Current Agriculture, Food & Resource Issues
G. N. Vlontzos
subsidization system each country has established. In 1994 the WTO began attempting to
liberalize agricultural trade and decouple subsidies from production. The continuation of
this attempt, through the new Doha Round, will result in the minimization of the gap
between internal and international prices, with the former to decrease and the latter to
increase. The use of export subsidies and export credits in order to meet consumer needs
has totally adverse outcomes with regard to the WTO liberalization strategy and,
hopefully, will be eliminated.
The second weak point of the argument is a continuation of the first, but on an
international level. The new opportunities being created though freer market access and
increased prices create the most suitable environment for structural adjustment and
development and/or establishment of production wherever there is competitive advantage
for the developing countries. This shift allows the population of such countries to gain two
very important things, income and partial satisfaction of demand with their own products.
The liberalization strategy stabilizes the world market, creates income and wealth and
creates opportunity for improvement in any production channel, be it in a developed or a
developing country.
It is a common belief that the step-by-step procedure of reducing tariffs and
liberalizing agricultural trade will lead to an increase in international prices and the
establishment of new producing and trading opportunities for developing countries. The
products of developing countries can have two marketing channels, one to meet domestic
needs and the other to gain market share on an international level. Both these channels can
boost the economies of these countries and reduce their dependence on food aid programs
and the inefficient operation of exporting and importing STEs. The interrelationship will
force both developed and developing countries to improve STEs and to minimize their
role and importance, thus allowing market forces to establish a less distorting marketing
environment.
Finally export credits must in the future be used from a more development-oriented
perspective, having as their target the financing of investment projects, rather than
operating as a mechanism to meet consumer needs over the short term. According to this
way of thinking, the WTO must cease to accept the ability of the creditor to have
exclusive exporting rights, because such a situation is highly distorting and does not lead
to economic growth for the recipients. On the contrary, this way of satisfying consumer
needs intensifies misallocation of resources, enlarges external debt and trade deficit and
postpones the establishment of market oriented production channels.
Discussion and Conclusions
The above analysis intends to examine the ways STEs operate in both developing and
developed countries and the effects they have on economic growth, from a strictly market
oriented point of view and according to the current WTO spirit. It is obvious that more
steps need to be taken at both structural and operational levels, and these steps must be
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