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AGRICULTURAL TRADE POLICY FORMATION WITHIN THE GATT:
THE ROLE OF THE UNITED STATES AND EUROPEAN COMMUNITY

PUBLIC DECISION PROCESSES

BY

Robert Eugene Wise

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements

for the degree of

MASTER OF SCIENCE

Department of Agricultural Economics

1988

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ABSTRACT
AGRICULTURAL TRADE POLICY FORMATION WITHIN THE GATT:
THE ROLE OF THE UNITED STATES AND EUROPEAN COMMUNITY
PUBLIC DECISION PROCESSES
BY

Robert Eugene Wise

Many factors influence the formation of agricultural
trade policy. One such factor is individual countries’
public decision processes. The structure of the political
process in each country may affect the outcome of trade
negotiations.

This research focuses on the role of the U.S. and EC
political processes in agricultural negotiations under the
General Agreement on. Tariffs and. Trade (GATT). This is
achieved through a case study of the Tokyo round of GATT
negotiations using interviews with policy process
participants and an empirical analysis of market access
options currently under discussion in the GATT.

A detailed picture of Tokyo round events is achieved,
along with data from four scenarios simulating new market
access rules developed on the Michigan State University
Agriculture Model. Policy participants have varying concerns
about the new proposals, but one common chord is that
ideology plays as great a role as quantitative analysis in

their decision making.

Copyright by
ROBERT EUGENE WISE

1988

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ACKNOWLEDGEMENTS

In conducting this research I have benefited from the
support and assistance of a number of people. They deserve
full acknowledgement for their varied contributions.

The single largest debt is due to Dr. James T. Bonnen,
my major professor and thesis advisor. In retrospect I am
able to see how fortunate I am to have been placed under his
tutelage upon arriving at Michigan State University. His
contributions to this project and my overall development in
graduate school, were, to say the least, varied. From
gaining an understanding of U.S. agricultural policy and the
policy process, from long afternoons discussing the state of
American politics and from better discussion of English
history than I ever had in high school, I have come to
appreciate Dr. Bonnen’s breadth not only as a great
intellect but also as a wonderful person. I am honored to
call him a friend.

I would like to thank Dr. Vernon L. Sorenson for his
contributions to this research, not only as a committee
member, but as a willing interviewee. His insights to trade
policy in general and from having worked on the Tokyo round
in Washington D.C. were invaluable, as was his critical

review of the research. He is a pleasure to work with.

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I am also grateful to all the people who gave of their
time to be interviewed for this research. Without their
input it would not have been impossible to conduct this kind
of project. Particular thanks are due to George E.
Rossmiller who acted as a "Washington anchor" for me,
providing suggestions of who to interview, criticizing my
approaches and allowing himself to be interviewed as well.

Personal thanks go to all the friends that made
Michigan such an enjoyable experience, and especially to
Leslie Berger, with whom I plan to share enjoyable
experiences for ever.

My final thanks go to those who have been there since
the beginning, and continue to be there for me, even if they
had their doubts that the thesis would ever be finished: my

family.

CHAP'.

TABLE OF CONTENTS

CHAPTER ONE: INTRODUCTION . . . . . . . . .
1.1 Nature of the Research . . . . . . .

1.1.1 General . . . . . . . . . . .
1.1.2 Current Context of the Research

1. 3 Research Orientation . . . . . .

Research Methods . . . . . . . . . .

2.1 Building the Broader Conceptual Framework

2.

2.

1.

l.

2

1.

1. 2 Case Study Methods . . . . . . . . . . .

1. 3 Empirical Analysis of the Market Access
Proposals . . . . . . . . . . . . . . . . .

1.3 Research Outline . . . . . . . . . . . . . . .

CHAPTER TU THE CONCEPTUAL FRAMEWORK . . .
2.1 Literature Review . . . . . . . . .
2.1.1 Economic Theory Contribution .
2.1.2 Political Science Contributions
2.1.3 Michel Petit’s Research . . . .
2.2 A Public Decision Process Model . .

2.

2.

