AGRICULTURAL TRADE IN THE URUGUAY ROUND: INTO FINAL BATTLE

Geneva: Multilateral Trade Negotiations

The MTN process in Geneva has wound through nearly three
years of discussions as part of the 1986-90 Uruguay Round (Bar-
kema, et al.). In December, 1988, a “midterm review” meeting in
Montreal ended in discord, when the United States and EC failed to
bridge their fundamental differences over agriculture. Additional
problems in three of the fifteen other negotiating areas: textiles, in-
tellectual property and safeguards, also prevented a package of
framework agreements designed to lay the groundwork for the final
two years of the Uruguay Round.

Negotiations Retrieve Midterm Review

However, the midterm review was retrieved in April, 1989, when
Geneva negotiations resulted in framework agreements in the prob-
lem areas. In agriculture, the U.S./EC differences were papered
over with language that called for “substantial progressive reduc-
tions in agricultural support and protection . . . resulting in correct-
ing and preventing restrictions and distortions in world agricultural
markets.”

On the U.S. side, which had unsuccessfully called for “elimina-
tion” of all trade distorting subsidies in Montreal, the Geneva lan-
guage was interpreted as a lot of reform in a hurry. On the EC side,
it was interpreted as modest reforms over an extended period. The
long-term goal of the Uruguay Round was reaffirmed as “a fair and
market-oriented agricultural trading system.”

Important Departures in Framework Agreement

Despite these negotiating nostrums there were several important
departures in the April framework agreement worthy of note
(Gifford). Areas that had escaped scrutiny since 1947, through seven
previous GATT rounds, were targeted for reform, including the
EC’s variable levies and other countries’ voluntary export restraints.

In addition, country-specific policies previously exempted from
GATT rules and given special treatment when various countries
joined GATT were put on the table for negotiation. These policies
include the majority of Swiss agricultural subsidies, Canadian wheat
import permits, and the U.S. “Section 22” import quotas.

The midterm review also explicitly identified domestic measures
as a source of trade distortion in need of reform and developed a de-
tailed work program with milestones, including a first set of (unspec-
ified) long-term commitments to occur in 1991.

In the short term, the package agreed to in Geneva capped the
level of domestic and export support and protection at “current” lev-

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