The current WTO agricultural trade negotiations began in March 2000
and became part of the Doha Development Agenda in late 2001. The previous
Uruguay Round reached agricultural agreements in the areas of market
access, export competition and domestic support. The current round is
seeking agreements under similar headings. The effort to reach agreement
over reductions in domestic support to farmers is complicated by a number
of factors, for example, the extent to which such support affects production
decisions, the wishes of governments to support farmers for pursuing
multifunctional outcomes from agriculture, and the categorisation of
a myriad of policy instruments into green, blue and amber boxes. These
complications pose the risk of considerably extending the negotiations
and diverting attention away from other areas of reform. But the sustainability
of many domestic support policies depends on trade barriers, and reform
of these trade barriers may force governments into reforming domestic
support without requiring specific international agreements. We use
the GTAP applied general equilibrium model to quantify and analyse a
number of trade reform scenarios, with and without specific changes
in domestic support. We conclude that substantial trade expansion and
welfare gains can be achieved, even when domestic support is excluded
from the multilateral agreement. Improved market access makes a far
greater contribution to welfare gains than do reforms to domestic policies,
and once substantive reforms to border policies have been achieved attention
can then be turned to the lower-priority task of reforming domestic
support.
Keywords: agricultural policy reform, CGE modelling, decoupled policies,
domestic support, WTO
