At present, about two-thirds of the 134 members in the World Trade Organization (WTO) are developing countries. Of the 48 LLDCs worldwide, 29 are WTO members. Six more are in the process of accession and 3 are WTO observers. The LLDCs as a group have a population of about 590 million people, with an income per capita about 4 percent that of the world average. Agricultural production per capita in LLDCs has been on a downward trend for the last four decades, though the same indicator for all developing countries has gone up by about 40 percent in the same period. LLDCs represent a small fraction of world trade (less than half of 1 percent for total trade and about 2 percent for agricultural trade). They had a positive (although declining) net agricultural trade balance until the mid 1980s, at which point the balance turned negative. Almost 20 percent of their total imports are food items.

The 18 NFIDCs have a population of some 380 million people, and an income per capita nearly five times that of the LLDC average but still much lower than the world average. NFIDCs are a diverse group: 4 are upper-middle income countries (Barbados, Mauritius, Saint Lucia, and Trinidad and Tobago); 8 are lower-middle income (Botswana, Dominican Republic, Egypt, Jamaica, Morocco, Peru, Tunisia, and Venezuela), and 6 are lower income (Côte d’Ivoire, Honduras, Kenya, Pakistan, Senegal, and Sri Lanka). Although Sri Lanka, Honduras, Kenya, and Mauritius had net food exports on average during 1995–1997, they imported cereals and on this basis were included in the group. NFIDC per capita food production as a share of both world and developing-country averages has risen (although from very low levels). As even such cursory data indicate, the upcoming “millennium round“ trade negotiations will affect individual LLDCs and NFIDCs in very different ways.

Developing countries generally face lower disciplines and enjoy longer time frames for implementing reforms. LLDCs are totally exempted from WTO commitments. Trade negotiations have also produced agreement that developing and least-developed countries should receive special consideration for market access and technical and financial support.

For agriculture, developing countries are allowed to reduce domestic support by two-thirds of the level required for other WTO members and to implement the commitments in a period of 10 years instead of 6. The “de minimis” clause, referring to the portion that does not have to be declared and reduced as part of domestic support reform because it is considered too small, is 10 percent for developing countries instead of the 5 percent for developed countries. Some categories of domestic support (in addition to the permitted measures of the “green box”) do not have to be reduced, including general rural development programs, some investment subsidies, input subsidies to low-income or resource-poor producers, and support to eradicate illicit narcotic crops. LLDCs are completely exempt from any reduction in domestic support.

Developing countries are allowed smaller cuts in their budgetary outlays for export subsidies and more time to make these adjustments. Subsidies to reduce marketing and transport cost for exports are exempted under some conditions. Regarding market access, developing countries are supposed to receive larger concessions for their exports, are allowed lower levels of minimal access for products that are a staple in their diet, and can spread adjustment over a longer time frame. In the case of sanitary and phytosanitary (SPS) measures, developing countries can request technical assistance from developed-country members and, again, are allowed longer time frames to fulfil requirements.

Preventing Adverse Effects on Food Imports

Concerns during the UR that liberalization of agricultural policies and trade may adversely affect food imports of LLDCs and NFIDCs led participants to include several measures dealing with food security issues in the “green box” of permitted domestic support (for instance, public stockholding and provision of foodstuffs at subsidized prices). Participants also approved a ministerial declaration in Marrakesh in April 1994 to deal with possible negative effects of agricultural trade reforms on the food security of LLDCs and NFIDCs. The declaration was reemphasized at the 1996 ministerial meeting of WTO in Singapore.

The 1994 decision agreed to (1) periodically review food aid needs; (2) increase the proportion of basic foodstuffs provided “in fully grant form and/or on appropriate concessional terms”; (3) provide technical and financial assistance to LLDCs and NFIDCs to improve their agricultural productivity and infrastructure; (4) consider treating LLDCs and NFIDCs favorably with regard to agricultural export credits; and (5) assist developing countries with short-term difficulties in financing normal levels of commercial imports. The WTO’s Committee on Agriculture received the mandate to review periodically the implementation of this decision, usually with the participation of international organizations such as the Food and Agriculture Organization of the United Nations, the International Monetary Fund, the World Bank, the World Food Programme, and the United Nations Conference on Trade and Development. The last review session took place in November 1998.

• LLDCs should be granted free entry of their exports to high-income WTO members as a way of improving their market access. If this cannot be agreed upon, LLDCs should push for additional reduction of tariffs, the elimination of tariff escalation, and expansion of tariff rate quotas for their exports. They should also aim at increasing market access opportunities under the relevant provisions of the Agreement on Textiles and Clothing.
• The UR was a first step in imposing discipline on the unfair competition of subsidized agricultural exports, which hurt poor agricultural producers in developing countries irrespective of the net agricultural trade positions of these countries. In the next negotiations LLDCs should push for the elimination of export subsidies, which would complete the first step taken at the UR. LLDCs should also pursue stricter disciplines on export taxes and controls that exacerbate price fluctuations in world markets.
• The UR allowed developing countries to maintain domestic support through policies tied to poverty alleviation and agricultural development. The main concern LLDCs have on this issue is that they receive technical assistance and financial support that is adequate for developing their agricultural sectors, a need affirmed in the ministerial declaration on the subject.
• Such technical and financial assistance is also vital if LLDCs are to comply with the Sanitary and Phytosanitary Agreement and produce at the standards expected in the markets of the developed countries. Improvements in SPS measures will also benefit domestic consumers in the exporting LLDCs.
• To assure food availability, net-food-importing countries (a group that includes not only those formally identified as NFIDCs in the WTO but also a great majority of LLDCs) should seek adequate food aid, which has declined in recent years. But it is also important to make food aid available in grant form, to target it to poor groups, and to deliver it in ways that do not displace domestic production in the countries receiving it. Badly managed food aid, or cheap food imports due to export subsidies, may just reinforce the bias of economic policies against the rural sector, with a negative impact on poor agricultural producers. To offset the possibility of more volatile agricultural prices NFIDCs should insist on the need for adequate financial facilities during emergencies.

In general LLDCs should emphasize to the international community the importance of implementing an integrated framework for economic and social development, with agricultural and trade policies playing a key part in it. The need for this framework was recognized in the WTO Plan of Action for LLDCs in 1996, which mainly focused on trade. More generally, LLDCs should emphasize the importance of creating and expanding a supportive international trade and financial environment. Appropriate measures would include the continuation and enhancement of the reduction of the external debt of Heavily Indebted Poor Countries (HIPC Initiative). Improved international conditions should go hand in hand with a better domestic framework in developing and least-developed countries, including stable macroeconomic policies, open and effective markets, good governance and the rule of law, a vibrant civil society, and programs and investments that expand opportunities for all, with special consideration for poor and disadvantaged groups.

Eugenio Diaz-Bonilla is a visiting research fellow and Marcelle Thomas and Valeria Piñeiro are research analysts at IFPRI.