The current round of agricultural trade negotiations: Should we bother about domestic support?

The current WTO agricultural trade negotiations began in March 2000, and became part of the Doha Round in late 2001. The previous Uruguay Round reached agreements in the areas of market access, export competition and domestic support. The current Round is seeking agreements under similar headings. Reaching agreement over reductions in domestic support to farmers is complicated by a number of factors, such as the extent to which such support impacts on production decisions, the wishes of governments to support farmers for pursuing multifunctional outcomes from agriculture, and the categorisation of a myriad of policy instruments into green, blue and amber boxes. It therefore poses the risk of considerably extending the negotiations and diverting attention away from other areas of reform. But the sustainabilility of many domestic support policies requires imposition of trade barriers so reform of trade barriers may force governments into reforming domestic support without requiring specific international agreements. Quantitative assessment, using the GTAP applied general equilibrium model is used to analyse trade reform scenarios, with and without specific changes in domestic support. It is concluded that substantial trade expansion and welfare gains can be achieved even when domestic support is excluded from the multilateral agreement, and that improved market access makes a far greater contribution to welfare gains than reforms to domestic policies. Once substantive reforms to border policies have been achieved, attention can then be turned to the lower-priority task of reforming domestic support.