WORLD TRADE
ORGANIZATIONG/AG/NG/W/13
23 June 2000
(00-2616)
Committee on Agriculture
Special SessionOriginal:  English
AGREEMENT ON AGRICULTURE:  SPECIAL AND DIFFERENTIAL TREATMENT
AND A DEVELOPMENT BOX
PROPOSAL TO THE JUNE 2000 SPECIAL SESSION OF THE COMMITTEE ON
AGRICULTURE BY CUBA, DOMINICAN REPUBLIC, HONDURAS,
PAKISTAN, HAITI, NICARAGUA, KENYA, UGANDA, ZIMBABWE,
SRI LANKA AND EL SALVADOR
The concept of Special and Differential Treatment  (S and D) is a fundamental building block
of the multilateral trading system.  It was conceived in acknowledgement of the fact that developing
countries have very different economic, financial, technological and development circumstances as
compared to developed countries.  Special advantages and flexibility must therefore be given to
developing countries to take into account their different needs and position.
S and D provisions are therefore crucial fo r developing countries.  Real, robust and
operational S and D provisions in agriculture are even more critical, firstly because food security is
integrally related to broader security issues and secondly, because of the special place of agriculture in
most developing countries' economies.
1. Food Security, National Security, Political and Economic Stability
For reasons of national security, economic and political stability, S and D provisions giving
more flexibility in agricultural trade policies must therefore be allowed to developing countries.  Key
products, especially food staples, should be exempted from liberalisation, and the domestic production
capacity of developing countries must be encouraged and helped along to become more competitive,
rather than destroyed on the basis on non-competitiveness.
Under GATT Article XXI, national security issues may be exempted from WTO trade
disciplines. Food security is also inextricably connected to national security and political sovereignty.
Chronic food insecurity puts national security in jeopardy by placing at risk, the health of a large
number of people, and also because it incites internal turmoil and instability.
The other dimension is political independence and sovereignty.  Countries in dire need and
dependent on other countries for something as basic as food are politically weakened because they
have little choice but to accept the conditions which may be imposed on them by the lending agencies
or countries. Indeed, past history has instructed us that food has been used as a tool many a time togain political and also economic stronghold over a country.G/AG/NG/W/13
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2. Special Place of Agriculture in Developing Countries
The FAO in a recent paper1 on agricultural development and food security makes the
observation that for a large number of developing countries, the agricultural sector remains largely
underdeveloped in production both for domestic market and for exports.  At the same time, in most ofthese countries, the agricultural sector lies at the center of their economies.  Agriculture, it says,
• accounts for a large share of Gross Domestic Product (GDP),
• employs a large proportion of the labour force,
• represents a major source of foreign exchange,
• supplies the bulk of basic food and provides subsistence and income for large rural populations.
It concludes that 'significant progress in promoting economic growth,  reducing poverty and
enhancing food security cannot be achieved in most of these countries without developing more fully
the potential capacity of the agricultural sector and its contribution to overall economic development'
(our emphasis, FAO, 1999).
Agriculture in developing countries is therefore not just another sector of the economy, but
one that has far-reaching implications on people's livelihoods and employment, food availability as
well as a countries' balance of payment situation.
S and D provisions and policy flexibility must therefore be provided to increase the domestic
capacity in the production of food in developing count ries.  From the view point of some, encouraging
developing countries to increase domestic food production may not seem to be  market efficient.
However, if all the benefits are taken into account – agriculture as the sole source of employment for
the majority of developing countries; domestic production especially of key staple products as themost accessible source of food for the majority – then clearly, these benefits outweigh the supposed
'economic costs'.
This type of flexibility, however, must  be differentiated from exporting developed countries'
provision of supports in order to gain markets abroad.
Unequal Trade Rules
The WTO's trade rules should therefore support developing countries' agricultural production
capacity.  However, the existing AoA rules seem to bestow special and differential treatment ondeveloped rather than developing countries.
The following points will briefly highlight these unequal rules:(i) Overall levels of subsidies have increased rather than decreased in OECD countries
since the base year 1986-88, from US$247 billion in 1986-88, to US$274 billion in
1998.  In contrast, developing countries which have traditionally not provided
subsidies have not been allowed to do so.
(ii) While the S and D subsidies allowed to developing countries are highly specified and
limited to only input and investment subsidies, developed countries have recourse to
the blue box and the very broad and vaguely defined green box.  Since the AMS had
                                                     
1  FAO 1999 'Issues at stake relating to agricultural development, trade and food security ', FAO
Symposium on Agriculture, Trade and Food Security: Issues and Options in the Forthcoming  WTO
Negotiations From the Perspective of Developing Countries '. 23-24 September.G/AG/NG/W/13
Page 3
to be disciplined, subsidies shifted into the green box.  Furthermore, its use is not
subject to limits and it is even given maximum protection under the due restraint
clause.
(iii) Import barriers in developed countries have risen, rather than decreased especially on
sensitive products.  When compared to the non-tariff barriers of the 1990s, an ESCAP
study2 reveals that the EU's final bindings for the year 2000 are almost two-thirds
above the actual tariff equivalent for 1989-1993.  For the US, they are more than
three-quarters higher.  Furthermore, for major agricultural products, developed
countries' tariffs are about twice as high as those of developing countries.  For 2
major cereals, wheat and maize, the bound tariff rates for developing countries are
94% for wheat and 90% for maize. In contrast, the OECD average in the first year ofimplementation (1995) was calculated at 214% for wheat, 197% for barley, 154% for
maize (FAO 1996).
