I. INTRODUCTION
The dynamics of international agricultural trade are changing. It is even arguable that a paradigm shift is taking place as agricultural markets move from surplus to shortage and countries introduce trade measures to ensure the availability of their food supplies. At the same time, there is growing awareness that agriculture has the capacity to impact both positively and negatively upon climate change, with the negative impact generated by the livestock sector being under especially close scrutiny. As a response to these new imperatives, consensus is now gathering round the concept of ‘sustainable intensification’: in other words, current production and/or productivity must be increased while husbanding the means of production for the future. All of this raises serious questions as to the extent that the WTO Agreement on Agriculture is ‘fit for purpose’. Its overall policy objective is rather ‘to establish a fair and market-oriented agricultural trading system’.Footnote 1 And the legislative provisions to implement this agenda require Members gradually to reorient their agricultural policies towards a more liberal, free-trade model by imposing specific quantitative reductions in their use of import tariffs and of domestic and export subsidies. To the extent that the Agreement on Agriculture does address production levels, it arguably reflects the time of relative surplus when it was enacted, even privileging support granted by Members to their producers aimed explicitly at reducing their domestic agricultural production (so-called ‘production-limiting programmes’). This approach would appear understandable when it is considered that, as the Uruguay Round negotiations were moving towards their conclusion, the scale of surplus was such that EU stocks in the cereals sector alone stood at some 33.4 million tonnes (notwithstanding that 36 million tonnes had been exported).Footnote 2 Yet, by the time of the 2007–08 food crisis, the figure had fallen below 500,000 tonnes.Footnote 3 Further, while the need to protect the environment was already recognized in the Agreement on Agriculture as a ‘non-trade concern’,Footnote 4 climate change and sustainability more generally could not be regarded as central to its focus. Rather, as evidenced in the operative provisions, ‘fairness’ was conceptualized in terms of the breaking down of trade barriers and the removal of trade-distorting subsidies.
Accordingly, this article will seek to explore the degree to which the Agreement on Agriculture remains ‘fit for purpose’. Such inquiry will commence by scoping the (r)evolution which is taking place in the agricultural sector, with specific reference to developments which have world trade consequences. As indicated, food security and climate change feature prominently in this context, but it will also be highlighted that the nature, and end uses, of agricultural products are changing. Secondly, there will be examination of the main policy response to emerge so far, namely sustainable intensification. Indeed, the Outcome Document of the 2012 Rio+20 Conference contained a specific resolution ‘to increase sustainable agricultural production and productivity globally’.Footnote 5 A difficulty which would at once seem to present itself, however, is that this concept remains ill-defined. Definitely, it is still to be encapsulated in a coherent legislative framework. And this must present significant hurdles for an Agreement on Agriculture designed to bear down upon concrete, trade-distorting measures. Thirdly, the main body of the article will be devoted to a more detailed examination of the compatibility of the provisions of the Agreement on Agriculture with these new policy goals. In this regard, emphasis will be placed on the rules which are centred round its three ‘Pillars’ covering respectively market access, domestic support and export competition, but it will be suggested that other provisions which have traditionally attracted less attention may now have a larger role to play, most notably the disciplines on export prohibitions and restrictions. In this third section, account will also be taken of the ongoing Doha Round negotiations, examining the ways in which they are accommodating the sea change that is occurring in the agricultural sector and, more specifically, in international agricultural trade. As a preliminary point, it may be observed that the negotiations likewise commenced at a time of relative surplus; and that Article 20 of the Agreement on Agriculture mandates an ongoing reform process, which builds upon existing rules whose long-term objective is the substantial and progressive reduction of support and protection. In consequence, agricultural trade liberalization (as opposed to sustainable intensification) would seem likely to remain the primary objective of the Doha Round. Finally, the conclusion will endeavour to identify certain provisions within the current legislative framework that are prima facie contrary to the new agricultural paradigm. Arguably, they offer the opportunity for an ‘early harvest’ within the ongoing reform process, whether through their substantial amendment or even complete removal. The conclusion will also endeavour to identify instances where the Agreement on Agriculture and proposed amendments in the Doha Round negotiations do have the capacity to foster sustainable intensification. But some caution will be expressed as to the advisability of looking to the Agreement on Agriculture for a contribution which extends beyond its stated role of regulating international agricultural trade.
For the purposes of such discussion, extensive (although not exclusive) reference will be made to the regulatory frameworks in the EU and the United States. The reasons for this are twofold. First, as shall be seen, the notion of sustainable intensification enjoys a longer history in developing countries and, in their case, there is a respectable argument that the Agreement on Agriculture already provides some accommodation for its promotion. In consequence, any re-focusing on a ‘productivist’ model is likely to present more novel issues for developed countries and, in particular, the EU and the United States, the world trade rules not granting them like accommodation. Secondly, as shall again be seen, a potential barrier to any policy of sustainable intensification is the privileging by the Agreement on Agriculture of production-limiting support; and there is wide consensus that the privileging of such support was a direct result of the Blair House Accord between the EU and the United States which opened the door to conclusion of the Uruguay Round.Footnote 6 Any change in the status of production-limiting programmes would therefore specifically affect measures introduced at the instigation of the EU and the United States.
II. THE CHANGING AGRICULTURAL SECTOR
As already observed, during the 2007–08 food crisis, EU cereal stocks fell dramatically.Footnote 7 And, significantly, such pressure on cereal stocks was being replicated globally, with the FAO projecting that these would fall to their lowest level for 25 years by the close of 2008 harvests.Footnote 8 Despite a temporary easing in the international markets after 2008 and a slight drop in the world price for grain,Footnote 9 the momentum of this paradigm shift from surplus to shortage would now appear to be restored. Not least, the 2012 harvest in both Russia and the United States was negatively impacted by drought conditions, resulting in fears of a repetition of the 2007–08 food crisis.Footnote 10
This has real consequences in terms of world trade in agricultural products. Perhaps most importantly, a series of export restrictions and bans have been placed on various commodity crops, in particular wheat and rice.Footnote 11 The FAO found that approximately one-third of the 105 countries surveyed until 2011 were still imposing some form of export restrictive measure on foodstuffs and maximizing their imports rather than raising barriers;Footnote 12 and in the summer of 2012 there were again live fears that Russia would implement export restraints (although denied by the Russian Agriculture Minister).Footnote 13 Even as some countries have sought to limit or prohibit exports, others have sought to increase imports. Thus, the EU temporarily suspended import duties on most cereals for the 2007–08 marketing year, citing ‘the exceptionally tight situation on the world and EU cereals markets and the record price levels'.Footnote 14 And the need for such measures may be illustrated by the unusual circumstance that in 2008 the value of cereal imports exceeded exports.Footnote 15
Another consequence of tightness of supply has been the reduction or abandonment of certain production-limiting and resource retirement programmes. By way of illustration, during the 2007–08 food crisis the EU took the major step of abolishing, first temporarily and then permanently, any requirement that farmers should set aside arable land, so taking it out of production, as a condition for receipt of subsidy:Footnote 16 in the words of the European Commission, ‘[t]he foreseeable demand and supply situation for cereals, including the demand linked to the fulfilment of the biofuel target set by the EU, argues for mobilising land which is presently kept out of production through the compulsory set aside scheme’.Footnote 17 The consequences of this abolition were considerable, it being estimated that between 1.6 and 2.9 million hectares of agricultural land would be released for production, bringing approximately 10 million tonnes of grains onto the market;Footnote 18 and this may account, in part at least, for the fact that the EU rapidly returned to the position of being a net-exporter of cereals. Similarly, the amount of land which may be enrolled in the voluntary Conservation Reserve Program in the United States has fallen considerably, the maximum authorized acreage having been reduced from 39.2 million for the period 2002–09 to 32 million for the period 2009–12.Footnote 19 Again these domestic policy initiatives have real consequences in terms of world trade in agricultural products, in that, as already indicated and as shall be explored more fully later, production-limiting and resource retirement programmes have enjoyed privileged status under the Agreement on Agriculture.
