1.    World Market as an excess-demand (or excess-supply) curve:

• Responsiveness of world prices to changes in trade volumes is pretty critical for an understanding of agricultural and food commodities.
• Depends on the slopes (elasticities) of excess demand curves:  price flexibility  (% change in world price per % change in trade volume (EU exports or RoW imports etc.)) as the inverse of the elasticity:
• EXD = ED(row) *E(Pd/P) * DR/XDR - ES(row) * E(Pd/P) * SR/XDR.
• Which, in turn, depends on:
• domestic elasticities of supply and demand curves
• ratios of total RoW supply and demand volumes to trade volumes
• price transmission elasticities between domestic and world prices (% change in domestic supply or demand price w.r.t. % change in world price), made up of:
• protection coefficient (Pw/Pd) and
• insulation coeeficient (*Pd/*Pw)
• The greater the protection and/or insulation, the more inelastic will be the XD curves, and the more responsive will be world prices to changes in trade volumes - which makes world prices more volatile.
• Otherwise, the smaller a country or country group's trade position, the more elastic the relevant XD curve will be - the small country assumption.
• But the whole world cannot consist of small countries:  world markets are necessarily a collection of indivudually small countries, but the world market effects will nevertheless reflect the conditions and policies of these countries.

2.    The WTO & Trade Negotiations:

• Subsidised Exports (and Import Levies & Quotas) depress world prices - EU (and US) shooting themselves in the foot - greater support => even greater support costs and more support supposed needed against low world prices.
• AND make Excess Demands more INELASTIC (see previous session (AEF372.3) appendix to Ch. 17, Ritson & Harvey (eds.))
• Which means the World Prices are MORE VOLATILE in face of variations in supplies round the world.
• So, it should be in everyones interests to LIBERALISE trade.
• BUT, previously supported farmers would lose, and fear world competition.
• How much might producers loose as a consequence of trade liberalisation, and how much are world markets distorted
• Producer Subsidy Equivalents (PSEs)
• Aggregate Measure of Support (AMS) - Blue Box, versus Green Box, versus Amber Box, versus Red Box.

b.    "The WTO is a rules-based, member-driven organization — all decisions are made by the member governments, and the rules are the outcome of negotiations among members."  - It is the authority which implements the agreements on rules and procedures already agreed by the member states - which is a definite advance on the GATT, where each ruling and decision was subject to confirmation by a vote amongst the signatories.

Did Uruguay work?  Probably too early to tell, though most commentaries suggest that trade has grown since the URAA began to be implemented.  The International Agricultural Trade Research Consortium (IATRC) has produced a Commissioned paper on the implementation of the URAA: CP12 (Bringing Agriculture into the GATT: Implementation of the Uruguay Round Agreement on Agriculture and Issues for the Next Round of Agricultural Negotiations, October 1997), and in 2001 also produced a number of papers on the issues for the next round (Doha, or sometimes called the development round)
See, also, Stefan Tangermann, 2001, Has the URAA worked well? IATRC working paper

These negotiations will continue, but now with the mandate given by the Doha Declaration, which also includes a series of deadlines. The declaration builds on the work already undertaken, confirms and elaborates the objectives, and sets a timetable. Agriculture is now part of the single undertaking in which virtually all the linked negotiations are supposed to end by 1 January 2005.

The single undertaking also includes negotiations under the headings of:

• market access (general - not agriculture specific)
• WTO rules & Dispute Settlement (2 separate headings)
• Services
• Geographic indications (place of origin)
• Environment
• Outstanding Implementation Issues (the miscellaneous catch-all heading)

Without prejudging the outcome, member governments commit themselves to comprehensive negotiations aimed at:

• market access: substantial reductions
• exports subsidies: reductions of, with a view to phasing out, all forms of these
• domestic support: substantial reductions for supports that distort trade

Key dates
Start: early 2000
Formulas and other “modalities” for countries’ commitments: by 31 March 2003
Countries’ comprehensive draft commitments: by 5th Ministerial Conference, 2003 (Cancun, Mexico)
Stock taking: 5th Ministerial Conference, 2003 (Cancun Mexico)
Deadline: by 1 January 2005, part of single undertaking.

For an analysis of the potential gains to be made from further trade liberalisation, see the USDA's ERS analysis "Agricultural  Policy Reform in the WTO: The Road Ahead" (suggest you concentrate on the 'overview' section of this major report.

Progress to date has been slow, and delayed further as the US became preoccupied with the Presidential election in 2004. Developing countries are determined toget something out of this round, while developed countries have not shown great enthusiasm for further major reductions in support - though are probably prepared to change their systems of support to eliminate the more pernicious of the conventional support measures - especially export subsidies.

d.    DRH Guess at key or pivotal focus of the current agricultural negotiations:  The extent to which international agreements can be allowed to restrict the scope of domestic policies, or conversely, the extent to which domestic policies can be allowed to damage international markets and trade opportunities.  This will probably materialise under four major issues:

• Multifunctionality (for Developed countries which still need to support various agriculturally related activities or populations) - how will they be allowed to do this, and to what extent?  The US and Cairns group are suspicious that this is simplky a smoke-screen for preservation of trade restrictions and traditional domestic support.
• Development Support:  what sorts of policies are going to be allowed for developing countries faced with an apparently inevitable and irresistable political demand to support and protect its declining industry (agriculture)?  In particular, will these policies (closely limited direct income support, for instance) be both financially viable and politically acceptable?  A group of developing countries, including Kenya, Nigeria, Pakistan and Sri Lanka, have put forward a proposal for the "Development Box" to allow domestic policies which seek higher productivity, higher income levels and reduced vulnerability to price fluctuations, and are also seeking exemption from any subsidy reductions for a list of basic food security crops.  Such proposals have recieved a cool reception from the developed countries and from the developing countries within the Cairns group, so far.
• Quality, Health & Safety - sanitary and phyto-sanitary provisions:  under what conditions and according to what criteria can countries restrict or regulate trade to protect consumers (or assuage consumer (or political) anxiety)?  At present, the main criterion is that any restrictions be soundly based on objective scientific evidence, with the key condition that any restriction be universally applied.  However, at least in some western countries, popular opinion is not always convinced by so-called objective scientific evidence, and there may be irresistable political pressure to ban or restrict certain products on the gounds of consumer anxiety or concern, rather than strict scientific grounds.
• Environment:  To what extent are trade restrictions going to be allowed to encourage or even force environmental protection (and animal welfare or labour force protection as well), both at home and abroad?  The present position is that trade restrictions are typically inappropriate and potentially counter-productive in seeking to promote these objectives, even if the objectives themselves are legitimate (as opposed to serving as a smoke screen for traditional producer support and protection).  However, it is not clear that this largely economic argument is accepted by or acceptable to the general electorates