2.1 Synthesis of the Literature . . .
2. 2 Structure and Hypotheses of the Framework

CHAPTER THREE: THE TOKYO ROUND OF TRADE NEGOTIATIONS:
A CASE STUDY . . . . . . . . . . . . . . . . . . .
3.1 Background and History of Agriculture in the

GATT . . . . . . . . . . . . . . . . . . . .
3.1.1 From Bretton Woods to the Dillon Round
3.1.2 The Kennedy Round . . . . . .

3.2 Launching the Tokyo Round . . .
3.2.1 The Decision for a New Round

3.2.2 The Tokyo Declaration . . .

3.3 The Nixon/Ford Years . . . . . .

3.4 The Carter Years . . . . . . . .
3.4.1 Breaking the Deadlock . . .

3.4.2 Concluding the Negotiations

3. 4. 3 Implementing the Agreements
3. 5 Reflections on Agriculture in the GATT

CHAPTER POUR: THE U.S. PUBLIC DECISION PROCESS FOR
AGRICULTURAL TRADE NEGOTIATIONS . . . .
4.1 The Actors . . . . . . . .
4.1.1 The Presidency . . . .

4.1.2 The Congress . . . .

4.1.3 The Executive Agencies

4.1.4 The Interest Groups .

vi

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17
17
23
33
39
39
43

47

47
49
52
56
56
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63
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74
75
78
80
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CHAPTER
AGRICUI
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CHAPTER
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vii

4.1.5 Actor Interactions . . . . . . . . . . 84
4.2 An Organisational Output Approach . . . . . . 86
4.2.1 Analysis of the Tokyo Round . . . . . . . 86
4.2.2 Adequacy of the Framework . . . . . . . . 99
4.3 A Governmental Politics Approach . . . . . . . 101
4.3.1 Analysis of the Tokyo Round . . . . . . . 101
4.3.2 Adequacy of the Framework . . . . . 110
4. 4 Reflections on the U. 8. Public Decision
Process . . . . . . . . . . . . . . . . . . . 111
4.4.1 The Public Decision Process During the
Tokyo Round . . . . . . . . . . . . . . . . 112
4.4.2 The Public Decision Process Today . . . . 114
CHAPTER FIVE: THE EC PUBLIC DECISION PROCESS FOR
AGRICULTURAL TRADE NEGOTIATIONS . . . . . . . . . . . . 121
5.1 The Actors . . . . . . . . . . . . . . . . . . 122
5.1.1 The EC Commission . . . . . . . . . . . . 122
5.1.2 The Council of Ministers . . . . . . . . . 124
5.1.3 The EC Parliament . . . . . . . . . . . . 126
5.1.4 The Interest Groups . . . . . . . . . . 127
5.2 An Organisational Output Approach . . . . . . 129
5.2.1 Analysis of the Tokyo Round . . . . . . . 129
5.2.2 Adequacy of the Framework . . . . . . . 133
5.3 Reflections on the EC Public Decision Process 134
CHAPTER SIX: ANALYSIS OF THE MARKET ACCESS PROPOSALS
FOR THE NEW ROUND . . . . . . . . . . . . . . . . . . . 136
6.1 Outline of the New Proposals . . . . . . . . . 136
6.1.1 Background to the New Round . . . . . . . 136
6.1.2 The Overall Nature of the Proposals . . . 140
6.1. 3 The Market Access Proposals . . . . . . . 145
6.2 Analysis of the Proposals . . . . . . . . 152
6.2.1 The Michigan State University Agriculture
Model . . . . . . . . . . . . . . . . . . . 152
6.2.2 Specification of the Scenarios . . . . . . 157
6.2.3 The Model Results . . . . . . . . 163
6.2.4 Overall Analysis of the Results . . . . . 175
CHAPTER SEVEN: APPLIED ANALYSIS OF THE MARKET ACCESS
PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . 178
7.1 Summary of the Market Access Proposals
Analysis . . . . . . . . . . . . . . . . . . . . 178
7.1.1 Scenario 1 . . . . . . . . . . . . . . . . 178
7.1.2 Scenario 2 . . . . . . . . . . . . . . . . 180
7.1.3 Scenario 3 . . . . . . . . . . . . . . . . 181
7.1.4 Scenario 4 . . . . . . . . . 182
7.1.5 Synthesis and Supplemental Research . . . 183
7.2 Policy Positions Toward the Market Acc ces s
Proposals . . . . . . . . . . . . . . . . . . . 187
7.2.1 The U. S. Position . . . . . . . . . . . . 187
7. 2. 2 The EC Position . . . . . . 190
7. 3 Observations on the Political Feasibility of
the Market Access Proposals . . . . . . . . . . 192

