Agricultural Trade Policies in the New Millennium - Book Reviews

Business Economics, April, 2003 by Donald R. Anderson

Edited by P Lynn Kennedy and Won W Koo. 2002. Binghamton, NY: Food Products Press, An Imprint of The Haworth Press. Pp 377. $89.95 hardcover; $49.95 paperback.

Agriculture is an industry with a unique position in the world economy. Although its products are traded heavily internationally, the sector has always been exempt from the rules and disciplines imposed on the conduct of international trade by the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GAIT). It has enjoyed this privileged position for three basic reasons: the essential nature of its product to human survival; the central role it plays in many economies, both structurally and as a foreign earnings generator; and its use as a building block in the development of regional economic and political groupings, the most notable example of which is the Common Agricultural Policy of the European Union. In consequence, trade in agriculture is far from liberal, and it is subject to procedures of bizarre complexity. Inevitably, the result has been extensive distortion to trade.

In fact, distortion has increased, and opposition to the economic and political pressures for liberalization has grown to become the central stumbling block in international trade negotiations. The difficulties inherent in overcoming this opposition are immense. They range from the adjustment problems that would be faced by subsidized producers in heavily protected markets to the threat assumed to be posed to the environment and consumers' health by genetically modified food. The subject itself has become Byzantine, a world with a language of its own, with procedures remote from conventional logic. Published material is often--though not always--obscure, and comprehensive treatment is relatively rare.

In May 2000, six months after the collapse of the WTO meeting in Seattle had ended immediate hopes for agricultural, or indeed any other, trade negotiations, the Southern Agricultural Trade Research Committee convened a symposium in New Orleans. Its purpose was to assemble leading agricultural economists in the trade policy field from the United States, Canada and the European Union to discuss emerging issues in agricultural trade under ongoing multinational and regional trade negotiations, including those within the WTO and the Free Trade Area of the Americas. In the event, active contributions came largely from U.S. universities and the U.S. Department of Agriculture. Others included representatives from the OECD, the World Bank, and the coffee division of the Louis Dreyfus Corporation.

Agricultural Trade Policies for the New Millennium is the published result: a collection of the full set of invited papers and other selected contributions from that conference, revised by the authors in the light of the discussions. The conference predated the WTO meeting at Doha that established the current round of trade negotiations--the Doba Development Round-in which agriculture is specifically included for the first time. It also pre-dated the approval by the U.S. Congress of the 2002 farm legislation. These omissions scarcely matter, however, for this is an outstanding book: among the best in its field. It is both accessible and comprehensive, and it should be required reading for those concerned with trade issues, whether or not they are agricultural.

The structure of the book is logical and clear. It opens with an overview by the editors (Kennedy and Koo), setting out briefly but accurately the priorities of the four main negotiating parties: the United States, the European Union, the Cairns Group of developed and newly industrializing agricultural exporting countries, and the developing countries. The closing chapter is also by Kennedy and Koo and acts as a counterpart, summarizing the obstacles to the satisfactory conclusion of negotiations for the liberalization of world trade in agriculture, again from the standpoint of each negotiating party. There is a subtle change of order here, with the European Union preceding the United States in the final chapter as the party posing the most difficulties. The editors then offer their own conclusions.

Together, these two chapters alone provide a very good briefing. The material that separates and supports them--the actual conference contributions--is divided into three sections. The first of these covers the key issues influencing agricultural trade negotiations and is, in effect, complete in itself: a supporting document for the opening and closing chapters. It opens with a critical assessment of progress (as of May 2, 2000) in the negotiations. The treatment is comprehensive, embracing the conflicts developing between Canada and the United States as a result of their diametrically opposed policies--elimination of subsidies in Canada and their re-introduction in the United States, the obstacles created by the "Green Box" programs (i.e., policies not actionable under the GATT), export subsidies; market access and export restrictions, the implications of research and development expenditure, and the influence of multinationals and market structures. In the following chapters the issues raised are authoritat ively developed and placed in perspective. The respective approaches, problems and policies of the European Union, United States and developing countries are reviewed in detail. The quality is high, with the chapters on the European Union and the United States particularly impressive, the former for its realism, the latter for its candor. The section concludes with a consideration of environmental issues.