. /.  WORLD TRADE  
ORGANIZATION  WT/MIN(05)/ST/82 
15 December 2005 
 (05-6059) 
MINISTERIAL CONFERENCE 
Sixth Session Hong Kong, 13 - 18 December 2005 Original:   English 
 
  
FOOD AND AGRICULTURE ORGANIZATION (FAO) 
 
Statement by Mr Hartwig De Haen
 
Assistant Director-General  
 
(Speaking as an Observer ) 
  
Agricultural trade and trade liberalization can unlock the potential of the food and agriculture 
sector to stimulate economic growth and promote food security.  Agricultural growth and greater trade prospects have the potential to contribute significantly to improve  food security and promote wider 
economic growth in poor countries. 
Despite progress in trade liberali zation, markets in agricultural products are still characterized 
by trade barriers and trade distorting subsidies.  The sa me is true for international trade in fish and fish 
products.  Higher value processed products are often s ubject to even higher barriers, to the detriment 
of income and employment generation of developing countries. 
FAO estimates that the number of undernourished people in developing countries stands at 
815 million.  A large proportion of the food insecure lives in rural areas and depends on agriculture 
for their livelihood. 
The gains from freer trade are neither automatic nor universal.  Not all developing countries 
would necessarily gain from either reduced levels of protection by their trading partners or from 
opening up their own markets.  Therefore, multilaterally  agreed trade rules need to be crafted in a way 
that is conducive to development and food secur ity.  Poorer countries will need assistance to 
overcome problems that limit their ability to take  advantage of improved trading opportunities. 
Under a freer global agricultural trade regime , prices of agricultural commodities that are 
presently highly protected, including basic foodstuffs , are expected to increase.  If transmitted to 
domestic markets, this will benefit farmers in  non-protecting countries and provide incentives for 
investment. 
However, developing countries differ widely in  terms of economic structure and the capacity 
they have to respond to market incentives. 
Some of the more advanced and competitive developing country exporters would benefit 
greatly from reduced protection in agriculture wo rldwide.  These countries could also gain from 
exposing their agriculture sectors to competitive pr essures which will drive efficiency gains through 
the reallocation of resources in line with each country's comparative advantage.  
The less advanced developing countries will face gr eater obstacles to participating in the gains 
from reduced distortions in international markets.   As agricultural exporters, many of the poorer 
developing countries already have significant dut y and quota free access to developed country WT/MIN(05)/ST/82 
Page 2  
 
 markets through reciprocal and non-reciprocal prefer ential trade arrangements.  The erosion of these 
preferences may lead to decrea ses in their export revenues, unless they expand their volumes of 
exports or diversify into value-a dded and non-agricultural production. 
Also, many of the less advanced developing coun tries still face serious supply-side constraints 
that limit their capacity to benefit from increased market opportunities.  Meeting the costs of 
compliance with SPS and TBT standards is one of the concerns of many of the poorer countries. 
Technical and financial capacity-building and assi stance are necessary to meet these standards and 
secure access to new markets. 
Net food importing countries may face greater f ood import bills.  As a result of tightened 
disciplines on export credits and on food aid, these c ountries could also lose a ccess to facilities that 
lessen the cost of their food imports and many will need assistance during the adjustment period. 
For such countries, increased food security will have to come primarily from improvements in 
productivity of local food crops.  Most of the required investment in infrastructure and research is non-trade distorting.  In addition, these countries would need flexibility in using product-specific 
policies specifically directed to improving food  and livelihood security and rural development. 
In summary, FAO believes that freer agricu ltural trade will deliver global gains and 
contribute to reducing hunger and poverty.  Howeve r, the benefits from trade would not be evenly 
distributed.  The less advanced developing; countries  are likely to gain less from trade and could even 
suffer losses, at least in the short-run.  For these countries, excessive opening of national agricultural 
markets to international competition, before domestic  markets and infrastructure function adequately 
can undermine the potential stimulus to growth from the agricultural sector. 
Therefore, FAO wishes to re-emphasize the importance of complementary policies and 
recommends a twin-track approach to ensure that the potential of trade is realized by the poor and 
food insecure developing countries. 
The first track calls for increased investment in agriculture and rural areas in order to improve 
productivity and build competitiveness, especially in food production for domestic markets.  Such 
investments have multiple payoffs, not the least of which is the increased capacity of developing 
countries to participate more effectively in the international economy. 
The second track calls for safety nets to prot ect vulnerable groups from trade-related shocks 
and to allow the poor to take advantage of the economic opportunities arising from trade.  
FAO is determined to continue playing its ro le in contributing towards the reduction of 
global hunger and malnutrition and moving the world to wards a fairer and more development friendly 
agricultural trading system. 
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