Dr. Michael Knowles
Coca-Cola
Remarks On
“The OECD and Fair and Open Agricultural Markets”
Comments to the OECD Committee for Agriculture, April 22, 2002
It is my pleasure to address you today on behalf of the Business and Industry Advisory Committee. BIAC represents the business community in OECD countries and appreciates this opportunity to discuss the work of the OECD Committee for Agriculture.
Increasingly, the WTO is creating greater access to international markets and a more open market system for both developed and developing countries. We can all agree that expanded trade in food and agriculture products will ultimately benefit all
countries and stakeholders. The establishment of a sound, global framework for a dynamic, fairly operating market will make a significant contribution to lifting communities out of poverty over time and achieving sustainability in agricultural production.
In response to current WTO trade policies, trade in agricultural and processed products has increased steadily. Despite these favorable trends, however, government intervention in the agricultural sector is still more intrusive than in any other sector. According to the OECD’s own studies, the level of protection and support of agriculture exceeds 70% in some countries. Trade distortions in the agricultural sector harm both developed and developing countries. Export subsidies, for example, tend to destroy markets in developing countries by driving down prices to levels where local farmers cannot compete.
Farmers are no longer the only commercial interests with stakes in these negotiations. Processed food and beverage trade is increasing twice as fast as trade in primary commodities. These products must become a top priority during the agricultural negotiations. The growth of global trade in the processed sector is slowed by a number of factors, including significant tariff and non-tariff barriers, such as disproportionately high tariffs, tariff escalation, Tariff Rate Quotas, export subsidies and trade-distorting domestic support measures.
We believe that the OECD has a unique and necessary role to play in facilitating the further liberalization of agriculture trade globally. In working toward this end, it is crucial for OECD’s work to rely on its historic strengths in the areas of statistical and economic impact analysis. Furthermore, its work must be coordinated with work currently underway in other international organizations dealing with agriculture policy.
For these reasons, BIAC believes that the OECD’s Committee for Agriculture should work towards completion of the data and policy analysis necessary to measure the progress being made in the area of agricultural reform. We strongly support the work the OECD has previously performed in measuring the market and trade impacts of tariff reductions and tariff escalation. We encourage you to continue the work with an increased focus on the effects of such tariffs in the processed food and beverage sector.
Agricultural trade is increasingly being complicated by non-tarriff barriers to trade. For example, food safety concerns have been cited for increased regulatory regimes related to trade in food products. In order for an open market system to function effectively, WTO must be diligent in instituting health and safety regulations based on sound science. Sound science and risk assessment is the proper foundation of a credible health and safety regulatory regime for all products and production methods.
In April of 2001, the OECD Council approved a limited work program in food safety housed under the OECD Committee for Agriculture. It is both understandable and appropriate for the OECD to examine the economic aspects of these non-tariff barriers to trade. However, BIAC has serious concerns that the work program reaches beyond the original mandate of the Council which intended for the OECD to draw on its unique expertise and complement rather than duplicate the activities of other international organizations.
BIAC cautions the OECD against engaging in the contentious and political issues which are more appropriately discussed within Codex Alimentarius, the international body recognized by the WTO as the preeminent international food standards setting body. We are concerned that entering into the debate on socioeconomic concerns such as “other legitimate factors” will undermine the hard-won consensus and discredit the progress made in Codex.
In order for the OECD to be effectively engaged in food safety, it is essential that it limits the scope of its work to those areas in which it has expertise, namely economic and policy analysis. When pursued in a straightforward manner relying on quantifiable measures and adequate data, this Committee will be able to produce useful inputs to the international policy dialogue.
I would now like to address the continued focus of OECD on agricultural development within non-member countries. While developing countries argue that liberalization of international trade has not yet benefited them to the same extent as developed countries, trade barriers and distortions in the agricultural sector adversely affect all countries by impeding innovation, investments and economic growth. Economic growth in the agricultural sector provides opportunities for the poor in developing countries by offering increased access to food, land, income, employment, financial services, technology, and capital for community services and education.
Of particular importance to economic growth in the agricultural sector, is the approach non-member countries take toward technological advances. We appreciate and support the goals of the Committee’s recent projects in this area and welcome the opportunity to participate in the OECD Centre for Co-operation with Non-Member Countries’ Global Forum on Agriculture this November.
In conclusion, I ask you to recognize the enormous potential an increasingly open market holds for all stakeholders, in both the developed and developing countries. BIAC strongly encourages the OECD Committee for Agriculture to continue to invest its resources in those unique economic skills it brings to realizing an open market system. It has been a privilege to speak to you today and BIAC looks forward to continuing to work with the Committee on these important issues. Thank you.
