A Global Analysis of Agricultural Reform in WTO Member Countries

Removing trade barriers, subsidies, and other trade distortions forms of support will cause aggregate world prices of agricultural commodities to rise by over 11 percent relative to an index of all other prices. Agricultural support and protection in developed countries is the major cause of low agricultural prices, and implicitly, a tax on net agricultural exporters in developing countries. The reform of agricultural policies would likely increase livestock product prices more than any other commodity. Reform increases world trade in agricultural commodities, but leaves the level of total agricultural production almost unchanged. In the short to medium term, some net agricultural importing countries suffer a welfare loss due to an adverse change in their terms of trade that reform causes. In the longer-run, however, agricultural policy reform benefits almost all countries, and developing countries in particular, due to the change reform induces in the developing countries’ investment pattern, growth in capital stock, and growth in their total factor productivity