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IPC Position Paper No. 5

The Role of Regionalism in
Agricultural Trade Reform

An Overview

Regional trade pacts are emerging in every corner of the globe, raising numerous questions about their effect on regional and international agricultural trade. The most significant of these are whether they threaten to detract attention from the more important task of multilateral trade liberalization in agriculture and whether such arrangements risk encouraging high-cost trade within the regions involved. With another round of trade talks scheduled to start soon in the WTO, it is important to ensure that regional FTAs complement these negotiations and that the multilateral system is given highest priority.

The present position paper by the International Food and Agricultural Trade Policy Council (IPC) attempts to set out a strategy for the incorporation of regional trade pacts into the ongoing process of trade liberalization. It reviews the progress in agricultural trade liberalization at the regional level, with special attention given to APEC, the FTAA, the EU and the Transatlantic Agenda, and makes recommendations for how the regional and multilateral approaches can develop in a compatible fashion.

The paper argues that agriculture must play its full part in regional trade liberalization, while avoiding conflict with the WTO. Quantitative restrictions on internal trade within FTAs should be removed and the use of export subsidies and internal supports should be restricted. The question of the complimentarity between the two approaches can be addressed by applying more rigorously the existing WTO rules on the acceptability of free trade areas and customs unions; requiring countries participating in FTAs to ensure that third parties are not adversely affected; binding the common external tariffs of trade blocs into the WTO schedules of commitments; and having the WTO Committees on Agriculture and Regional Trade Agreements closely monitor the activities of these blocs. The multilateral system must make use of the potential inherent in the recent phenomenon that has seen networks being set up between regional FTAs, while avoiding their pitfalls.

In these ways, and by respecting the priority of the multilateral system, the IPC believes that regional trade liberalization can play a constructive role in helping bring about a more liberal trading system in agricultural and food products.

FULL TEXT (.pdf format)

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