Agreement on Agriculture Explained: A Comprehensive Overview
The General Agreement on Tariffs and Trade (GATT) was formed in 1947 to foster international trade. As part of its mandate, it recognized the importance of agriculture in global trading and therefore introduced the Agreement on Agriculture in 1995. The Agreement on Agriculture, also known as the AoA, was a historic and comprehensive agreement that aimed to reform global agriculture trade. This article provides an overview of the AoA, its provisions, and its impact on the global agricultural sector.
What is the Agreement on Agriculture?
The AoA is an agreement formed under the World Trade Organization (WTO) that governs the trade of agricultural products. The agreement aims to create a transparent, predictable, and fair trading system for agricultural products among WTO member countries. It focuses on the three pillars of agricultural trade: market access, domestic support, and export competition.
The market access pillar of the AoA aims to reduce trade barriers and promote fair trade. The agreement sought to eliminate all forms of quantitative trade restrictions, including quotas and other measures that restrict the quantity of imports. The agreement also aimed to reduce tariffs on agricultural products, as high tariffs can often deter trade. The market access pillar of the AoA also established the Special Safeguard Mechanism (SSM), which allows developing countries to impose temporary tariffs to protect local agricultural production.
The domestic support pillar of the AoA aims to reduce subsidies that distort trade. The AoA introduced a new concept of Aggregate Measure of Support (AMS), which measures the total amount of subsidies that a country provides to its agricultural sector. The agreement seeks to reduce the level of these subsidies, especially for developed countries, to promote fair competition.
The export competition pillar of the AoA aims to reduce trade-distorting practices, such as export subsidies. Export subsidies can provide an unfair competitive advantage to a country’s agricultural exports in international markets. The AoA seeks to reduce these subsidies and promote fair competition in the export of agricultural products.
Impact of AoA
The AoA has had a significant impact on the global agricultural sector. The agreement has forced countries to reform their agricultural policies, reduce trade barriers, and promote free and fair trade. The AoA has also led to increased agricultural trade, particularly for developing countries. The agreement has helped reduce the cost of agricultural products, making food more accessible and affordable to consumers.
Critics of the AoA argue that the agreement has favored developed countries over developing countries. They argue that developed countries still provide substantial subsidies to their agricultural sector, undermining the fair competition that the AoA sought to promote. The agreement has also been criticized for its impact on small-scale farmers in developing countries.
In conclusion, the Agreement on Agriculture is a vital agreement that promotes fair trade and reduces trade barriers for agricultural products. It seeks to create a level playing field for all WTO member countries and has undoubtedly had a significant impact on the global agricultural sector. However, the agreement is not without its flaws, and critics argue that it favors developed countries over developing countries. Despite its shortcomings, there is little doubt that the AoA has been a force for positive change in the global agricultural sector.