Republic of Ireland

This paper employs a panel regression analysis using county-level data to quantify the relative importance of competing forestry and agricultural policy incentives in explaining trends in private afforestation in Ireland. It concludes that an increase in the level of up front payments to planters is the most cost efficient way of increasing planting levels. The introduction of the Irish agri-environment programme REPS has contributed to a significant decline in the level of forestry planting and offset the recent increases in the level of forestry grants and premia. Several policy reforms to encourage forestry planting in Ireland are proposed, including greater integration of forestry with the REPS scheme and increasing the value of the initial payment which farmers receive.

Coping with the Fallout for Preference-Receiving Countries from EU Sugar Reform

Developing countries can produce sugar at much lower cost than it can be produced in the EU, yet reform of the EU sugar policy will result in both winners and losers among them. Reform will benefit competitive sugar exporters currently excluded from the EU market. It will adversely affect those developing countries that currently benefit from preferential import access to the EUs high-priced sugar market, while diminishing the benefits received by those least-developed countries to which duty-free and quota-free access has been promised after July 2009. This article identifies the countries likely to lose and the extent of their potential losses. It examines alternative proposals that have been put forward to assist these countries to adjust to the adverse effects of EU sugar policy reform and contributes to the debate by putting forward a further proposal.

EU Agricultural Policy: What Developing Countries Need to Know

This paper provides a consolidated, up-to-date overview of the changes to the CAP and the factors making for further reform from the particular perspective of decision-makers in developing countries. It discusses the principles and mechanisms by which EU farmers are supported under the CAP, and the way in which these mechanisms have been changing since the first major reform of the CAP was adopted in 1992. The main pressures for further reform of the CAP are identified, emphasising the political economy of further reform to provide some sense to developing country policy-makers of how these pressures for reform might play out in the future. Taking a horizontal approach, the impact of reform on developing countries of the three main policy instruments – domestic support, border protection and export subsidies – are then discussed, followed by a focus on a few commodities of particular interest to developing countries. The conclusion develops a checklist of factors which developing country policymakers can use to help track the evolution of the debate on CAP reform and its impact on developing countries.

Greening the cap: the way forward

This paper reviews the debate on the proposal to introduce a green payment in Pillar 1 of the CAP since the publication of the Commission’s legislative proposals for the EU’s Common Agricultural Policy post-2013 in October 2011 to June 2012. Both arms of the legislative authority have begun to formulate their positions in response to stakeholder reactions. Many relevant details of how the proposals will be implemented remain unclear, but an attempt is made to examine their potential contribution to environmental improvement. Increasing the ambition of agri-environment measures in rural development programmes in Pillar 2, combined with strengthened cross-compliance standards, could offer more effective environmental protection at a lower cost in terms of foregone food production. The legislative process to date indicates that the final outcome will be based on the Commission’s original ideas but there is still scope to improve the environmental impact of CAP spending in the next MFF period.

Developing Countries' Position in WTO Agricultural Trade Negotiations

Four themes in the developing countries’ position are highlighted. (i) They are seeking meaningful improvements in market access for their agricultural exports. (ii) They have highlighted the asymmetry of current WTO obligations under the Uruguay Round Agreement on Agriculture, and are seeking greater equality of outcomes in the new round. (iii) Meaningful concessions on special and differential treatment will be necessary to satisfy the interests of both exporters and importers, especially on the scope to be allowed for tariff protection to domestic food production. (iv) Innovative and reliable guarantees will need to be provided to the least developed food importers to protect them against the risk of world price volatility.

Special and Differential Treatment in the WTO Agricultural Negotiations

This paper examines the case for special and differential (S&D) treatment for developing countries within the WTO Agreement on Agriculture and the particular instruments or exemptions it should contain. The S&D treatment currently allowed to developing countries in the Agreement and the use they have made of it is first described. The range of proposals put forward by developing countries (and by development NGOs in developed countries) is summarised, and the S&D provisions in the August 2004 Framework Agreement for Establishing Modalities in Agriculture are outlined. The reasons why developing countries want special and differential treatment under the AoA are discussed. Some of the main proposals in the Development Box are then reviewed in the light of the justifications presented by its proponents. The paper concludes that the potential exists in the Framework Agreement to take a significant step towards “operationally effective and meaningful provisions” for S&D treatment. While noting this positive outcome, the important objective for developing countries of gaining a reduction in the trade-distorting support and protection by developed countries should not be forgotten. Classification-

Agro-Food Preferences in the EU's GSP Scheme: An Analysis of Changes between 2004 and 2006.

This article examines the extent to which the 2006 revisions to the EUs Generalised System of Preferences improved market-access opportunities for developing-country agro-food exports. It shows that they resulted in only a slight increase in the percentage preferential margin, but that there has been a significant increase in the value of preferential trade and of the preferential margin enjoyed by exporters. This was accompanied by changes in the ranking of beneficiaries. Countries such as China, Brazil, Argentina, India and South Africa maintained their significant shares of GSP agro-food exports, but other countries such as Thailand and Vietnam have now emerged as major GSP beneficiaries.