Food Fights over Free Trade: How International Institutions Promote Agricultural Trade Liberalization

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Overview

This detailed account of the politics of opening agricultural markets explains how the institutional context of international negotiations alters the balance of interests at the domestic level to favor trade liberalization despite opposition from powerful farm groups. Historically, agriculture stands out as a sector in which countries stubbornly defend domestic programs, and agricultural issues have been the most frequent source of trade disputes in the postwar trading system. While much protection remains, agricultural trade negotiations have resulted in substantial concessions as well as negotiation collapses. Food Fights over Free Trade shows that the liberalization that has occurred has been due to the role of international institutions.

Christina Davis examines the past thirty years of U.S. agricultural trade negotiations with Japan and Europe based on statistical analysis of an original dataset, case studies, and in-depth interviews with over one hundred negotiators and politicians. She shows how the use of issue linkage and international law in the negotiation structure transforms narrow interest group politics into a more broad-based decision process that considers the larger stakes of the negotiation. Even when U.S. threats and the spiraling budget costs of agricultural protection have failed to bring policy change, the agenda, rules, and procedures of trade negotiations have often provided the necessary leverage to open Japanese and European markets.

This book represents a major contribution to understanding the negotiation process, agricultural politics, and the impact of international institutions on domestic politics.

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What People Are Saying

John Odell
This impressive book documents two ways in which international institutions sometimes help trade negotiators produce liberalizing outcomes despite entrenched resistance, by tilting politics within their countries against protected interests. Both sides in battles over trade and protection will find practical implications here. Scholars will find hypotheses about how variations in the institutional context change the international negotiation process, supported by an empirical tour de force.
John Odell, University of Southern California, author of "Negotiating the World Economy"
Robert Paarlberg
This is a major piece of careful scholarship, of value to an important audience extending well beyond political science. Economists, trade specialists, and agriculturalists will immediately notice the empirical detail provided in this work. Davis understands the concerns and can speak the technical language of these practitioners; they will have to take her sophisticated analytic methods and conclusions seriously.
Robert Paarlberg, Wellesley College, author of "The Politics of Precaution"
Adam Sheingate
This book has many admirable qualities: the argument is well conceived, the scholarship is of a very high quality, and the conclusions make significant contributions to our understanding of the link between domestic and international politics.
Adam Sheingate, author of "The Rise of the Agricultural Welfare State"
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Product Details

  • ISBN-13: 9780691122540
  • Publisher: Princeton University Press
  • Publication date: 4/18/2005
  • Pages: 416
  • Sales rank: 1,180,438
  • Product dimensions: 6.10 (w) x 9.20 (h) x 1.10 (d)

Meet the Author

Christina L. Davis is Assistant Professor of Politics and International Affairs at Princeton University.
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Read an Excerpt

Food Fights over Free Trade

How International Institutions Promote Agricultural Trade Liberalization
By Christina L. Davis

Princeton University Press

Christina L. Davis
All right reserved.

ISBN: 0691115052


Chapter One

Introduction

WAVING BANNERS that proclaimed "Our life is important, our lifestyle is important-so we oppose agricultural liberalization!" Japanese farmers drove thirty-seven tractors through the streets of the Ginza shopping district of downtown Tokyo in November 1989 to protest U.S. demands for rice liberalization. By 1990 their representatives sent politicians petitions signed by nearly ten million supporters who urged the government to reject any increase of agricultural imports. In one instance, seventeen men carried over three hundred cardboard boxes full of petitions to deposit in the Diet members' office building. One year later, fifty thousand Japanese farmers filled the Tokyo Dome baseball stadium in an emergency meeting to rally support for the ban against rice imports. The focus of all this anger by farmers was the Uruguay Round trade negotiation in which negotiators from 115 countries were trying to strengthen the system of trade rules and negotiate lower trade barriers for industrial and agricultural goods as well as for services and investment.1

At the same time, European farmers were also protesting against U.S. demands in the Uruguay Round for European Union (EU) agricultural liberalization. French, German, Italian, and other European farmers battled with police dressed in riot gear as they demonstrated in the streets of Brussels where EU decision-makers would determine the future of agricultural policy for all EU member nations. Actions were even more radical in France. As U.S. and EU negotiators struggled to reach an agricultural trade agreement in November 1992, French farmers burned an American flag and ransacked a McDonald's restaurant in Paris. Over the year, twenty-nine bomb attacks were made against public buildings throughout France. European farm groups labeled the compromise agreement that emerged as a "death warrant" for farmers.2

Yet by the end of 1993 both Japan and the EU had accepted the Uruguay Round Agreement requiring that Japan partially open its rice market and that Europe reduce its subsidies to farmers. While the agreement represented less liberalization than the United States and developing countries had wanted, it also represented more agricultural liberalization than in any previous negotiation and a major political concession by Japanese and European leaders for the cause of free trade. Agricultural liberalization angers one of the most powerful domestic constituencies while offering little political reward. Nevertheless, amidst many setbacks over the long history of negotiations on agricultural trade, some negotiations such as the Uruguay Round have brought progress toward liberalization. Why have Japan and Europe ignored farmer protests in some negotiations when they accepted U.S. demands for greater access to their agricultural markets, and why have they risked trade wars in other negotiations by their refusal to change agricultural policies?

