Reviewing Agricultural Trade Policies
To Promote Intra-OIC Agricultural Trade
17
Chapter 2: Overview and Analysis of Global Agricultural Trade Policy
The rapid change occurring in the structure of output during the 20th century has been decisive
in determining the 21st century main economic actors. The share of the output created in
agriculture diminished rapidly to the benefit mainly of services and industry. In 2017 low
income countries were still the group realizing a quarter of their GDP (26%) in agriculture
(down by 2 percentage points since 2010). During the same period, the lower middle income
group was down to 15% (from 17%), upper middle income group to 6% (from 7%) with the
high income countries being stabilized at 1% (World Bank, 2018). However, one should keep in
mind that the total output increase during this period resulted in a considerable rise in high
income countries’ agricultural production as well. As a result, 10%of the world population living
in low income countries produce 4%, while 74% living inmiddle income countries produce 73%
and 17% living in high income countries produce 23%of world agricultural output (World Bank,
2018). Those figures highlight the dependency of the low income countries on agriculture, while
their production is almost insignificant (4%) compared to middle and high income countries
and yet is still facing a severe competition in world markets. In parallel to the suggestion of the
economic theory that demand for agricultural commodities is inelastic, the last two group of
countries realizing the lion share of the global agricultural production, support and protect their
agriculture in order to increase agricultural exports, since their comparative advantages lay in
industry and service sectors. This also explains why the WTO Doha Round with a heavy agenda
on agriculture could not be concluded. The biggest trade war ever taking place between USA and
EU was for banana, starting in 1993 with a preferential regime introduced by EU for ACP
Countries (African, Caribbean and Pacific Group of States) and discriminating against Latin
American banana producers. The WTO dispute settlement concluded in 2012 confirms the
importance of agriculture for those two biggest economies and for a product they do not
cultivate.
The WTO Agriculture and Commodities Division together with the Institute for Training and
Technical Cooperation organized a symposium on the Agriculture Policy Landscape in June
2018. The outcomes of the symposium were the need for regulated and more trade, to improve
global welfare by helping the producers while addressing the challenges of sustainably
providing food to the growing global population (WTO, 2018a).
This section sets the scene for the OIC member countries resolution to design required
agricultural trade policies for increasing the group’s intra-trade in the sector. It examines the
change in the global agricultural trade which occurred during the last decade, looking at the
performance of the regional trading blocs for highly traded commodities or commodity groups.2
Based on the introductory notes concerning the structure of output and relatively higher
importance of agriculture for low income and developing countries economic growth, the
section further discusses the agricultural trade policies.
2 Agricultural trade data is given in three main groups, namely agri-food products, agricultural raw materials and fish since
their production processes, trade conditions and added value differ considerably.