In addition to this shift from surplus to shortage, two further developments in the agricultural sector may be highlighted. First, the role of agriculture in combating climate change now enjoys an increasingly high profile. It has been estimated that agriculture accounts for some 10–12 per cent of total anthropogenic greenhouse gas emissions;Footnote 20 and, in this context, studies such as the 2006 FAO report, Livestock's Long Shadow: Environmental Issues and Options, have graphically brought to the attention of the public the potential negative impact of livestock farming.Footnote 21 Consistent with such concerns, a subsequent 2009 World Bank survey found preference across a wide range of developed and developing countries for the sacrifice of agricultural land so as to preserve or expand forested areas as a buffer against climate change.Footnote 22 The potential conflict between this goal and that of boosting food production is readily apparent. On the other hand, agriculture is also recognized as capable of providing solutions as well as problems. In the United Kingdom, greenhouse gas emissions from agriculture have fallen by 20 per cent between 1990 and 2010, with ‘key drivers’ being the reduction in both livestock numbers and fertilizer applications.Footnote 23 Notwithstanding such advances, the FAO considers the mitigation potential to still be ‘extremely large’, with there being the added bonus that the majority of this potential can be realized in developing countries (primarily through soil carbon sequestration).Footnote 24
Secondly, agriculture has been called upon to supply a far broader variety of products for a far broader range of end uses. Most controversially, it now supplies very significant amounts of feedstock for biofuels, to the extent that such production has been regarded as contributing to both the 2007–08 food crisis and the recurring commodity shortages of 2012.Footnote 25 That these concerns are treated seriously may be illustrated by the European Commission proposal of October 2012 to limit the use of ‘food-crop based biofuels’;Footnote 26 and the close interface between climate change and food security is clearly revealed by the reason provided for this limitation, namely ‘to stimulate the development of alternative, so-called second generation biofuels from non-food feedstock, like waste or straw, which emit substantially less greenhouse gases than fossil fuels and do not directly interfere with global food production’.Footnote 27
As farmers look to diversify into numerous forms of less-traditional, but high-value, production, considerations of this sort would not seem confined to biofuels. And this direction of travel is being actively promoted throughout the EU, the European Commission advocating a policy of ‘partial replacement of non-renewable products by more sustainable bio-based ones’.Footnote 28 Thus, by way of example, greater demands are being placed on agriculture as a source of pharmaceuticals, with the potential also for field crops to be genetically modified so as to produce specific drugs and vaccines (‘biopharming’).Footnote 29 Another innovation is the manufacture of biodegradable plastic bags from a range of natural materials, including corn starch or linseed oil. Accordingly, the end use of agricultural production has become ever more diverse, extending beyond the provision of food and fibre as previously understood; and, from the viewpoint of the legislator (and, in particular, the world trade legislator), it may become increasingly difficult to draw bright-line distinctions between what is ‘agricultural’ and what is ‘industrial’. Indeed, the very notion of what is ‘agriculture’ becomes less susceptible of ready definition, with the obvious difficulties that this generates for the continuation of a bespoke regime within the legislative framework of the WTO.
III. SUSTAINABLE INTENSIFICATION
Faced with these new imperatives, consensus would seem to be clustering round a policy of ‘sustainable intensification’. It has been seen that there was a specific resolution to such effect in the Outcome Document of the 2012 Rio+20 Conference; and, when drawing up its Strategic Framework for the period 2010–19, the FAO identified ‘sustainable intensification of crop production’ as ‘Strategic Objective A’ and ‘increased sustainable livestock production’ as ‘Strategic Objective B’.Footnote 30 Similar sentiments are being expressed at national and regional level. In 2011, the United Kingdom Foresight Report stated that ‘[o]ne of the strongest arguments for the Project's conclusion that the global food supply must be increased through sustainable intensification without significant new land being brought into cultivation is the emissions of greenhouse gases that would otherwise result’;Footnote 31 and, in 2012, the European Commission in its Communication, Innovating for Sustainable Growth: A Bioeconomy for Europe, affirmed that ‘the EU needs to produce ‘‘more with less’’ and develop smart sustainable farming’.Footnote 32 It may also be emphasized that these sentiments are shared across the Atlantic. When assessing the priorities for the United States 2012 Farm Bill, the Secretary for Agriculture asserted that the new legislation would address ‘the changing needs of agriculture and the challenges for rural America’—and that ‘[i]t's about providing an adequate food supply for our nation and the world’.Footnote 33 Significantly, notions of sustainable intensification could be found in the same speech, which identified as a core principle ‘the need to support sustainable productivity’.Footnote 34
Notwithstanding this convergence in thinking, the precise contours of ‘sustainable intensification’ remain relatively ill-defined. Initially, it was associated with developing countries,Footnote 35 but arguably a key element of its present configuration is that additional effort is now also being required of developed countries, with a clear role for ‘big agriculture’: thus, for the purposes of the ‘New Vision for Agriculture’ proposed by the World Economic Forum, ‘[t]he most crucial driver is improving the productivity of all farms, small and large, while balancing their environmental footprint’.Footnote 36 Against this background, a useful (and recent) definition may be found in the Foresight Report, where the term is stated to mean ‘simultaneously raising yields, increasing the efficiency with which inputs are used and reducing the negative environmental effects of food production’.Footnote 37 In this definition can be detected a different emphasis from the Outcome Document of the 2012 Rio + 20 Conference, with greater weight placed on an increase in productivity than on an increase in production (so as to avoid, for example, the inappropriate conversion of biodiverse land to arable use). And this different emphasis is likewise articulated by Garnett and Godfray who state that ‘[t]he prime goal of sustainable intensification is to raise productivity (as distinct from increasing volume of production) while reducing environmental impacts'.Footnote 38 Also, more generally, the same authors capture very effectively the inherent uncertainty which prevails in any attempt at categorization:
It is still not clear what sustainable intensification might look like on the ground, how it might differ amongst production systems, in different places, and given different demand trajectories, and how the tradeoffs that inevitably arise, might be balanced. However it provides a framework for exploring what mix of approaches might work best based on the existing biophysical, social, cultural and economic context and a growing body of work is starting to emerge that explores what implementation might look like in practice.Footnote 39
Accordingly, the implementation of sustainable intensification is very much work in progress and, as already observed, this is problematic in any assessment of the compatibility of both the Agreement of Agriculture and the Doha Round negotiations with current agricultural priorities. That said, the broad contours of the new policy objectives would seem reasonably clear. Measures to increase production and/or productivity are to be encouraged. Measures to protect the environment are likewise to be encouraged. But, arguably of greatest importance, it is the successful combination of these two objectives which is to be most encouraged. This gives rise to novel and complex issues for an Agreement on Agriculture which, as a rule, is inimical to support for production and which addresses the need to protect the environment as a ‘non-trade’ concern, undoubtedly to be taken into account, but not central to the legislative framework which it lays down for international agricultural trade.
