The Uruguay Round Agreement on Agriculture (URAA) established rules relating to international trade in agriculture, covering market access, export subsidies, and domestic agricultural policy. The URAA required non-tariff barriers to agricultural imports to be tariffed and bound, farm production and export subsidies to be reduced, and aggregate domestic support for the agricultural sector also to be reduced. Different requirements apply to developed countries, developing countries and least developed countries which influence the extent of the changes required, the time period over which they are to be achieved, and the degree of discretion in their implementation.
Article 20 of the World Trade Organization (WTO) Agriculture Agreement conditions the long term objective of substantial, progressive reductions in support and protection, resulting in fundamental reform, by other concerns, notably the experience and effects of implementing reduction commitments agreed in 1994, special and differential treatment of developing countries, the objective to establish a fair and market-oriented agricultural trading system, and non trade concerns.
Liberalisation of economies including agricultural markets increases competitive intensity on a global level. Although this may lead to diminished pressure on the environment in certain regions, it may also lead to intensification (within the limits of environmental legislation) in other areas as well as marginalisation and abandonment in economically weaker regions.
Agricultural liberalization has significant impacts for the environment, animal welfare and food security. Any further liberalization must protect the interests of small farmers, net food-importing countries, least developed countries, and sustainable agriculture.
Many developing countries depend upon agriculture for their rural growth and rural poverty reduction. The agricultural sector can generate sustained growth in rural regions and enable rural poverty reduction. This has not happened largely because world trade in agricultural and agro-industrial products has grown slower than general trade. Developing countries have not been able to capture as large a share of trade growth in agriculture as in industry due to massive trade barriers to their agricultural goods. This has constrained agricultural growth and diversification in the developing world.
The constraints to agricultural trade – particularly agricultural protectionism in industrial countries – continue to inflict enormous welfare losses on the developing world, exceeding those from restrictions in the textile trade by a factor of three. And they more than negate the grant aid provided by developed countries.