This question is of ongoing importance, especially because agriculture is once again taking center stage in the new World Trade Organization (WTO) trade round scheduled to end in 2005. The negotiation, which the World Bank estimates could add 2.8 trillion dollars to global economic activity, may hinge upon whether agreement can be reached on agricultural liberalization.3 Agriculture negotiations not only are of vital concern to farmers and trade officials around the world, but they also offer insights into the study of comparative politics and international relations. Negotiations over agricultural policy typify the difficulty of balancing local interests with the pressures arising from participation in the global economy.

This book is about the politics of negotiations to open sensitive markets. In such negotiations, international pressure for liberalization meets resistance from strong interest groups, ministries with a stake in the status quo, and high levels of politicization. As governments struggle to find an agreement that both sides can accept, their interaction is constrained by the institutional context of the negotiation. Governments establish rules for international trade in order to facilitate economic cooperation, but how does an international institution like the WTO promote liberalization when it encounters opposition from strong political groups? Can features in the structure of the negotiation present the key to persuading reluctant governments to liberalize markets? Will all governments respond in the same way to similar negotiation strategies? Answers to these questions may be found by looking at the efforts by the United States to open agricultural markets in Japan and the EU. More broadly, the book is aimed to appeal to those interested in trade negotiations, the role of international institutions, and Japanese and EU politics.

Through a comparative study of the past thirty years of agricultural trade negotiations, the following chapters explain how the context of the trade negotiation can offset the passionate and well-organized demands of farmers to make it politically possible for politicians to accept liberalization. Although some agricultural liberalization has taken place through internal reforms without international involvement, much of the substantial policy change in this sector has been the subject of international negotiations. The focus here is on such negotiated policy liberalization. It will be shown that two kinds of negotiation structures make governments more likely to liberalize agricultural policies: when a negotiation links together agricultural and industrial issues into a package deal that makes liberalization in one area conditional upon liberalization of the other; or, when a negotiation frames the agricultural protection policy as a violation of international trade law. Issue linkage and legal framing represent distinct strategies to pursue liberalization by either broadening or narrowing the scope of a negotiation. While they apply contradictory pressures, both promote liberalization by adding to the stakes of the negotiation and changing the aggregation of domestic interests. At the same time, the effectiveness of linkage or leverage from international law interacts with domestic interests and policy processes.

When addressing disagreements over trade policies, states can utilize several different existing institutional arenas, and each setting varies in terms of the agenda, rules, and procedures that guide the conduct of the negotiation. The General Agreement on Tariffs and Trade (GATT) and its successor the World Trade Organization form the core international institution for trade issues.4 Within the GATT framework, negotiations consist of comprehensive trade rounds or legalistic dispute settlement procedures (DSP). The former are major trade events that bring together over a hundred members to negotiate many issues. Launched with an opening declaration by members that provides an agenda for discussion of liberalization across sectors, a trade round proceeds as a mix of informal bargaining and consensus decisions that culminate in a multilateral agreement with binding commitments. Issue linkages are integral to the process of bringing agreement among the diverse economic interests of members. In contrast, the DSP negotiations resemble adjudication. They begin with the filing of a legal complaint against a specific policy and end with an early settlement or a ruling passed by a panel of judges. The narrow focus on the legal status of a trade barrier tends to exclude linkage among issues. Outside of the GATT framework, other types of trade negotiations include loosely structured bilateral talks on either a single policy or a broad set of issues. In addition, meetings of regional trade associations share the comprehensive character of trade rounds but follow different procedures. For example, the Asia-Pacific Economic Cooperation (APEC) forum emphasizes the voluntary nature of participation in nonbinding agreements. Comparison of these different kinds of negotiations will demonstrate whether the features that shape the structure of a negotiation have an impact on liberalization outcomes.

Theories of international relations and trade policy emphasize the importance of distributional interests and coercive power.5 However, such explanations cannot account for the variation in outcomes between the same pairs of countries over topics from one sector. If U.S. market power or alliance relations allow it to coerce liberalization by means of threats or persuasion, then one would expect most negotiations with Japan and the EU to bring favorable outcomes for the United States. On the other hand, if the strength of domestic resistance in Japan and Europe determines negotiation outcomes, then one would expect that Japan and the EU would refuse to liberalize agricultural markets. Instead, there is considerable variation in the degree of liberalization across U.S. agricultural trade negotiations with Japan and Europe. Even when controlling for interests and power, issue linkage and legal framing emerge as important factors to predict when countries will liberalize agricultural policies. This finding challenges the emphasis on economic interests and threats found in the literature while pointing to the need to give more attention to the agenda and rules that shape the negotiation process.