IV. COMPATIBILITY OF THE AGREEMENT ON AGRICULTURE
A. General
As has been seen, the stated aim of the Agreement on Agriculture is to make trade in agricultural products between all Members of the WTO fair and market-oriented.Footnote 40 And ‘fairness’ is achieved only when both support for domestic agricultural production and protection of domestic agricultural markets are progressively removed. A fair international agricultural trading system is therefore one where market conditions prevail: the supply of agricultural products should fluctuate only in response to the demand for them and neither demand nor supply should be distorted by support measures implemented by Members or other ‘protectionist’ domestic agricultural policies. This aim is to be achieved primarily through the rules which govern the three central ‘Pillars’ of market access, domestic support and export competition; and, as indicated, the compatibility of the rules of each ‘Pillar’ with current policy imperatives will be considered in turn, together with the relevant proposals in the Doha Round negotiations. In addition, attention will be directed to disciplines on export prohibitions and restrictions, which, for the reasons already outlined, have acquired great contemporary resonance. But before commencing such exercise, it may first be considered whether the coverage of the Agreement on Agriculture is itself ‘fit for purpose’, in light of the diversification by farmers into new forms of cropping and new end uses. The question is far from otiose in the context of world trade, since, where a product is covered by the Agreement on Agriculture, it may benefit from advantages (such as exemption from domestic support reduction commitments) which would not be enjoyed if it were instead regarded as ‘industrial’ and regulated by the general rules on trade in non-agricultural goods in, inter alia, the GATT (and this would be the case even if it were competing directly with the ‘industrial’ product).
B. ‘Agricultural Products’
Although the title of the Agreement on Agriculture suggests universal coverage of all aspects of international agricultural trade, there would in fact seem to be a somewhat more narrow conception of what constitutes an ‘agricultural product’ for its purposes. The term ‘agricultural product’ is defined in Article 2, together with Annex 1. Covered products are listed according to their customs classification or Harmonized System Code,Footnote 41 and not by any general definition referring to their connection to the ‘cultivation of the soil for the growing of crops and the rearing of animals to provide food, wool, and other products’.Footnote 42 This classification method means that the list of products deemed to be ‘agricultural’ can in some instances be esoteric and, on occasion, inconsistent with other international regimes. For example, whilst many familiar products, such as live animals, cereals and sugars are included, forestry and fish are not.Footnote 43 On the other hand, the list would seem to include specialist crops destined for pharmaceutical purposes;Footnote 44 and there is no restriction to products in their ‘raw’ state. Indeed, even some items at quite advanced stages of industrial processing are covered: notably, sausages, chocolate and bread are all ‘agricultural’ for the purposes of the Agreement on Agriculture.Footnote 45
Notwithstanding that, for the purposes of exploring this definition, some assistance can be obtained from consideration by GATT panels of what constitutes a ‘primary product’ within agriculture-specific exemptions from the GATT rules,Footnote 46 the WTO panels and Appellate Body have not dwelt on the matter in any depth, instead confining their assessment to brief reference to the list of products found in Annex 1. As the panel succinctly observed in the Canada–Dairy dispute when determining whether butter, cheese and milk fell within the Agreement on Agriculture: ‘[t]he “agricultural products” set out in Annex 1 include the products at issue in this dispute (butter, cheese and “other milk products”), all of which fall under HS Chapter 4. We thus find that the Agreement on Agriculture applies to the issue at hand’.Footnote 47
In essence, an ‘agricultural product’ is one which was selected as such by Members during the Uruguay Round of multilateral trade negotiations. Using the Harmonized System Code to designate covered products was a way of conveniently capturing these political choices. This methodological approach means the list of products does not owe its coherence to any abstract or dictionary definition of ‘agriculture’ or ‘agricultural products’; and, on the basis of the panel and Appellate Body treatment of the list, it must be regarded as closed: products will only be added as a consequence of further multilateral trade negotiations, rather than through any process of dynamic treaty interpretation by the panel or Appellate Body. That there is some need to update the list may be evidenced by the proposal of India during the Doha Round negotiations that products such as rubber, jute and sisal should be included.Footnote 48 Despite this proposal, the most recent draft modalities for agriculture in the Doha Round negotiations leave Annex 1 unchanged.Footnote 49
However, perhaps the greatest area of ongoing difficulty is biofuel feedstock. This enjoys no distinct classification under the Harmonized System and much would therefore appear to depend upon its form and origin.Footnote 50 For example, bioethanol (including that produced from potential crops such as cereals or sugar) would seem to qualify as an ‘agricultural product’ under Chapter 22. But biodiesel would seem to fall under Chapter 38 as an ‘industrial product’, notwithstanding that it may be produced from oilseed rape which is itself an agricultural product (under Chapter 12).Footnote 51 Moreover, biomass may be generated from forestry, and forestry products likewise fall outside the scope of the Agreement on Agriculture.Footnote 52 This may create perverse incentives, in that biofuel feedstock generated from forestry is understood to be environmentally superior to that generated from food crops,Footnote 53 yet does not attract the benefits conferred upon agricultural products under the Agreement of Agriculture. Similar considerations apply in the case of ‘dual use’ crops. For example, as noted, oilseed rape can be employed not just in the manufacture of food, but also in the manufacture of biodiesel. In the latter case, it inevitably competes against mineral oils; and, for world trade purposes, this competition would not be on a level playing field if it retains its status as an ‘agricultural product’, for the reason that (unlike mineral oils) it may be capable of receiving domestic support which qualifies for exemption from reduction commitments under the Agreement on Agriculture.Footnote 54 Should this interpretation be correct, then there would also be the adverse consequence that privilege is accorded to a form of ‘food-crop based biofuel’; and, as has been seen, such biofuels are considered to impact negatively on both the environment and food security, giving rise to the EU proposal to limit their usage.Footnote 55
One suggested response has been to create a separate Harmonized System Code for biofuels, with it then being for WTO Members to agree whether or not to include that Code within Annex 1 to the Agreement on Agriculture.Footnote 56 For the time being, it may be observed that, when the Harmonized System was revised as from 1 January 2012, the heightened profile of ‘biodiesel’ was recognized by its being conferred with separate identification, while remaining under Chapter 38.
C. Market Access
Maximizing market access for agricultural products by reducing import restrictions was an important objective of the Uruguay Round of multilateral trade negotiations. Market access even came first in the list of key difficulties negotiators decided to address.Footnote 57 From this background, it is not surprising that the overall thrust of the market access ‘Pillar’ of the Agreement on Agriculture is to open markets of Members to exports of agricultural products from other Members by ensuring that only the most transparent restrictions can be imposed and that even those restrictions which the rules do permit are reduced over time. The underlying assumption of the Agreement on Agriculture is therefore that Members will always seek to ‘protect’ their domestic farmers from cheaper imports unless they are specifically prevented from doing so by the multilateral trade rules.
