WORLD TRADE WT/MIN(98)/ST/81
20May1998
ORGANIZATION(98-2092)
Original: English MINISTERIAL CONFERENCE
Second Session
Geneva, 18and20May1998
FOOD AND AGRICULTURE ORGANIZATION
Statement Circulated byMr.Hartwig deHaen,
Assistant Director-General, Economic andSocial Department
(AsAnObserver)
Thesigning oftheMarrakesh Agreement fouryears agoprovided theframework foranorderly
development ofagricultural trade, andfora“rules-based ”conduct ofdomestic andtrade policy in
theagricultural sector. Allcountries, bothdeveloped anddeveloping, hadhighexpectations fortheir
economies tobenefit from theadvantages resulting from theopening upofmarkets.
Asonlythree years havepassed since theAgreement onAgriculture came intoeffect, the
experience wehavehadintheimplementation oftheUruguay Round isnotsufficient tocome todefinite
conclusions about itsimpact. However, thequalitative changes ofthelastfewyears, asaresult of
theUruguay Round, areperhaps more important thanthequantitative changes thatwehaveseenso
far. TheUruguay Round Agreements have already hadaprofound impact onthedesign and
implementation ofdomestic andtrade policies. Ishould liketoventure acouple ofobservations on
developments sofar.
Agricultural prices strengthened
Ananticipated consequence oftheUruguay Round wasamodest strengthening ofagricultural
commodityprices.Itiswell-knownthatthetrendofrealagriculturalcommoditypriceshasbeendeclining
overthelongrun.However, itappears thatthisdecline hasslowed down inrecent years and,infact,
itmayhavebeenreversed. FAOdataindicate thatthetrade-weighted index ofexport prices ofmajor
agricultural commodities was16percenthigher in1997, compared to1990. Thiscompares witha
decline ofabout 50percentduring thedecade ofthe1980s, when world agricultural markets were
incomplete disarray. Exporting countries and,totheextent thattheprice increases werepassed on
tothem, agricultural producers, would welcome these recent developments.
Some difficulties fornet-food importing countries
Thestrengthening ofworld agricultural prices, however, hasposed some difficulties for
importers. Theexperience oftheLeast-Developed Countries (LDCs) andtheNet-Food Importing
Developing Countries (NIFDCs) during the1995/96 price spike isacaseinpoint. During thatyear,
when alsofoodaidandconcessional salesweredrastically reduced, thecostoftheircereal import bill
increased byover70percent. Inmany cases, poorconsumers hadtobeartheconsequences by
adjusting theiralready inadequate diets.
Ofcourse, thehigher world market prices mayeventually alsohavebeneficial effects inso
farastheyaretransmitted tothefarmers. Higher prices notonlyincrease farmers ’incomes, butalso
enable themtoincrease production through investment andhigher input use.Naturally, governmentsWT/MIN(98)/ST/81
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should provide thenecessary infrastructure andenabling environment tofacilitate theproduction
response -aprocess which needs resources andtime.
Inthisconnection, itisimportant thattheMarrakesh Ministerial Decision onMeasures
Concerning thePossible Negative Effects oftheReform Programme onLeast-Developed andNet-Food
Importing Developing Countries isfullyimplemented, aswasstressed bytheWorld Food Summit
in1996. InFAO’sview, thisgroup ofcountries isstillfaced withthepossibility offluctuations in
prices during thistransitional period towards anewinternational trading system foragriculture, although
cereal prices haveeased since 1996.
Policy reforms andFAO’stechnical assistance
FAO haslongexperience inproviding technical assistance toitsmember countries inawide
range oftrade-related issues concerning agriculture, fisheries andforestry sectors. Toindicate the
magnitude ofFAO’stechnical assistance, in1996 FAO operated over1,500 projects indeveloping
countries (amounting tooverUS$1.5 billion) outofwhich alargepartwasdirectly orindirectly related
toagricultural, fisheries andforestry commodity trade. FAO hasjustpublished abrochure onits
technical assistance programme related tofollow-up activities totheUruguay Round. Copies ofthe
brochure areavailable tointerested delegations.
SincetheconclusionoftheUruguayRound,FAOhasrespondedtoagrowingnumberofrequests
frommember countries fortechnical assistance intheareasofitscompetence. Thenature oftherequests
included clarifications ontheimplications oftheUruguay Round Agreements, howtoapply specific
provisions inpractice, theirimpact onmarkets ofspecific commodities, howtotranslate potential market
access toexport earnings, assisting countries contemplating applying formembership totheWTO.
