Trade in Agricultural Products: Should Developing Countries Give Up on the WTO Promise for a Fair and Market-Oriented Agricultural Trading System? A Historical and Theoretical Analysis

Abstract

Although the World Trade Organization (WTO) can rightly claim credit for establishing the first ever truly multilateral framework of rules for trade in agricultural products in the form of the Agreement on Agriculture (AoA), the AoA itself recognizes that it is only the first step in a long process aimed at establishing a “fair and market-oriented agricultural trading system.” The Doha negotiations have been increasingly looking irrelevant to agriculture until the 10th Ministerial Conference in Nairobi in December 2015, which adopted several decisions pertaining particularly to agriculture. Despite this recent development, and considering the manifest divergence of positions among the membership on the future of the Doha negotiations, it is clear that the present AoA, as modified by these latest Ministerial Decisions, is likely to remain the only framework governing agricultural trade for the indefinite future. Developing countries in general, and the poorest amongst them in particular, will be the primary losers of such an outcome. Reflecting on the history of agricultural trade regulation over the last two centuries, this article aims to demonstrate that the treatment of agriculture as an exception to the general rules of international trade has a long pedigree, both in economic theory and regulatory practice, often used by powerful states against the less fortunate. If multilateral negotiations fail to deliver on agriculture, developing countries cannot look to bilateral and regional agreements for solution. The article concludes that developing countries cannot afford to give up on multilateralism, for only a multi-sectoral and multilateral forum such as the WTO allows all countries, whether they are for or against agricultural liberalisation, to make progress in this area through issue linkages and cross-sectoral trade-offs.