The only market access restriction permitted by the Agreement on Agriculture is the tariff, that is, a customs duty on the import of agricultural products.Footnote 58 The tariff was thought to be more transparent than other measures which Members used to protect their domestic markets from cheaper imports of agricultural products in the GATT period, such as the notorious variable import levy employed by the European Economic Community. The Agreement on Agriculture required that all other non-tariff barriers should be ‘converted’ into tariff equivalents through the controversial, Member-driven practice of ‘tariffication’.Footnote 59 Members were further required to make specific binding commitments to reduce their existing tariffs and any new tariff equivalents generated by ‘tariffication’, with these reduction commitments being more extensive in the case of developed countries and, in particular, developed countries with a history of high levels of border protection.Footnote 60 The specific reduction obligations are not contained in the Agreement on Agriculture itself, but are instead found in the general provisions of the GATT Modalities, and also in the Schedule of Commitments of each Member.Footnote 61 Moreover, the Appellate Body made it clear in an early dispute under the WTO Dispute Settlement Understanding that such Schedules form an ‘integral part of the GATT 1994…[and] the concessions provided for in that Schedule are part of the terms of the treaty’.Footnote 62 This means Members must not exceed the maximum levels of border protection as specified in their Schedules and that they must also guarantee a minimum level of market access to agricultural products from other Members.Footnote 63 In addition, panels and the Appellate Body have robustly enforced the rules, sometimes in ways that have surprised the Members involved in the dispute.Footnote 64
The ‘anti-protectionist’ paradigm of the Agreement on Agriculture at first sight also seems to dominate the proposals to change the market access ‘Pillar’ in the Doha Round negotiations. The proposals are for deeper, asymmetric cuts in tariffs, designed to open the agricultural markets of the most pernicious ‘protectionist’ Members, like the EU, at an accelerated rate beyond that set for other, less ‘protectionist’, Members.Footnote 65 However, what is interesting is that within the Doha Round negotiations there is also acute awareness that the market access provisions must specifically address food security. Indeed, the Doha Ministerial Declaration itself requires that special and differential treatment for developing countries must be embedded within the negotiations in such a way as to enable them effectively to ‘take account of their development needs, including food security and rural development’.Footnote 66 Accordingly, policy space has been created for, in particular, the proposed introduction of ‘Special Products’, to be self-designated by developing countries, guided by indicators based on the criteria of food security, livelihood security and rural development.Footnote 67 And such ‘Special Products’ would not be subject to the full rigours of tariff reduction commitments, with the result that developing countries would be able to reduce the speed with which they needed to open these forms of domestic production to competition from imported products. Under the current draft modalities in the Doha Round negotiations, developing countries could designate up to 12 per cent of tariff lines as ‘special’ and the benign treatment which they would enjoy for market access purposes would take the form, as a general rule, of freedom from any cut in the case of up to 5 per cent of tariff lines and an overall average cut limited to 11 per cent.Footnote 68
Notably, the illustrative list of indicators provided in the current draft modalities is heavily dependent on welfare considerations.Footnote 69 For example, the product must be a staple food, or part of the basic food basket of the developing country (through, inter alia, laws and regulations); and the product must account for a significant proportion of total food expenditure, or total income, of households in a particular region or nationally. Further, there is focus on domestic production, including express reference to production on smallholdings and in drought-prone regions; and a specific criterion is that ‘the product contributes a relatively high proportion to value addition in the rural areas, in a particular region or at the national level, through its linkages to non-farm rural economic activities, including handicrafts and cottage industries or any other form of rural value addition’. Such support for increased, but sustainable, food production is strongly reminiscent of the definition of ‘sustainable intensification’.Footnote 70
Accordingly, the Doha Round negotiations offer the potential for food security and rural development to become more clearly embedded within the market access regime, notwithstanding that such exceptional treatment may have the capacity to impact negatively on trade liberalization.Footnote 71 It may be suggested, on the one hand, that the overarching imperative of these provisions is more socio-economic than ‘productivist’, in that they should allow farmers to remain on the land in difficult circumstances (as opposed to, for example, promoting any major restructuring of the agricultural sector so as to achieve economies of scale). Yet, on the other hand, measures which have the effect of retaining farmers on the land may also have production benefits, a real possibility in their absence being land abandonment (which remains a policy concern even within the EU).Footnote 72
D. Domestic Support
The Agreement on Agriculture has likewise sought to reduce the trade-distorting effect of domestic support.Footnote 73 By reference to a 1986–88 base period, the levels of such support have been reduced with varying degrees of severity according to the category of Member concerned. Thus, developed countries were required to implement a reduction of 20 per cent in their domestic support over the period 1995–2000; and developing countries were required to implement a reduction of 13.3 per cent over a period of up to 10 years (but no reduction at all was required of least developed countries).Footnote 74 That said, there are three significant exemptions to these rules.
First, when calculating their level of support in any year from 1995 onwards, Members are not required to include ‘de minimis’ support’.Footnote 75 For developed countries, this can amount to 5 per cent of the total value of production of a basic agricultural product in the case of product-specific support (which would include, for example, targeted subsidies for cereals) or 5 per cent of the value of total agricultural production in the case of non-product specific support. The percentage is raised to 10 per cent for developing countries.
Secondly, and perhaps most importantly in the present context, direct payments under certain domestic production-limiting programmes are also to be excluded from annual calculations of support levels.Footnote 76 Such payments have commonly been referred to as ‘Blue Box’ support; and the ‘Blue Box’ captured many of the payments made to farmers by both the European Community and the United States during the 1990s. In fact, as previously indicated, there is a respectable argument that the ability to shelter these subsidy regimes within the ‘Blue Box’ operated as the lever which opened the door to conclusion of the Uruguay Round.
