Impact of the WTO on Agricultural and Food Policies

THE struggle of the World Trade Organisation (WTO) to conclude the Doha round of multilateral trade negotiations brought again to the forefront the important role that agricultural policy continues to play in international trade relations. The sector is subject to heavy-handed governmental interventions throughout the world. Despite decades (even centuries) of economists’ arguments against agricultural subsidies and tariffs, political factors continue to dominate agricultural policy setting (including trade policy) in both rich and poor countries. In poor countries moreover, where agriculture is a very important share of the economy and where food is a major consumption item, the importance of agricultural policy as a public policy issue is obvious. However, also in rich countries, agricultural policy remains disproportionately important compared to the relatively small share of agriculture in terms of economic output. For example in the EU, the Common Agricultural Policy (CAP) still absorbs more than 40% of the entire EU budget. Despite a strong decline of agriculture in terms of employment and output in rich countries, agriculture and agricultural policy remain so important for them in their trade negotiations that they are willing to let the WTO negotiations collapse over disputes on agricultural policy. While there is a large literature on what determines government interventions in agriculture and food markets – the so-called political economy of agricultural and food policies – there is remarkably little attention paid to the impact of international agreements such as the WTO. Moreover, virtually all