WORLD TRADE ORGANIZATION (WTO) - ORGANISATION MONDIALE DU COMMERCE - ORGANIZACION MUNDIAL DEL COMERCIO

Mr. Anwarul Hoda, Deputy Director-General, World Trade Organization (WTO)

Over the past millennia, our civilization has made impressive progress in securing the material wellbeing of mankind. Technology has transformed the nature of the quest for food security but in one respect there has been no change. Food security remains a main driving force behind man's endeavours today, as before. Wars have been waged over scarcity of food, of the resources used to produce food such as arable land and water. Revolutions have been sparked off by the price of bread. Today there is a dawning realization that a sustainable domestic food supply cannot be ensured by each government acting individually.

Food self-sufficiency is not food security - the goal of self-sufficiency is illusory in a world where a vast range of inputs constitute the full production equation. Food security is not simply the production in a particular country of a particular foodstuff, but an interaction of the fuels, fertilizers, machinery, capital and other inputs from domestic sources or from neighbouring or distant countries. Moreover, the production of a single commodity can meet only one aspect of a country's food needs. Inputs of a whole range of other commodities from other countries are equally vital.

In an interdependent world, the effects of any exceptional changes in food production in one state, from adverse climatic events for example, are spread over a broad range of countries. The burdens of short-term fluctuations and longer-term structural change are thereby reduced. Efficient domestic production, stable trading relationships and efficient storage and distribution make up food security in the longer term. Progressive integration of national food markets has created the global market place for food which is today enhancing world food security.

The WTO Agreement has made a major contribution towards strengthening the global market for basic foodstuffs. Clearly, we are still a long way from free trade and agriculture, but the remaining protection will be transparent and predictable. More importantly, a framework has been established for continuing the reform process in future. Most agricultural import barriers, other than tariffs, are prohibited and input tariffs are being reduced as from 1995. Existing export subsidies too are being phased down and new export subsidies are prohibited.

Another important element of the Agreement is the improved disciplines governing export restrictions and prohibitions on foodstuffs. While domestic subsidies which distort trade are to be reduced, nothing in the WTO Agreement prevents the use of most domestic agricultural policies to improve the environment for food production or to tackle other food security issues. Governments are free to invest in transportation, market and port facilities; they are free to make capital outlays in irrigation and in reticulation of electrical energy. They can underwrite the costs of research and education; they can establish and maintain food security stocks and they can continue with programmes to provide domestic food aid.

Under the Agreement, developing countries can also continue to use investment and input subsidies, even direct support to stimulate production under certain conditions.

Implementation of the measures for liberalization of agriculture will result in the reduction of inefficient production which is based on subsidies and protection. This may in the short term have negative consequences for the net-food importing countries as prices will tend to rise. The WTO provides some mechanisms to help countries cope with any such effects.

More importantly, in the longer term the higher prices will induce production including importing countries. In the end we shall have more real food security, based not on temporary supply of cheap subsidized foodstuffs, but on more assured supply based on efficient production in more diversified producing regions.

Trade was a basic element of life long before the study of economics made comparative advantage fashionable, and food has always been an important element of that trade, with markets integrated to a greater or lesser extent for thousands of years. But during the latter part of the twentieth century, trade in basic foodstuffs was subjected to increasingly higher impediments. The WTO Agreement has effectively reversed this trend.

The message from the WTO is that progressive liberalization of production and trade in agriculture can only enhance food security, not diminish it. The goal for developed, as well as developing, countries should be balanced food production within an open and efficient trading system. The path to food security is through integration and interdependence, not protection and autarchy.