Thirdly, domestic support that comes within the scope of Annex 2 to the Agreement of Agriculture falls completely out of calculation, being commonly referred to as ‘Green Box’ support. However, if measures are to qualify for this exemption, they must also meet the ‘fundamental requirement’ of having ‘no, or at most minimal, trade-distorting effects or effects on production’. Unfortunately, there is some difficulty in assessing whether a measure meets this criterion, since the wording of the provision has not yet been the subject of detailed judicial discussion. More specifically, in United States–Subsidies on Upland Cotton, both the panel and the Appellate Body felt able to decide the dispute without fully addressing the factors which determine whether the measure concerned does indeed have no, or at most minimal, trade-distorting effects or effects on production.Footnote 77 Annex 2 does, nonetheless, expressly require that the measure must conform to two basic criteria,Footnote 78 plus policy-specific criteria and conditions. These policy-specific conditions and criteria cover a wide range of programmes: general services (such as research, training services and extension and advisory services); public stockholding for food security purposes; domestic food aid; and direct payments to producers.Footnote 79 And the forms of direct payment which may attract exemption are diverse, varying from decoupled income support to support under structural and environmental schemes.Footnote 80 Accordingly, the ‘Green Box’ is broad in its sweep and would now appear, through several years of ‘box-shifting’, to exempt a far greater proportion of domestic support than was the case at the time of the conclusion of the Uruguay Round. Not least, the EU has largely dismantled its ‘Blue Box’ exempt production-limiting programmes, with most direct payments now comprised in the Single Farm Payment, which, according to the EU, qualifies for ‘Green Box’ exemption as ‘decoupled income support’, namely support which is not conditional upon any specific form of production or even production at all.Footnote 81
Despite increased policy focus on boosting production and/or productivity, the Doha Round negotiations would seem to be proceeding on the basis that the ‘Blue Box’ should continue, albeit on a reduced scale. In the case of developed countries, the amount of such subsidy would, as a general rule, be subject to an overall limit of 2.5 per cent of the average total value of agricultural production over a 1995–2000 base period.Footnote 82 Moreover, perhaps somewhat surprisingly, the current draft modalities propose the introduction of an additional category of ‘Blue Box’ exemption, over and above direct payments under production-limiting programmes, which would cover ‘direct payments that do not require production’ at all.Footnote 83
Accordingly, neither the ‘Blue Box’ rules as found in the Agreement on Agriculture nor their currently proposed amendment in the Doha Round negotiations sit easily with notions of ‘sustainable intensification’. A constant theme which underpins this new imperative is that the available amount of agricultural land is unlikely to expand to any material degree;Footnote 84 and, in consequence, there is every reason to make full (but sustainable) use of the land which is available. Further, the practical importance of the ‘Blue Box’ has materially declined over recent years. Most notably, it may be highlighted that, with the abolition of compulsory set-aside in the arable sector, the EU has moved away from production-limiting programmes and, in turn, this may account for a willingness by the EU to see the size of the ‘Blue Box’ reduced during the Doha Round negotiations. Against this background, serious consideration may be given to going so far as eliminating any ‘Blue Box’ exemption for programmes which either limit production or require no production at all.Footnote 85
By contrast, the ‘Green Box’ would seem to provide greater opportunities for the promotion of sustainable intensification. In line with the Preamble to the Agreement on Agriculture, many of the programmes which are exempted from domestic support reduction commitments under Annex 2 could be considered to promote ‘non-trade concerns’, such as food security and the need to protect the environment, and both food security and the need to protect the environment would generally be accepted as integral to any policy of sustainable intensification.Footnote 86 On the other hand, it may be recalled that all ‘Green Box’ measures must meet the fundamental requirement that they have no, or at most minimal, trade-distorting effects or effects on production.Footnote 87 While the restriction on anything more than minimal trade-distorting effects would seem fully consistent with the purpose of the Agreement on Agriculture, if sustainable intensification is vigorously to be pursued, there would seem to be something counter-intuitive if ‘Green Box’ exemption were to be excluded from support which has more than minimal effects on production. Subject to this considerable proviso, individual programmes may be examined, with specific reference to those which will promote intensification and those which may promote sustainability. Decoupled income support would also seem to merit detailed attention, on the basis that it is now the main mechanism for subsidizing EU farmers.
Turning first to measures which may boost production and/or productivity, it has been seen that general services (exempt under paragraph 2 of Annex 2) cover research (including research programmes relating to particular products) and extension and advisory services; and there is evidence that future productivity gains in agriculture may be dependent on public investment in agricultural research, with particular reference to mitigating the anticipated adverse effects on productivity of climate change and increasing water scarcity.Footnote 88 Besides, in the Foresight Report itself, new science and technology are located at the heart of the drive to realize sustainable intensification, it being unequivocally stated that ‘[i]nvestment in food production research needs to focus on raising yields in conjunction with improving sustainability and maintaining ecosystem services’.Footnote 89 The potential role for general services measures would also be enhanced if the relevant provisions were to be amended as proposed in the Doha Round negotiations. A new category would be added, with specific reference to developing countries, comprising policies and services related to, inter alia, rural development and rural livelihood security in such countries; and, among the examples given, are infrastructural services, land rehabilitation, soil conservation and resource management, drought management and flood control, rural employment programmes and nutritional food security.Footnote 90 Besides, such a provision should materially assist the productivity of smallholders in developing countries, identified as an urgent priority by the United Nations High Level Task Force on the Global Food Security Crisis.Footnote 91
In addition, levels of production (if not productivity) may be enhanced through income insurance and income safety-net programmes (exempt under paragraph 7 of Annex 2) and through payments for relief from natural disasters (exempt under paragraph 8 of Annex 2). Definitely, it is apprehended that such support may cause farmers to be less risk averse, and thus encourage production in high-risk areas. That said, research in the United States has indicated that, while increased insurance participation is correlated with additional acres planted (and to an extent which is statistically significant in some cases), the total amount of additional acres remains relatively small.Footnote 92 At the same time, the WTO rules present a fairly high hurdle before entitlement may be triggered,Footnote 93 while recent policy development favours the limitation of crop insurance programmes to the coverage of catastrophic risks.Footnote 94 Yet, in light of recent climatic events, the role of such payments may still prove to be substantial, and on an ongoing basis: by 1 August 2012 more than half of the counties in the United States had been designated disaster areas.Footnote 95 Perhaps reflecting these developments, a central plank of current EU reforms to the CAP is the enhancement of risk management measures, including crop insurance, these having been identified in the proposed regulations as one of six priorities for rural development over the period 2014–20.Footnote 96 It may also be noted that ‘Green Box’ exempt payments which have the capacity to support production may be available to farmers in disadvantaged areas through regional assistance programmes (under paragraph 13 of Annex 2). Significantly, the level of payments under these programmes is fixed by reference to ‘the extra costs or loss of income involved in undertaking agricultural production’, which would seem well calculated towards the objective of maintaining farming activity, and agricultural output, in adverse circumstances.
On the other hand, production and/or productivity are unlikely to be fostered by payments under resource retirement programmes, ‘Green Box’ exempt under paragraph 10 of Annex 2. With supplies becoming tight, it may legitimately be questioned whether the Agreement on Agriculture should privilege support which is conditional upon the retirement of land from marketable agricultural production for a minimum of three years (or, in the case of livestock, conditional on slaughter or definitive permanent disposal).Footnote 97 In practice, however, the potentially negative impact of this provision would appear to have been reduced following the decision of the United States no longer to notify payments under its flagship Conservation Reserve Program as payments under a resource retirement programme.Footnote 98
If the emphasis is switched from intensification to sustainability, paragraph 12 of Annex 2 grants ‘Green Box’ exemption to payments made under domestic environmental programmes. For such payments to be eligible, they must be part of a clearly-defined government environmental or conservation programme and they must also be dependent upon the fulfilment of specific conditions under the government programme, which may include conditions related to production methods.Footnote 99 These criteria would therefore seem more appropriate for support under agri-environmental schemes, as opposed to support linked to production per se; and it may be highlighted that payments under the Conservation Reserve Program are now notified as payments under paragraph 12 (as opposed to payments under resource retirement programmes). That said, agri-environmental schemes may de facto take land out of production, as again may be illustrated by the Conservation Reserve Program, in respect of which an initiative introduced in 2012 is to increase the area for wetland restoration by some 200,000 acres.Footnote 100 As a result, in the case of agri-environmental schemes, there is scope for tension between the twin priorities of, on the one hand, boosting output and, on the other, ensuring environmental sustainability, with at least some policy choices leaning towards the latter priority. And, at times of greatest shortage, such tension becomes the more acute, as may be illustrated by the decision in August 2012 to permit emergency cropping of hay and grazing on 3.8 million acres enrolled in the Conservation Reserve Program (with many of these acres having wetland-related characteristics).Footnote 101