Agricultural Protection

Historically, agriculture stands out as a sector where countries stubbornly defend domestic programs. Even though tariffs on industrial goods have fallen during the postwar period to average from 5 to 10 percent, agricultural protection has remained high with tariffs averaging above 40 percent in 1998 (OECD 1999, 33). Nontariff barriers remained common in the agricultural sector long after they were eliminated for most industrial goods. Indeed, there is a paradoxical relationship in which nearly all industrialized countries raise the levels of protection for agriculture as the sector's size in the economy shrinks (Hayami and Anderson 1986).

High levels of agricultural protection have arisen because farm lobbies are an influential pressure group. Collective action incentives guarantee that farmers wield political strength beyond their numbers (Olson 1965). The economist Peter Lindert (1991, 63) says "the farm sector gets the most protection when it employs 3 to 4 percent of the employed labor force." He explains that as their numbers decline, farmers become better organized and have greater incentives to seek protection, and governments can more easily subsidize the small group of remaining farmers. Few voices are raised against agricultural protection given the lack of organization by consumers and their belief-true or not-that nationally produced food is safer and better. Moreover, electoral districting often biases political representation to favor rural constituencies. Once protection programs were put in place, farmers have used the backing of politicians from rural districts and the agriculture ministry to defend their vested interests in the status quo.

The costs of the resulting agricultural protection include expenditures for higher prices and taxes. Much money is wasted on inefficient programs that often do not help the farmers in most need because they reward higher levels of production rather than compensate for low income levels (Johnson 1991). In 1998 OECD nations spent a total of 362 billion dollars on their farm support policies and per capita expenditure on farm policies reached an astonishing 363 dollars in the United States, 381 dollars in Europe, and 449 dollars in Japan.6 The most common forms of policy intervention are subsidies, price support measures, and trade barriers.

Protection also closes off valuable markets for agriculture exporters, which include the United States and many developing countries. Research by the U.S. Department of Agriculture (USDA) indicates that elimination of agricultural protection and support could increase the value of U.S. agricultural exports by 19 percent.7 The USDA study also predicts that removal of global market distortions would increase global economic welfare by 56 billion dollars annually. Agricultural liberalization by wealthy countries would especially benefit many developing countries, which have been denied fair opportunities to export their goods while at the same time being forced to compete in their local markets with subsidized agricultural products from developed countries. Although many developing countries have a comparative advantage in agriculture and agricultural exports could play a major role in poverty reduction, the subsidies and trade barriers of rich countries have prevented these gains from trade.8 At the Doha ministerial meeting in November 2001 that launched the new WTO trade round, one delegate said agricultural issues that "may lose elections in France are life and death in Tanzania."9

Trade friction represents another cost of agricultural protection, as these policies have given rise to a large number of controversial trade negotiations. Japan and Europe both have stood on the brink of trade wars with the United States over "food fights" that threaten the stability of the global trade system. In the context of the GATT, agricultural issues nearly blocked conclusion of successive trade rounds and generated the largest number of formal trade disputes. In December 1999 at the Seattle meeting of the WTO, when member states failed to agree on beginning a new trade round, agriculture formed one of the major lines of division. Two years later the meeting at Doha nearly ended in a similar failure as France declared that an agenda statement on phasing out agricultural subsidies was a "deal breaker."10 Only a last-minute compromise allowed the meeting to go forward to establish the agenda for the upcoming round. This compromise included the controversial phrase on agriculture along with the qualification that the agenda would not prejudice the outcome of the negotiation.

The United States made little effort to stop the rise of agricultural protection until the 1960s. It is one of the ironies of postwar institutional development that the United States created the GATT exceptions for agricultural protection that later hindered its own efforts to promote agricultural liberalization. When Western leaders in the aftermath of World War II gathered to form the new economic order, their goal was to prevent the kind of competitive protectionist policies that were blamed for the economic turmoil of the 1930s. However, ambitious goals to promote liberalization in a multilateral trading system were modified by the political need to provide flexibility for domestic social policies (Ruggie 1982; Downs and Rocke 1995). In particular, Judith Goldstein (1993) explains that exceptions were closely fit to accommodate the needs of the U.S. agricultural sector. When officials negotiated the original 1947 GATT rules, U.S.

Continues...


Excerpted from Food Fights over Free Trade by Christina L. Davis Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

List of Figures
List of Tables
Acknowledgments
Abbreviations
1 Introduction 1
I Negotiation Structure and Trade Liberalization 35
2 Framework for Analysis of Negotiations 37
3 Patterns of Agricultural Liberalization 70
II U.S.-Japan Trade Negotiations 113
4 Farm Politics in Japan 115
5 Legal Framing and Quota Policies 135
6 Linkages in Comprehensive Negotiations 178
III U.S-EU Trade Negotiations 225
7 Farm Politics in the European Union 227
8 Two Rounds of Negotiating CAP 254
9 Battles over Beef 314
IV Conclusion 343
10 Comparative Perspectives 345
App.: Descriptive Statistics 367
Bibliography 369
Index 387
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