1. Directorate for Food, Agriculture and Fisheries ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES OECDOCDE Agricultural Policies and Opportunities for Developing Countries' Exports Stefan Tangermann Director for Food, Agriculture and Fisheries Geneva, 10-11 October 2005 WTO Symposium on Trade and Sustainable Development

2. Directorate for Food, Agriculture and Fisheries 2 Outline OECD area policies and market access Dynamics of South-South trade Relevance of non-tariff barriers

3. Directorate for Food, Agriculture and Fisheries 3 OECD area farm policies hurt competitive exporters Farm support in OECD area remains high … and largest (though somewhat declining) part is provided through price support, output subsidies … which are rarely efficient in meeting domestic objectives in OECD countries … but stimulate production, reduce imports and expand exports … at expense of competitive low-support exporters

4. Directorate for Food, Agriculture and Fisheries 4 Farm support in OECD area remains high (US$ 280 billion in 2004) Japan Australia EU USA OECD New Zealand Korea Source: OECD

5. Directorate for Food, Agriculture and Fisheries 5 … and is mostly provided through price and output support Source: OECD

6. Directorate for Food, Agriculture and Fisheries 6 Market access is cornerstone Price support can be maintained only behind border measures (export subsidies, tariffs) Elimination of export subsidies, in all forms, already agreed in 2004 Framework Tariff cuts are decisive, because they generate largest gains

7. Directorate for Food, Agriculture and Fisheries 7 The benefits of progressive tariff cuts Tariff rates are widely dispersed … with strong distortion effects Tariff escalation does not help OECD farmers … but harms developing countries Exceptions for too many 'sensitive' and 'special' products can greatly reduce the gains from tariff cuts

8. Directorate for Food, Agriculture and Fisheries 8 Developing countries are increasingly heterogeneous in agricultural trade In agriculture, developing countries overall are increasingly importers But some developing countries are dynamic exporters South-South trade in agriculture grows rapidly Tariff cuts in developing countries are important for developing country exporters

9. Directorate for Food, Agriculture and Fisheries 9 Developing countries become ag. importers All dev'g countries, ag. products All dev'g countries, food excl. fish LDCs, ag. products LDCs, food excl. fish Source: FAOSTAT

10. Directorate for Food, Agriculture and Fisheries 10 South-South trade in agriculture grows fast Annual growth rates of ag. exports, 1994-2004 Developed country exports to developing countries Developing country exports to Source: UN Comtrade developing countries developed countries

11. Directorate for Food, Agriculture and Fisheries 11 South-South trade will continue to grow 2.5 6.5 -3.4 -54-38 56 40 -2.3 10 Numbers in bars denote 2014 net trade quantities in million tons Source: OECD

12. Directorate for Food, Agriculture and Fisheries 12 Non-tariff barriers become increasingly relevant As tariffs are cut, NTBs become more important in relative terms … but also in absolute terms, as consumers and industry focus on attributes of products and processes Public and private standards are increasingly demanding

13. Directorate for Food, Agriculture and Fisheries 13 Private standards more demanding than public standards? Private standards are than public standards Source: OECD survey

14. Directorate for Food, Agriculture and Fisheries 14 Sustainable expansion of exports requires strong supply capacity Ability to comply with public and private standards Agricultural research, extension Rural infrastructure Transport infrastructure, ports, logistics Customs administration Attractive conditions for foreign investment

15. Directorate for Food, Agriculture and Fisheries 15 CONCLUSIONS 1.Tariff cuts are backbone of agric. liberalization... and do not undermine effective domestic policies 2.Tariff cuts in developing countries become increasingly important... as South-South trade expands rapidly 3.Strong supply capacity required... to meet evolving consumer demands