Nevertheless, in any assessment of the scope which the ‘Green Box’ offers to promote sustainable intensification, perhaps the most difficult issues arise in the context of ‘decoupled income support’ under paragraph 6 of Annex 2, with their difficulty being compounded by the fact that, as has been seen, this category of support now accounts for the vast majority of direct payments to farmers in the EU.Footnote 102 Two such issues may be highlighted. First, it is arguable that the detailed WTO criteria which govern decoupled income support preclude its employment as an engine to boost agricultural production. An express stipulation is that ‘[n]o production shall be required in order to receive such payments’.Footnote 103 While this has the clear advantage of generating production neutrality and thereby encouraging farmers to respond to market signals (as opposed to making crop selection based upon the availability of specific subsidies), it would now perhaps be unwise for so important a category of domestic support to be dependent upon a condition which, while not prohibiting production, precludes a positive obligation to do so.Footnote 104 Even where production is undertaken, any incentive element would seem to be excluded by provision that ‘[t]he amount of such payments in any given year shall not be related to, or based on, the type or volume of production (including livestock units) undertaken by the producer in any year after the base period’.Footnote 105 Further, in this context, the Appellate Body in United States–Subsidies on Upland Cotton has confirmed that the expression ‘related to’ extends to ‘both positive and negative connections between the amount of payment and the type of production’, namely situations where farmers are both required to produce certain agricultural products and situations where they are expressly required not to.Footnote 106
Secondly, by contrast, decoupled income support does have a long association with a policy tool which would appear well suited to the delivery of sustainable intensification, this being cross-compliance (under which environmental and other conditions are attached to direct payments to farmers). Such conditions can be specifically tailored so as to impose sustainable agricultural practices and, as compared with agri-environmental schemes, there would seem to be the opportunity to create a closer link with the act of production. In addition, there is the advantage that cross-compliance regimes are already in force in several Members, including the EU, Korea, Switzerland and the United States, with probably the most fully developed regime being that implemented within the EU.Footnote 107
Under the EU regime, the vast majority of direct payments are now subject to: first, a range of statutory management requirements which extend beyond the protection of the environment to include also public, animal and plant health and animal welfare; secondly, a general obligation to maintain all agricultural land in good agricultural and environmental condition; and, thirdly, an obligation to maintain land under permanent pasture.Footnote 108 These obligations will also be enhanced during the period 2014–20: for farmers to be entitled to payment under a new basic payment scheme, they will be required to observe specified agricultural practices beneficial for the climate and the environment; and, in return, they will receive a separate ‘greening payment’, with 30 per cent of the total amount of direct payments of each Member State being allocated for this purpose.Footnote 109 That said, while the enhanced obligations may be regarded as an efficient engine to promote good husbandry in crop and livestock production, controversy has already been generated by the inclusion of ‘ecological focus areas’ among the specified practices beneficial for the climate and the environment. These areas were non-exhaustively described in the proposed regulation as ‘land left fallow, terraces, landscape features, buffer strips and afforested areas’.Footnote 110 They may therefore lead to a material reduction of overall output, since, as a general rule, they must initially extend to at least 5 per cent of land eligible for direct payments (excluding areas under permanent grassland). The wisdom of such an approach has been openly questioned at a time when demand for agricultural products is rising.Footnote 111 But, sensitive to such criticism, the Commissioner for Agriculture and Rural Development has emphasized that ‘[t]his is not set-aside!’: rather the measure was ‘a long-term investment in a sustainable competitiveness’.Footnote 112
Likewise, in the United States the opportunity to deploy cross-compliance may also be blunted. For it to be effective, there must be direct payments upon whose receipt the environmental conditions may be attached; and a study for the year 2010 found that only approximately 20 per cent of farms received such payments.Footnote 113 Further, there is every indication that the current Farm Bill, when eventually passed, will materially reduce the role of direct payments.Footnote 114
Despite these limitations, such regimes would still appear well suited to the delivery of sustainable intensification, with strong arguments in favour of their expansion, but unfortunately their treatment under the Agreement on Agriculture is far from straightforward. In particular, it is not immediately clear whether the focus of the support is sufficiently ‘environmental’ to qualify for ‘Green Box’ exemption as payments under an environmental programme. In the EU, emphasis is laid upon the ‘greening’ of direct payments, with increasingly rigorous environmental conditions being imposed upon their receipt; and such emphasis is especially marked whenever successive Commissioners for Agriculture and Rural Development have sought to explain the rationale behind CAP reform to civil society.Footnote 115 Yet, at least in the case of current EU direct payments, this would not seem to displace their primary character for WTO purposes as decoupled income support;Footnote 116 what can be said with some certainty is that the European Commission has claimed exemption on such basis.Footnote 117 And, even though the new ‘greening payment’ is more determinedly environmental, it may still lack the targeting necessary to qualify as a ‘clearly-defined government environmental or conservation programme’ as required for ‘Green Box’ exemption under paragraph 12 of Annex 2 (while at the same time being less obviously capable of characterization as ‘decoupled income support’).
Accordingly, a major policy initiative which may operate to secure sustainable intensification remains to be incorporated coherently within the WTO legislative framework. In light of the purpose and architecture of the Agreement on Agriculture, this is perhaps inevitable. Domestic support regimes which have the capacity to deliver sustainable intensification – and, not least, direct payments subject to cross-compliance conditions – are always in danger of running up against WTO rules designed to preclude support for production, while remaining insufficiently ‘green’ to qualify as environmental support.
Finally, any consideration of domestic support in the context of sustainable intensification must inevitably address the specific circumstances of developing countries. As already noted, early notions of sustainable intensification tend to be associated with developing countries and, more precisely, smallholder farming.Footnote 118 Without doubt, in line with its mandate to provide special and differential treatment for such countries,Footnote 119 the Agreement on Agriculture does offer them opportunities of consequence to promote agricultural production and/or productivity unfettered by domestic support reduction commitments. Perhaps most importantly, under Article 6(2), exemption is conferred in respect of, inter alia, ‘investment subsidies which are generally available to agriculture in developing country Members and agricultural input subsidies generally available to low-income or resource-poor producers in developing country Members’. And it is expressly stated in the current draft modalities that ‘[t]he provisions of Article 6.2 of the Agreement on Agriculture shall remain unchanged’.Footnote 120
At the same time, although not formally part of the domestic support regime, the Marrakesh Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-developed and Net Food-importing Developing Countries (NFIDC Decision) expressly provides that full consideration should be given in aid programmes to requests for the provision of technical and financial assistance to such countries for the purposes of improving their agricultural productivity and infrastructure.Footnote 121
Again with regard to food security, developing countries are likely to be the main beneficiaries of the ‘Green Box’ exemptions granted in respect of public stockholding of agricultural products for food security purposes (under paragraph 3 of Annex 2) and in respect of domestic food aid (under paragraph 4 of Annex 2).Footnote 122 That said, as might be expected, the detailed conditions target these forms of support on humanitarian concerns, as opposed to promoting production for the more extensive demands now being made on agriculture. For example, in the case of public stockholding, it is expressly provided that ‘[t]he volume and accumulation of such stocks shall correspond to predetermined targets related solely to food security’, while, in the case of domestic food aid, eligibility is dependent upon ‘clearly-defined criteria related to nutritional objectives’. It may further be noted that, under the Doha Round negotiations it is proposed that the humanitarian focus be reinforced, by exempting also ‘the acquisition of foodstuffs at subsidized prices when procured generally from low-income or resource-poor producers in developing countries with the objective of fighting hunger and rural poverty’.Footnote 123
In consequence, the Agreement on Agriculture, together with proposed amendment in the Doha Round negotiations, does seem to offer particular latitude for developing countries to provide domestic support for sustainable intensification without their support being subject to reduction commitments. On the other hand, in the case of developing countries, a constant theme is that effective implementation of such policies is stifled in practice by lack of the necessary financial resources: to give a graphic example, it has been estimated that the expansion of agricultural output of developing countries would require an average annual net investment of 83 billion Dollars in primary agriculture and necessary downstream services.Footnote 124 At the same time, there is arguably more that could be done in terms of policy development to address recent food shortages. For example, there has been advocacy of a ‘Food Security Box’ for developing countries, permitting general subsidies to increase domestic food production (such subsidies to cover, inter alia, seed and fertilizer), with no requirement that the recipients be low-income or resource-poor farmers.Footnote 125 Such an initiative should have the capacity to mobilize production across a range of agricultural structures, with a positive outcome in terms of promoting greater domestic self-sufficiency (although care would need to be taken to ensure that the increase in production was sustainable).
