By Paul Morris, Minister-Counsellor for Agriculture and Resources
Embassy of Australia, Washington, D.C.
The Cairns Group of 15 agricultural-exporting countries was formed in 1986 to influence agricultural negotiations within the World Trade Organization (WTO). It was largely as a result of the group's efforts that a framework for reform in farm products trade was established in the Uruguay Round and agriculture was for the first time subject to global trade-liberalizing rules. The group is now positioning itself to play an important role in the new round of WTO agricultural negotiations that commence in Seattle, Washington, in November 1999.
The Cairns Group, which accounts for about 20 percent of world agricultural exports, includes both developed and developing countries across a diverse set of regions around the world. The group consists of Argentina, Australia, Brazil, Canada, Chile, Colombia, Fiji, Indonesia, Malaysia, New Zealand, Paraguay, Philippines, South Africa, Thailand, and Uruguay. By acting collectively, this disparate group has had more influence and impact on agricultural negotiations than individual members would have had independently. The group, which is under Australian leadership, takes a consensual approach to decision-making.
Beyond the Uruguay Round
Members of the Cairns Group were generally pleased with the outcome of the Uruguay Round, but believe that much remains to be done to ensure that a genuine market-oriented approach to agricultural policies is achieved. For example, in 1997, levels of agricultural support in Organization for Economic Cooperation and Development (OECD) countries alone were still extremely high at $280,000 million. The approach taken by the group to the challenge of reducing this assistance and creating a freer agricultural marketplace has been two-pronged. First, the group has worked to ensure that countries meet the agricultural-related commitments agreed to during the Uruguay Round. It has done this by remaining visible and active since the end of the round. One of its members (Ambassador Danai from Thailand) was appointed the first chair of the WTO Committee on Agriculture. Ambassador Danai's successor as chair, appointed in early 1997, is another Cairns Group member Ambassador Osorio from Colombia).
Second, the Cairns Group has engaged other WTO member countries in early preparation for the next round of agricultural negotiations in an attempt to ensure that they start on time and are not unnecessarily protracted as they were during the Uruguay Round. The group in April 1998 agreed on a strongly worded "vision statement" conveying its broad objectives for the 1999 agriculture negotiations and initiated a necessarily ambitious strategic approach to the preparations for the negotiations:
"The Cairns Group of Agricultural Fair Traders reaffirms its commitment to achieving a fair and market-oriented agricultural trading system as sought by the Agreement on Agriculture. To this end, the Cairns Group is united in its resolve to ensure that the next WTO agriculture negotiations achieve fundamental reform which will put trade in agricultural goods on the same basis as trade in other goods. All trade-distorting subsidies must be eliminated and market access must be substantially improved so that agricultural trade can proceed on the basis of market forces."
Objectives for the Seattle Negotiations
The vision statement outlines the Cairns Group's reform goals in three key areas within the Uruguay Round framework, as follows:
Deep cuts to all tariffs are required, as well as the removal of tariff peaks and the redressing of tariff escalation so that market access for agricultural commodities and value-added agricultural products is on a similar footing as trade in other commercially traded products. This should include the objective of transforming market access barriers to tariffs and the removal of nontariff barriers to trade. In the interim, the Cairns Group supports substantial increases in trade volumes under tariff-rate quotas, although the administration of these quotas must not diminish the size and value of market access opportunities, particularly in products of special interest to developing countries.
All trade-distorting domestic supports must be eliminated or replaced with non-trade distorting methods of assistance. Income aids or other domestic support measures should be targeted, transparent, and fully decoupled so that they do not distort production and trade.
Export subsidies must be made illegal for agricultural products, as they are for other traded goods, and clear rules must be established to prevent circumvention of export subsidy commitments. In this regard, it is worth noting that only 25 of the 134 current WTO members are entitled to use export subsidies, and most of these are developed countries (with more than 80 percent of export subsidies accounted for by the European Union). Also, agricultural export credits must be brought under effective international discipline with a view to ending government subsidization of such credits.
Special Needs of Developing Countries
The vision statement also reaffirms the group's support for continuing the principle of special and differential treatment for developing countries, including least-developed countries and small states, as an integral part of the next WTO agriculture negotiations. The Cairns Group ministers agreed that the framework for liberalization must continue to support the economic development needs, including technical assistance requirements, of these WTO members. As has been stated by the Cairns Group:
"Major challenges facing many developing countries are the persistence of rural poverty and the linkages between such poverty and serious environmental problems. Consequently, more sustainable agricultural development remains a central policy issue in many developing countries. An improved international trading environment that is more conducive to supporting agricultural development is needed as an essential ingredient in addressing these problems."
Adherence to these principles will not only improve the trading environment for agricultural exporting nations but will also have important implications for global food security. Food security will be enhanced through more diversified and reliable sources of supply, as more farmers, including poorer farmers in developing countries, are able to respond to market forces and new income-generating opportunities without the burden of competition from heavily subsidized products. To provide further assurance to net-food-importing countries, export restrictions must not be allowed to disrupt the supply of food to world markets.
Reductions in assistance to the agricultural sector may also have positive implications for the environment. In many cases, agricultural subsidies and access restrictions have stimulated farm practices that are harmful to the environment. Reform of these policies can contribute to the development of environmentally sustainable agriculture.
Preparations for the Next Round
Cairns Group ministers welcomed the launch by the second WTO Ministerial Conference in Geneva in May 1998 of preparations for the next round of agriculture negotiations. The WTO Ministerial Declaration that emanated from that conference binds WTO members to a preparatory process that began in September 1998 and will culminate in ministerial agreement on the scope, structure, and time frame for the agriculture negotiations. WTO ministers will take this decision at the third WTO Ministerial Conference in Seattle, Washington.
Cairns Group ministers will next meet in Mar del Plata, Argentina August 28-29, 1999. This meeting will provide ministers with the opportunity to agree on the group's input into the Seattle ministerial decision to ensure that the its ambitions for the forthcoming negotiations are fully addressed.
The Cairns Group reaffirms its commitment to achieving a fair and market-oriented agricultural trading system as sought by the Uruguay Round Agreement on Agriculture. To this end, the group is united in its resolve to ensure that the next WTO agriculture negotiations achieve fundamental reform that will place trade in agricultural goods on the same basis as trade in other goods.
Economic Perspectives
USIA Electronic Journal, Vol. 4, No. 2, May 1999