Agricultural trade reform: the development perspective By Tjalling Dijkstra

1. Agricultural trade reform: the development perspective • By Tjalling Dijkstra • Sustainable Economic Development Department • Ministry of Foreign Affairs • The Hague

2. Full trade liberalisation: • %-wise developing countries gain more than OECD countries; LDCs gain most • Largest proportion of gains arises because of agricultural trade liberalisation • In OECD: modest impact on av. farm household • In DCs: poverty falls for agr and diversified households, rises for non-agr households

3. More realistic Doha scenario: • Overall gains reduced and distribution altered • SSA, Bangladesh a.o. will lose • Major reasons why some countries lose: Negative terms of trade effect for net food importers, Preference erosion, Increase underemployment when smallholder production replaced by imports.

4. Turning losers into winners: • Special and Differential treatment • Support for net food importers • Compensate preference erosion • Aid for trade

5. 1. Special and Differential Treatment • SDT in agriculture: smaller reduction of tariffs, longer implementation periods, more sensitive products, special products on basis of food security, livelihood strategy and rural development, 100% DFQF market access for LDCs, front loading cotton. • But Arguments for SDT must be clear.

6. 2. Support to net food importers • Implementation Marrakesh decision (1994) • Little recent progress; discussions on: ex-ante financing mechanism aimed at food importers (2002); multilateral Food Import Financing Facility (2003) • Alternative solution: improve domestic food production and trade (+ SDT)

7. Africa: agricultural issue related to CAP reform Compensation questions: Take the value of specific preferential access agreements or to net adverse effect of MFN liberalisation over all? Bilateral or multilateral responsibility? Focus on specific crops or diversify? 3. Preference erosion

8. 4. Aid for Trade • Definition: Trade policy and regulations, Trade development, Trade-related infrastructure, Building productive capacity, Trade-related adjustment. • Strengthen: The demand side, The donor response (incl. Paris agenda), The bridge between demand and response, Monitoring and evaluation.

9. What policy makers in DCs (+ DGIS) need Knowledge on (1): • Consequences of different scenario’s for different groups of DCs, e.g. 20-20-20, five and five, 60% and 15 bln. (answers required quick but not dirty) • Weighing offensive and offensive interests of each group of developing countries (e.g. Agriculture versus Mode 4 for SSA)

10. Knowledge on (2): • What is the development friendly upper limit of specific SDT measures for individual countries (e.g. % special products, G33: 20%)? • Analysis of conflicting interests of different developing country groups (e.g. Latin America versus ACP countries for tropical products)

11. Knowledge on (3): • Institutional changes required to tackle supply side constraints in specified countries • Diversification scenarios in relation to preference erosion • (lack of) complementarity between multilateral, regional and bilateral trade agreements

12. In addition: • Coordination and alignment also in research • Building analytical capacity in the South • Thank you.