E. Export Competition
Consistent with the provisions on market access and domestic support, the Agreement on Agriculture seeks to reduce barriers to trade in the field of export competition.Footnote 126 Under Article 8, Members undertake not to provide export subsidies so as to enable their farmers to export their products, except in conformity with the Agreement itself and with the commitments laid down in their respective Schedules. Again different levels of reduction were imposed according to the category of Member concerned.Footnote 127 Developed countries were required to make two reductions over the period 1995–2000 (as from a 1986–1990 base). First, they were obliged to reduce expenditure on export subsidies by 36 per cent; and, secondly, they were obliged to reduce the quantity of subsidized exports by 21 per cent. In the case of developing countries, the percentages were set lower, at respectively 24 and 14 per cent, and the implementation period was extended to up to 10 years, while no reduction at all was required of least developed countries.
It should at once be mentioned that the regime for export competition does already contain a provision which has the capacity to promote food security. Article 10(4) conditions international food aid on requirements which are intended to prevent commercial displacement: thus, for example, it is necessary for Member donors to observe the FAO Principles of Surplus Disposal and Consultative Obligations. Significantly, under the Doha Round negotiations the current draft modalities propose a substantial recasting of this provision, in ways which render far more explicit humanitarian considerations and which focus on protecting local production.Footnote 128 Accordingly, all food aid transactions must be needs-driven.Footnote 129 And, in terms conducive to sustainable production (if not sustainable intensification), Member donors are to refrain from providing in-kind food aid ‘where this would cause, or would be reasonably foreseen to cause, an adverse effect on local or regional production of the same or substitute products', instead being encouraged to procure food aid locally or regionally so far as possible (provided that this does not unduly compromise the availability and prices of basic foodstuffs in these markets).Footnote 130
That said, arguably the most significant development in the Doha Round agricultural negotiations was agreement at the 2005 Hong Kong WTO Ministerial Meeting that developed countries should ensure the parallel elimination by 31 December 2013 of all forms of export subsidies and disciplines on all export measures with equivalent effect.Footnote 131 This would be consistent with the current state of agricultural markets, where exports can generally be secured without any form of financial support: indeed, EU expenditure on export refunds has fallen away dramatically, to the extent that it constitutes a fraction of the current agricultural budget.Footnote 132 On the other hand, it is interesting to note that the proposed EU legislative framework for the period 2014–20 does retain a system of export refunds.Footnote 133 And, should a policy of sustainable intensification prove (over) successful, then once again there may be surpluses that are difficult to shift on international markets without subsidy.
F. Beyond the Three Pillars: Export Prohibitions and Restrictions
As indicated above, the Agreement on Agriculture was originally negotiated at a time of surplus production; and it may be recalled that, at the end of the 1992–93 marketing year, EU cereal intervention stocks stood at some 33.4 million tonnes, even though during the same marketing year nearly 36 million tonnes of cereals had been exported. It is therefore easy to understand why the primary focus of WTO negotiations was upon export refunds rather than export prohibitions and restrictions.Footnote 134 But export prohibitions and restrictions are not outside the rules; rather, they are subject to a ‘lighter touch’.Footnote 135
Article XI(2)(a) of the GATT provides exemption from the general elimination of quantitative restrictions in the case of ‘[e]xport prohibitions or restrictions temporarily applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party’ and this provision is supplemented by Article 12 of the Agreement on Agriculture (although not applicable to developing countries, unless they are net-food exporters). In particular, Article 12 lays down procedural constraints. First, there is an obligation to give due consideration to the effects of export prohibitions and restrictions on the food security of importing Members. Secondly, there is an obligation to give prior written notice, as far in advance as practicable, to the Committee on Agriculture; and this notice must contain, for example, information as the nature and the duration of the measure. Thirdly, there is an obligation to consult, upon request, with any Member that has a substantial interest as an importer. That said, the obligation to give prior written notice has not consistently been honoured in practice, even during the 2007–08 food crisis.Footnote 136
Over and above any such difficulties in practice, the wording of these provisions could be questioned both for their strength and precision. Not least, the obligation to give ‘due consideration’ to the effects of the prohibition or restriction is a weak one. Further, there is no definition of what constitutes a ‘critical shortage’, while information on the duration of the measure may prove unreliable.Footnote 137 This may be illustrated by the export ban imposed by the Russian Federation in August 2010, which was predicted by the President to last no longer than the end of the year,Footnote 138 but in the event continued until 1 July 2011.Footnote 139 In respect of these issues, however, assistance may now be derived from the jurisprudence of the Appellate Body in China–Raw Materials (albeit in the context of ‘other products essential to the exporting contracting party’ as opposed to foodstuffs).Footnote 140 Importantly, it was observed that a case-by-case analysis was required; and that ‘[i]nherent in the notion of criticality is the expectation of reaching a point in time at which conditions are no longer ‘‘critical’’’.Footnote 141
The Agreement on Agriculture's preoccupation with opening markets continues into the Doha Round negotiations with the result that export prohibitions and restrictions are pushed towards the end of current draft modalities and dismissed as simply ‘other issues’.Footnote 142 Proposed additions to Article 12 of the Agreement on Agriculture are again primarily procedural. Members imposing any export restrictions and prohibitions would be obliged to do so in an open and transparent manner and, on request, in consultation with Members ‘having a substantial interest as an importer’.Footnote 143 There is also a duty to monitor the impact of the measure imposed on the WTO Committee on Agriculture.Footnote 144
Although the current draft modalities do not make explicit reference to ‘sustainable intensification’ as such, there is still in this context some hint at a broader agenda beyond trade liberalization. Existing export prohibitions and restrictions imposed on foodstuffs and feeds must be removed at the end of the first year following their implementation,Footnote 145 clearly acknowledging the ‘chilling’ effect they can have on food production in that they tend to reduce domestic prices (this generally being the motivation for their introduction in the first place) and so prompt farmers to reduce or even cease growing the crop concerned.Footnote 146 Further, imposing a time limit for existing and subsequent export prohibitions and restrictions recognizes that such measures may have very adverse consequences in terms of food security on net-importing countries, and particularly so in the case of NFIDCs.Footnote 147
In any event, since the current draft modalities were issued in December 2008, the imposition of export prohibitions and restrictions has moved swiftly up the WTO agenda. Thus, in June 2011 Egypt initiated a proposal to prevent restrictions being imposed on exports of agricultural products to NFIDCs;Footnote 148 and, at the Eighth WTO Ministerial Conference held in December 2011, several ministers urged Members to commit both to removing existing food export restrictions and to refraining from their employment in the future.Footnote 149
IV. CONCLUSION
It would now be hard to argue that the demands on agriculture are not undergoing a paradigm shift. If there had been any lingering uncertainty, it would seem to have been dispelled by the renewed pressures on supply imposed by the adverse climatic conditions of the summer of 2012. The consequent question whether the Agreement on Agriculture (and its Doha Round renegotiation) adequately address this changed landscape is not an easy one. First of all, some caution would seem advisable before suggesting that the template as agreed in the Uruguay Round has become materially redundant. For example, it would clearly be an error to abandon the existing legislative framework in favour of one with focus purely on export restraints. Likewise, it would seem to be a mistake to stop the deepening of curbs on protectionism: a 2012 European Commission report found a steady increase in the incidence of potentially trade-restrictive measures during the latter part of 2011 and early part of 2012, and across a wide range of sectors.Footnote 150 Moreover, even though tightness of supply may be anticipated for the foreseeable future, there must be wisdom in retaining a set of rules which is at least capable of regulating a return to surplus. An illustration of the dangers of moving too hastily may perhaps be provided by reference to the objectives of the CAP. Over the period leading up to conclusion of the Treaty of Lisbon, there was considerable advocacy of a move away from the ‘productivist’ model which they represented (and, in particular, the objectives of stabilizing markets and assuring the availability of supplies),Footnote 151 with a view to throwing greater emphasis on environmental concerns. Yet, while environmental concerns continue to be genuine, few would currently dispute the merits of stable markets and ready availability of supplies.
