Chapter 6


* Export subsidies are to be reduced by 21 percent in terms of the volume of exports
 benefiting from such subsidies, and by 36 percent of the expenditures on export subsidies
 over the period 1995-2000. This regulation largely concerns the export subsidies applied
 by developed countries, in order to dispose of surpluses.

There are also some provisions made on food aid, e.g. that it should not be tied to
commercial exports (see discussion of Usual Market Requirements under section 1.5 above)
and that food aid should be implemented in accordance with the FAO Principles of Surplus
Disposal.

What are the implications of the provisions of the Uruguay Round Negotiations for
development and food security? Only some tentative observations can be made.

All measures, specifically the tariffication of non-tariff barriers and the further reduction of
the tariffs, contributes to greater transparency on international markets and closer linkages
between domestic and world market prices. This can enhance economic efficiency and
growth on a world-wide scale, with positive implications for food security in the long-run.

Although the group of developing countries as a whole will probably gain from the
liberalisation of agricultural trade, the gains will be relatively small as far as tropical products
are concerned and, furthermore, unequally distributed. The poor countries will gain less than
the middle income countries. A number of countries that enjoyed preferential treatment in the
past (e.g. under the Lom6 Convention), and this refers largely to poor and least developed
countries in Africa, may even experience losses, due to the decline in their preferential
margins.

Another important issue for food security, is the implications of the Agreement for world
market prices and the future trade volume in food, specifically in grain. The most likely
scenario appears to be a reduction of (surplus) production in a number of developed
countries, resulting in a decline in export volumes and increase in world market prices.
Internationally available food aid supplies are also likely to decline. This will negatively
affect the food security situation of food importing countries, of countries and people
depending on food aid supplies, and the stability of grain supplies on a general world-wide
scale. On the other hand, it will have a stimulating effect on food production in a number of
countries with potential to increase food production and exports.

The most significant gains in export earning of developing countries will probably not come
from agricultural trade liberalisation but from a reduction of the restraints on textiles under
the Multi-Fibre Arrangement.

In summary, too much should not be expected from the Uruguay Round Agreement for
developing countries. The developed countries will gain most from international trade
liberalisation. This means, in essence, that the inequities in international trade may be
compounded rather than diminished.


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