This book seeks to evaluate the extent to which WTO disciplines in the area of domestic support for agriculture contribute to policy reforms at the national level. The authors use the framework of WTO agriculture notifications to organize information on national support to agriculture in order to examine the extent that the rules established in the WTO Agreement on Agriculture (AoA) have contributed to national policy reforms. The authors build up a detailed core set of information by using actual and estimated (or ‘shadow’) notifications made by eight WTO Members in the area of agricultural domestic support that then allows for the comparison of countries' policy choices and implementation of WTO commitments.
This book can satisfy the interest of two audiences. First, the detailed discussions provided in the country chapters will stoke the interests of analysts seeking a deeper understanding of the agricultural policies at the country level and how these have changed over time. At the same time, the discussions about the relationship between WTO disciplines and multilateral policy trends will appeal to a broader audience seeking to understand how rules and processes in place in the WTO can help improve the functioning of the multilateral trading system more generally. By balancing detailed data on domestic support with a rich accounting of political economy, the authors also raise interesting points on how WTO rules shape reporting incentives on domestic support and the resulting impact on notified data.
The authors set ambitious goals, identifying key analytical questions covered in the country-specific chapters. The questions can be grouped into three general themes: (1) contribution of notifications to greater international transparency, (2) impact of current disciplines on evolution of agriculture policies, and (3) impact of future disciplines proposed in the context of the Doha negotiations. To address the first theme, the book considers the diverse approaches taken by countries in notifying domestic support. The second set of questions requires a comparison of other measurements of support such as the OECD producer support estimates (PSE) in order to establish whether the information in the notifications reflect actual changes in economic policy behavior. The third theme considers the possible implications of the 2008 Doha draft modalities text on future domestic support limits. While the last category is necessary to round out the discussion of WTO current and possible future rules, the fundamental contribution this volume makes is through the analysis provided in the first two thematic areas.
As an essential starting point, the book describes the WTO legal obligations in the area of domestic support on agriculture, developed at the end of the Uruguay Round of trade negotiations. At that time, the legal agreements defined different categories of support, creating limits on domestic support that would have spillover effects on international markets. The AoA also specified areas of less trade-distorting support that countries could provide without limits. Obligations for notifying domestic support accompanied these legal limits with a view to enhancing the transparency associated with domestic policies and agriculture.
This authors tease out the different levels of transparency in the context of the WTO system. At the most basic level, notifications provide enhanced accounting of levels of support of Members' policy choices over time. At the next level, the notifications provide background information, including methodologies and legislative references which clarify the basis for the reported summary numbers. Finally, on an institutional level, the process of discussing these issues in the Committee on Agriculture provides more clarity about how WTO Members are interpreting the rules that are laid out in the Uruguay Round AoA.
The authors consolidate existing data from notifications in a digestible time series form. To fill in the gaps in the data set in the years when countries had not provided notifications the authors also generate shadow notifications. The tables presented in the various country chapters in many cases represent large data collection efforts and these tables alone are a valuable contribution to transparency.
The book also contributes to a higher level of transparency by providing a deeper appreciation of the nuanced differences in information provided in notifications. These differences will impact the way national policy behaviors can be compared. Countries make several types of decisions when they report domestic support in agriculture in the context of WTO obligations. At the basic level, countries have taken decisions on how to classify their domestic support according to WTO rules. While the AoA defines non-distorting support, countries interpret this definition differently and may disagree about what types of support fall into this category. How they choose to classify their domestic support will affect what is included in the support they declare in their notifications. Calculation of some aspects of trade-distorting support also differs among WTO Members. By highlighting these types of divergent interpretations of the notification obligations, the authors contribute to the collective understanding of notification practice and the extent to which comparisons can be drawn across country notifications in relation to trends in domestic support.
The second main theme of this book is whether the data provided in WTO notifications accurately capture policy evolution within domestic economies. Getting to the root of this question requires a combination of legal and economic analysis. The WTO agreements provide a set of legal rules defining categories of support, and associated reduction and by so doing create the incentive for policy evolution. At the same time, the legal structure of the agreement does not always parallel in meaningful ways an economic framework for analysis. For example, changing the reporting of particular domestic support policies may have significant repercussions on reported numbers and how they relate to established WTO commitments but may not imply that the underlying economic support to agricultural producers has changed.
Both the OECD and the WTO contribute to transparency of national domestic support policies. The authors compare OECD measurements of support to agriculture (e.g., PSE) and the domestic support notified at the WTO in terms of predictability and comparability of information produced. At the WTO, the fact that countries submit notifications influences both the timeliness and the content of notifications. The OECD publishes annual measurements of producer support. While OECD numbers provide enhanced comparability and data which can be used as an input into economic analysis of support, the WTO underlying principles have to do with the balance of rights and obligations taken at the national level in the context of multilateral agreements. The editors of this volume suggest that linking the WTO domestic support notifications to the annual policy review process of the OECD would ensure annual submissions on a regular basis for a large number of countries and could lead to more uniform reporting in WTO notifications.
The third category of questions in this book focuses on the ways in which the Doha Round negotiations may provide stronger disciplines on trade distorting support and incentives for policy reform. At this point in time, the future path for the Doha negotiations is unclear. This lack of clarity is compounded by the uncertainty about future developments in international agricultural markets. As the authors note, there have been new developments in the past few decades that have had led to significant changes in the fundamental market conditions that determine international agriculture prices. For example, the development of markets for ethanol has created closer economic links between agricultural and energy markets. In the future factors outside the WTO will have a significant influence on policy reforms in agriculture. Forecasts of the future impact of Doha on domestic support policies are relatively less useful than the analysis in other areas of the book due to the changing conditions in agricultural markets and the current context of the Doha negotiations.
At its core, the book makes a compelling argument for the value of transparency. The authors demonstrate how transparency can be enhanced when data provided in notifications are compiled and analyzed consistently across different countries. Further efforts in this area, enhancing the understanding of assumptions embedded in country-level measurements of agricultural domestic support could contribute to future policy reform discussions. By reading this book, students, researchers, and policy practitioners will gain a deeper appreciation of the role of transparency and will be more sophisticated consumers of WTO notified information in the future.