In addition, there is a strong argument that the Agreement on Agriculture (whether in its current form or as renegotiated in the Doha Round) has the capacity to foster increased production and/or productivity, whether through its overall effect or detailed measures. Definitely, in the view of the WTO Director-General, the overall effect is positive, as evident in his letter of 14 December 2011 to the United Nations Special Rapporteur on the Right to Food: ‘[i]n response to an enhanced transmission of unbiased price signals competitive producers adjust their production and investment decisions. This supply response helps to mitigate price pressure, contributing to improved availability of affordable food’.Footnote 152 And, to illustrate the potential of detailed measures, three examples may be recalled. First, under Article 6(2) there is scope for developing countries to provide exempt support for agricultural investment; secondly, research into farming practices which directly foster sustainable intensification may in the correct circumstances be subsidized as a ‘Green Box’ exempt general service;Footnote 153 and, thirdly, the current draft modalities propose that ‘Green Box’ exemption similarly be conferred on policies and services in developing countries which address climate change concerns (such as drought management).Footnote 154
On the other hand, it would seem reasonable to suggest that the international agricultural trade rules should no longer privilege measures which may actually militate against sustainable intensification; and the future role of the ‘Blue Box’ may legitimately be brought into question. In particular, there is now less logic in exempting from domestic support reduction commitments direct payments under production-limiting programmes (or direct payments which do not require production at all, as envisaged in the current draft modalities).Footnote 155 In this respect, the Doha Round negotiations arguably display an element of path dependency and fresh thinking may be required. Further, there is general consensus that the ‘Blue Box’ was introduced as a mechanism to break the impasse which had been reached in the Uruguay Round negotiations (by providing a shelter for the bulk of EU and United States domestic support); and it may perhaps therefore be regarded as a temporary expedient, with there being no immediate reason why production-limitation should be so vital on a long-term basis for an Agreement on Agriculture designed to generate trade flow. Interestingly, no reference is made to ‘Blue Box’ measures in the Preamble. Similarly, it may be asked whether there is an ongoing justification for the fundamental requirement that all ‘Green Box’ support has both no, or at most minimal, trade distorting effects and no, or at most minimal, effects on production. The former criterion would seem absolutely in line with the ethos of the Agreement on Agriculture; the latter less so.
Positive incentives to promote sustainable intensification would also seem to generate inherent difficulties for world trade rules. First, as has been seen, the precise nature of ‘sustainable intensification’ itself remains fully to be worked out, with the result that both the current Agreement on Agriculture and any revised version negotiated within the Doha Round are likely to be faced with novel instruments and measures, not capable of ready categorization. Again by way of illustration, having identified increasing financial stability for agricultural producers and food independence as priorities for agriculture over the period 2013–20, the Russian Federation announced in the summer of 2012 that it would make per hectare payments to farmers, with the amounts based upon output volumes and climatic conditions; and, significantly, WTO compatibility was claimed for those payments.Footnote 156
Secondly, the Agreement on Agriculture is generally hostile to support for specific crops, as evidenced by the rules governing the use by Members of decoupled income support, which preclude connection between the amount of payments and the type or volume of production.Footnote 157 Accordingly, by way of illustration, it may not be easy for a Member to provide exempt support in favour of a form of biomass production which is apprehended to have a very light carbon footprint.Footnote 158 In like vein, developing countries may struggle to find ways of providing exempt support for a commodity crop which is of heightened importance in terms of their climate or economy.Footnote 159 That said, one possibility not to be overlooked is de minimis support, which, despite being limited in scale, may be product-specific.
Thirdly, there is the overarching hurdle that, although ‘sustainable intensification’ may not be a contradiction in terms,Footnote 160 it does nevertheless exhibit certain ‘Janus-like’ qualities, with the result that both domestically and at WTO level there is a need for subtle balancing of competing interests. Within the WTO context, it may be reiterated that measures which place their emphasis on production may struggle to comply with the provisions of the Agreement on Agriculture. By contrast, measures which place their emphasis on sustainability may qualify for ‘Green Box’ exemption as environmental programmes, but the specific nature of such programmes renders them an unlikely vehicle for delivering sustainable intensification. And, where the link between intensification and sustainability is perhaps most close, namely cross-compliance regimes, there are again genuine problems of accommodation within the existing framework of the Agreement on Agriculture. Thus, although receipt of the EU Single Farm Payment is conditional upon observing good agricultural practice, in world trade terms it would seem to fall between two stools. On the one hand, the cross-compliance requirements are in all probability insufficiently rigorous to justify exemption as an environmental programme and, on the other hand, if it is to secure exemption as decoupled income support, according to the world trade rules there must be no obligation to produce.
In consequence, some ingenuity will be necessary if the Agreement on Agriculture is to become a major force for the promotion of sustainable intensification. As has been seen, even what constitutes an ‘agricultural product’ is now open to interpretation. But perhaps most critically, the primary goal of the Agreement on Agriculture is to establish a fair and market-oriented agricultural trading system and one would not expect it to transform into an engine which develops detailed measures for a very different policy objective (and one which, as yet, remains properly to be defined). Rather, its role is to assess whether measures developed elsewhere distort trade in ways that cannot be justified. To this extent, the Doha Round negotiations would seem to display some awareness of the changes which have occurred in the agricultural sector: not least, there is greater emphasis on the need to tackle food security and climate change in developing countries. Indeed, perversely, the delay in concluding the Doha Round may yet prove to be an opportunity, since the new challenges facing agriculture, somewhat opaque at the time of Seattle and even Doha, are now more fully revealed and capable of being addressed.Footnote 161 Grasping this opportunity, and still holding true to its main purpose, a good first step forward would be to negotiate a new Agreement on Agriculture which is not positively inimical to a more ‘productivist’ model and which also grants Members the policy space to foster sustainable intensification in ways which impact as little as possible on the free flow of trade.
