The Final Act of the Uruguay Round and the Marrakesh Agreement
establishing the World Trade Organization were signed on April 15,
1994. The World Trade Organization (WTO) was subsequently
established on January 1, 1995, as the multilateral institution
charged with administering agreed-upon rules for trade among member
countries. The WTO supersedes the General Agreement on Tariffs and
Trade (GATT), which was established in 1947 as the umbrella
organization for international trade. The United States and other
countries participating in the Uruguay Round of Multilateral Trade
Negotiations (1986-94) formed the WTO to embody the new trade
disciplines adopted during those negotiations. The basic aim of the
WTO is to liberalize world trade and place it on a secure basis,
thereby contributing to economic growth and development.
At the heart of the WTO are the numerous agreements negotiated
and signed by members during the Uruguay Round. These agreements
cover trade in goods and services, as well as trade-related aspects
of intellectual property rights. All have some relevance to
agricultural trade, and supporting material on a number of them is
available in this briefing room.
Major WTO Agreements
There are also four plurilateral agreements (not binding on all
WTO members):
- Agreement on Trade in Civil Aircraft
- Agreement on Government Procurement
- International Dairy Agreement
- International Bovine Meat Agreement
Agreement on Agriculture (AoA)
The WTO Agreement on Agriculture (AoA) represents a fundamental
change in the way agriculture is treated under the rules governing
trade among WTO member countries. Prior to the Uruguay Round, rules
on trade in agricultural products in the General Agreement on
Tariffs and Trade (GATT) were largely ineffective due to a number
of loopholes and exceptions that, in effect, excluded much of this
trade from most of the disciplines applied to trade in manufactured
goods. The AoA introduced important new disciplines on the trade of
agricultural products and required countries to reduce agricultural
support and protection in the areas of market access, domestic
support, and export subsidies-sometimes referred to as the "three
pillars" of the agreement.
Under market access, countries agreed to open markets by
prohibiting nontariff barriers, converting nontariff barriers to
tariffs (known as "tarrification"), and reducing tariffs. Countries
also agreed to reduce expenditures on export subsidies and on the
quantity of agricultural products exported with subsidies. Domestic
support reductions were achieved through commitments to reduce a
country's aggregate measurement of support (AMS)-a numerical
measure of the value of most trade-distorting domestic
policies.
The AoA recognized that the long-term objective of substantial
progressive reductions in support and protection is an ongoing
process. As a result, it committed members to initiate negotiations
by the end of 1999. Agriculture and services were the only areas
where negotiations on further trade liberalization were mandated in
the Uruguay Round Agreements that established the WTO. Agricultural
negotiations began in January 2000, in advance of the official
launching of the
Doha Round.
See the AoA General Issues section of the recommended
readings page for more information regarding general issues related
to the WTO Agreement on Agriculture.
Tariffication and Market Access
Tariffication, the conversion of nontariff barriers to
equivalent
bound tariffs, was one of the most important outcomes of the
Uruguay Round Agreement on Agriculture (AoA). The adoption of a
tariffs-only approach for agriculture was a sweeping reform that
went a long way toward subjecting agricultural trade to the same
disciplines applied to other traded goods.
The Uruguay Round tariff reductions, along with the
establishment of
tariff-rate quotas (TRQs), increased market access for
agricultural exports, but also left many high tariffs in place (see
AoA Issues Series: Market Access: Tariffication
and Tariff Reduction). Agricultural trade would benefit from
further reducing high tariffs, expanding and reforming TRQs, and
improving the predictability of tariff protection.
See the AoA Tariffs and Market Access section of the
recommended readings page for more information regarding tariff and
market-access issues related to the WTO Agreement on
Agriculture.
Domestic Support
Domestic support policies were recognized as one source of
market and trade distortions in negotiating the Uruguay Round
Agreement on Agriculture (AoA). Countries, therefore, agreed to
limit domestic policies presumed to be the most trade distorting
and to exempt non- or minimally trade-distorting policies from any
limitations (see AoA Issues Series: Domestic Support
Policies).
Policies were categorized by color according to whether and how
they were disciplined. Policies that directly influence production
decisions, such as price support policies (
amber box policies), were capped and subject to cuts. Support
levels from amber box policies are quantified, according to the
AoA, by calculation of an
aggregate measure of support (AMS), which combines estimated
support levels for all commodities into one overall measure.
The AoA exempted three types of domestic programs from reduction
commitments. The first type of exempt support is
amber box policies deemed to be de minimis-defined as
support that is less than 5 percent of the value of production. The
second type of domestic program exempt from reduction commitments
is expenditures that are entirely government funded and do not vary
with prices. This type of support ( green box policies)-deemed to
have little or no effect on production or trade-includes research
programs, domestic food aid, environmental programs, and certain
crop insurance and income-support programs. The third type of
exemption (
blue box policies) includes payments that are related to
production-limiting programs (e.g., subsidies paid as a result of
production quotas or those that require producers to set aside land
in order to qualify for subsidies).
See the AoA Domestic Support section of the recommended
readings page for more information regarding domestic-support
issues related to the WTO Agreement on Agriculture.
Export Subsidies
The Uruguay Round Agreement on Agriculture (AoA) imposed
meaningful disciplines on agricultural export subsidies for the
first time (see
AoA Issues Series: Export Subsidies). Prior to AoA
implementation, export subsidies significantly distorted
agricultural trade.
Under the AoA, countries that employed export subsidies for
agricultural commodities agreed to lower the volume and value of
their subsidies during a multiyear phase-in period. New subsidies
cannot be introduced. Bona fide food aid and export market
promotion and advisory services are exempt.
See the AoA Export
Subsidies section of the recommended readings page for more
information regarding export-subsidy issues related to the WTO
Agreement on Agriculture.
Dispute Settlement
The WTO Agreement also created a
Dispute Settlement Body within the WTO to resolve disputes
among WTO members, and it established a system for regular review
of national trade policies and international trade trends.
WTO Accession
Any state or customs territory having full autonomy in the
conduct of its trade policies may become a WTO member subject to
negotiations guided by a working party of WTO members. At the
conclusion of the Uruguay Round, there were 124 WTO members. China
completed accession negotiations and became a WTO member in
December 2001, Taiwan in January 2002, and Viet Nam in January
2007. Tonga is the WTO's 151st member, joining in July 2007. Russia
and Ukraine are among over two dozen countries currently
negotiating to join the WTO (see WTO's web page on accessions). The lengthy accession process
involves extensive review of the applicant's trade policies and
laws to ensure conformity with WTO rules. WTO membership should
facilitate more transparent and rules-based trade regimes in these
countries.