Multilateral agricultural trade policy reform is expected to stimulate trade and economic growth, but any new trade rules need to be compatible with the first Millennium Development Goal, which calls for the proportion of people suffering from hunger or living in extreme poverty to be reduced by half by the year 2015, warns the UN Food and Agriculture Organization (FAO) in its annual report on the State of Agricultural Commodity Markets 2006 (SOCO2006), issued today.

At a news conference launching SOCO2006 in the Palais des Nations in Geneva, David Hallam, Chief of FAO's Trade Policy Service, said: “Some developing countries, assisted by supportive economic structures natural resource endowments and a commercial orientation are already highly competitive and successful in exporting agricultural products. These more advanced and competitive exporting countries are well placed to reap the benefits of liberalization in the global trading system.”

According to the FAO report, “many lower-income countries, especially in sub-Saharan Africa, are less well placed to gain in the short- to medium run from of trade liberalization that includes improved access to export markets, or from further opening of their own markets. The extent to which these poorer countries benefit from trade liberalization will depend upon their economic structures, their competitiveness and their capacity to respond to new market incentives.”

FAO report examines how developing countries can benefit

With the Doha Development round of trade talks now revived, FAO’s new report takes an in-depth look at the principal elements that may be needed to alleviate the concerns of developing countries regarding the role of trade in improving the competitiveness of their agriculture sectors.

Mr. Hallam said: “Not only will some developing countries not gain from trade liberalization, in some cases they may be adversely affected and, not surprisingly, they see this as a threat to their domestic production and food security.” Reducing tariffs means increased competition from imported foods for locally produced products, and domestic production systems that contribute significantly to food supplies, rural incomes and employment may not be ready to withstand this challenge.

Rules should recognize food security needs

According to the report, most countries agree on the importance of reaching an agreement that will lead to a less distorted agricultural trading environment. Such an agreement is particularly important for developing countries that depend on exports of agricultural commodities to support their development and poverty reduction strategies. But at the same time there is also “broad agreement that the rules of the international trading system should recognize the food security and development needs and the priorities of all developing countries.”

Sustainable food security depends on improved productivity in local food production, and many developing countries will need to have the flexibility and scope to create a supportive policy environment to facilitate this, the report says.

Flexibility will be necessary for some countries

“It is clear that many countries will need to be allowed some flexibility in the implementation of new trade rules, and also to be given assistance, at least for the short term, while they adjust to the new market realities arising from trade liberalization,” warned Mr. Hallam, adding: “In the language of the World Trade Organization, these countries need significant special and differential treatment.”

The FAO report calls for action to ensure that the potential benefits from trade reforms are shared by all as equitably as possible. “FAO is committed to assisting countries to improve their productivity and the competitiveness of their agricultural commodities,” said Mr. Hallam. FAO has been offering developing countries policy advice and training programmes to enable them to better defend their interests in trade talks.

The new issue of The State of Agricultural Commodity Markets is intended to raise awareness of the interests that developing countries have in the Doha Development Round by focusing on market access issues and the measures needed to ensure that trade policy reform contributes effectively to the reduction of poverty and food insecurity.

According to Mr. Hallam: “At the end of the day the real measure of success in the WTO multilateral trade talks will be just how much they contribute to reducing hunger and poverty in the world.”

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