Inthefirstinstance, FAO’sassistance includes helpinareas related totheimplementation of
theUruguay Round Agreements. Itcovers, inter alia, matters related totheAgreement onthe
Application ofSanitary andPhytosanitary Measures (SPS), theAgreement onTechnical Barriers to
Trade (TBT), theAgreement onTrade-Related Aspects ofIntellectual Property Rights (TRIPS),
agricultural andfoodpolicy adjustment tothenewWTO provisions contained intheAgreement on
Agriculture, tradedevelopment issues intheforestry andfisheries sectors, andassistance inconnection
withtheMinisterial Decision onmeasures fornet-food importing andleast-developed countries.
Thedemand forsuchassistance isgrowing, andFAO isactively collaborating withother
international organizations, including interaliatheWTO, UNCTAD, UNDP andtheWorld Bank,
aswellasbilateral agencies, inthedelivery oftrade-related technical assistance inagriculture, fisheries
andforestry. Inthisconnection, FAO hasalsoexpressed itsreadiness tocollaborate withthesixlead
agencies ontheIntegrated Framework fortrade-related technical assistance totheleast-developed
countries which wasinitiated inOctober 1997.
Thefuture
TheUruguay Round wasamilestone inthemultilateral trading system, butinmany respects
itwasonlyabeginning andalotremains tobedone. Asregards agriculture, Article 20ofthe
Agreement onAgriculture provides thebasic parameters forthecontinuation ofthereform process.
Iwould notliketoventure onhowthisprocess mayevolve intheyears ahead, butsimply make a
fewobservations.
World trade, bothintheagricultural andother sectors, willcontinue toplayanimportant role
infoodsecurity. Itisexpected thatthemajority ofdeveloping countries willcontinue todepend on
world markets, andperhaps foragrowing share oftheirfoodneeds. Atthesame time, developingWT/MIN(98)/ST/81
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countries willincreasingly relyontheworld market toearntheirincome bothfrom agricultural and
non-agricultural exports. Asaresult ofthese twotrends, farmers andconsumers willbeincreasingly
exposed tofluctuations originating inworld markets. Animplication ofthistrend istheneedfora
wider diffusion ofrisk-reducing financial instruments, support tofoodsecurity stocks, compensatory
financing schemes andsafeguards.
Thereislikelytobeanexpansioninscience-basedregulationsaffectingtrade.Consumers
wantfoodwhich issafe,ofgoodquality, properly labelled andpackaged, andprepared under hygienic
conditions. Thiswillmake itessential thattheJoint FAO/WHO Codex Alimentarius Commission
continues todevelop foodstandards, guidelines andrecommendations thatserve asreference points
forharmonization ofsanitary measures andtechnical standards, andforresolution oftrade disputes
under theSPSandTBTAgreements. Codex standards arebased onsound scientific analysis, which
includes appropriate assessments ofandprecautions against riskstohuman health. Codex standards
areinternationally harmonized helping countries toreduce thecompliance costsofmeeting innumerable
different national standards. Through appropriate labelling provisions Codex alsoresponds toconsumer
desire toknow theingredients andnutritional value ofthefoods theypurchase.
FAO alsoenvisages agrowing needtoensure effective andscience-based rulesonprevention
oftransboundary spread ofplant andanimal pests anddiseases, while facilitating fairtrade. Itisin
thisperspective thatFAOwillcontinue itsactivities related tothefurther development andapplication
oftheInternational Plant Protection Convention.
FAO remains dedicated tosupporting afairandmarket-oriented trading system and
tostrengthen itstrade-related technical assistance andpolicy advice, especially tothepoorest developing
countries where relevant capacity isgrossly lacking. ThePlanofAction oftheWorld Food Summit
commits FAO andother organizations tocontinue assisting developing countries ontrade issues in
agriculture, fishery andforestry, andparticularly inpreparing them forfuture multilateral trade
negotiations, namely tobecome “wellinformed andequal partners inthe(negotiation) process ”.FAO
pledges itssupport toallefforts aimed atempowering these countries tobecome fullyintegrated in
themultilateral trading system andbenefit from it.
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