EMERGING ISSUES IN AGRICULTURAL TRADE AND THE ENVIRONMENT

This paper outlines emerging issues in agricultural trade and the environment. Its intent is to provoke discussion, rather than to capture all of the issues and details that merit analysis. It focuses primarily on "micro" issues rather than global issues such as green house gas emissions or biodiversity, although these are in many respects simply the aggregation of questions that must be resolved by changes in practices and incentives at the farm level. It begins with a description of the stylized facts of trade-environment interactions, arguing that the widely cited "Kuznets function" underscores our ignorance concerning the mechanisms linking growth, trade, and pollution. Especially in agriculture, there is evidence that market and government failures have not yet led to substantial interventions to reduce environmental externalities. The second part of the paper discusses these mechanisms, and raises a set of research questions designed to guide OECD and other investigators toward a more detailed understanding of the linkages from trade to environment in agriculture. The third part of the paper explores the challenges posed for trade policy-making, touching on two of the most important future areas in agriculture: sanitary and phytosanitary (SPS) measures, and genetically modified organisms (GMOs), and offers some policy principles to advance agricultural sustainability. The final part of the paper raises some of the challenges likely to face the WTO as it grapples with these and other trade-environment issues in the next century.