3
(iv) While dumping is disallowed in the GATT, export subsidies were made legal for
agriculture. Furthermore, subsidisation of exports not only takes place via the 'exportsubsidy' support category, but is also provided indirectly via the other forms of
domestic supports.  On the other hand, very few developing countries provide export
subsidies, for the same reasons that few provide domestic supports.  Similar to
domestic supports, developing countries are not allowed to increase these negligible
levels of export subsidies while developed countries are allowed to maintain 64 percent of their subsidy outlays in the base level.
(v) Despite the promises, there has been no political will to activate the Marrakesh
Decision in order to address the problems of net-food-importing developing countries
(NFIDCs).  This had been the avenue developing countries had expected to receivecompensation for the negative effects of liberalisation.
Impact of Agricultural Liberalisation on Developing Countries in the Context of Unfair Trade
Rules
The results of agricultural liberalisation, and of the implementation of the Agreement on
Agriculture have been varied, but in general, the impact has not been positive.
In a study of 14 country case studies, the FAO
4 makes the following conclusions:
1. Few studies reported improvements in agricultural exports in the post UR period.  The typical
finding was that there was little change in the volume exported, or in diversification ofproducts and destinations.
2. Food imports were rising rapidly in most cases.  Some regions were facing difficulties coping
with import surges due to 'detrimental effects on the competing domestic sectors'.  On the
whole it was observed that while liberalisation br ought about an almost instantaneous surge in
                                                     
2 ESCAP 1996 'Agricultural Policy Reform under the Uruguay Round: Implications for Developing
Countries of the ESCAP Region ', Asian and Pacific Developi ng Economies and the First WTO Ministerial
Conference: Issues of Concern , United Nations, New York.
3 FAO 1996, 'Policy Options for Developing Countries to Support Food Security in the Post-Uruguay
Round Period ', Panos Konandreas and Jim Greenfield. Rome.
4 FAO 1999 'Synthesis of Country Case Studies ', in FAO Symposium on Agriculture, Trade and Food
Security: Issues and Options in the Forthcoming WTO Negotiations From the Perspective of Developing
Countries, Geneva, 23-24 September.G/AG/NG/W/13
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food imports, these countries were not able to raise their exports due, amongst other factors,
to supply side constraints.
3. There was a 'general trend towards the concentration of farms in a wide cross section of
countries'.  While the concentration of farms led to increased productivity andcompetitiveness, in the absence of safety nets, the FAO found that this process marginalised
small farmers and added to unemployment and poverty.
4. For many developing countries, key agricultural sectors that were vital for the economy in
terms of food supply (i.e. also food security), employment, economic growth and poverty
reduction, were being seriously eroded due to the inability to compete with cheap imports.
Therefore, the evidence emerging so far is that developing countries on the whole are not
benefiting economically from agricultural liberalisatio n.  In fact, the balance of payments situation has
worsened.  From a socio-economic perspective, food security, unemployment and poverty seem to
have also deteriorated.
These are alarming findings.  Article 20 clearly states that a continuation of the programme of
liberalisation must take into account the implementation experience including effects on non-trade
concerns such as food security.  A systematic review of implementation, that seeks to re-balance the
rules and implement measures and reforms to address the existing problems and loopholes, therefore,
should be part of the present negotiations.
Recommendations
1. A Development Box should be created with policy instruments that aim to
(i) protect and enhance developing countries' domestic food production capacity
particularly in key staples
(ii) increase food security and food accessibility for especially the poorest(iii) provide or at least sustain existing employment for the rural poor
(iv) protect farmers which are already producing an adequate supply of key agricultural
products from the onslaught of cheap imports
(v) flexibility to provide the necessary supports to small farmers especially in terms of
increasing their production capacity and competitiveness
(vi) stop the dumping of cheap, subsidised imports on developing countries.
2. The instruments in the Food Security/Development Box therefore should include the
following:
(a) All developing countries should be able to use a positive list approach to declare
which agricultural products or sectors they would like disciplined under AoA
provisions.  That is, only the products which are declared by a country are subject to
AoA commitments.
(b) Allow developing countries to re-evaluate and adjust their tariff levels.  Where it has
been established that cheap imports are destroying or threatening domestic producers,
developing countries should be allowed to raise their tariff bindings on key productsG/AG/NG/W/13
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to protect food security.  Furthermore, the OECD countries which continue to have
very high tariff peaks and escalations should drastically reduce these tariff levels,
specially for products of interest to developing countries.
Flexibility in levels of domestic supports.  Developing countries should be allowed an
additional 10 per cent on their de minis support level, i.e. bringing the level from 10
to 20 per cent.
(c) Prohibit developed countries from the use of the Special Safeguard Clause.  This
Clause instead should be opened up to all developing countries.  Developing
countries should be allowed to invoke this based on low prices or excess volume.
3. Dumping in any form must  be prohibited.  All forms of export subsidies (direct or indirect) by
developed countries must be eliminated immediately.
Competition policy in agriculture must be addressed in this review.  Developing countries
must be given an easily accessible mechanism to protect themselves against the abuse of monopolypower and to seek compensation.
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