CHAPT

APPENI
APPEHI
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BIBLIC

viii

CHAPTER EIGHT: CONCLUSIONS . . . . . . . . .
8.1 Policy Positions Toward th New Round
8.1.1 The U.S. Position . . . . . . . .

8.1.2 The EC Position . . . . . . . . .

8.2 Prospects for the New Round . . . . .

8.3 Observations on the Research .Approach
Concluding Remarks . . . . . . . . . . . . .

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APPENDIX A: Article XI Of the GATT . . . . . . .
APPENDIX B: List of Interviewees . . . . . . . .
APPENDIX C: Results of the Empirical Analysis . .

BIBLIOGRAPHY O O O O O O O O O O O O O O O O O O O

 

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CHAPTER ONE

INTRODUCTION

1.1 Nature of the Research
1.1.1 General

The purpose of this research is to contribute to the
understanding of the determinants of agricultural trade
policies. Many factors influence agricultural trade, but
this research focuses on one in jparticular; namely' the
public decision processes of given nation states or trading
blocks. The specific context of the research is the role
that the U.S. and EC public decision processes play in
shaping the outcomes of agricultural negotiations held under
the auspices of the General Agreement on Tariffs and Trade
(GATT).

While most individuals and most governments would agree
that liberalization of trade in agriculture is desirable,
there is little consensus on how it might be achieved. The
problem is that liberalization is desirable from a global
perspective, but not necessarily from a particular interest
group’s .perspective. Thus the nature of the political
process of a country can create a national position
inconsistent with global goals -- the situation is that of a
"social trap."

.A result of this trap has been that within the GATT,
dedicated to the promotion of trade liberalization,

agriculture has been granted exceptional status under most

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of the key provisions that have been negotiated. This
research has as a general premise, acceptance of the
rationale for agricultural trade liberalization, as well as
the more specific premise of accepting the GATT as one
appropriate forum in which to attempt to achieve such
liberalization. Thus any answers as to what influence
national public decision processes have had, and might have,
on the GATT’s attempts to deal with world agricultural trade
are considered to be useful.

Before outlining the specific context of the research,
it is useful to put the subject matter into a broader

perspective.

1.1.2 Current Context of the Research

As a result of the revolution in production and
productivity that has occurred worldwide in agriculture,
more and more countries have and are becoming self-
sufficient in a wide variety of agricultural products. Major
importers of the past have become new exporters, while at
the same time effective demand on world markets has become
stagnant. The result since the early 1980s has been
burgeoning surpluses. The presence of surpluses has had a
depressing effect on world prices and dumping often occurs.
The creation of surpluses in the U.S. and EC can largely be
attributed to domestic farm policies aimed at farm income

maintenance and food security goals, which have encouraged

over-production.

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Unfortunately, as the costs of farm policies continue
to rise for the major developed nations, such as the U.S.
and EC, tensions between the trading partners also rise; the
potential gains and losses from a change in trading
practices are becoming ever greater. Agricultural trade
relations around the world and particularly between the U.S.
and EC are at their worst, certainly since the second World
War. The rest of the world now blames the U.S. and EC for
depressing world prices and the EC for increasing the
instability of world markets, while at the same time the
U.S. and EC continue to fight over access to third markets.

Meanwhile the volume of agricultural products traded on
world markets is still substantial and most observers agree
that there are potentially many gains to be derived from a
liberalization of trade practices. However there could be
losses, particularly for farmers in developed countries. It
is hypothesized that the political power of this group has
much to do with the lack of progress to date in liberalizing
agricultural trade. Thus, study' of‘ both. policy' and. the

political process itself is of interest and importance.

1.1.3 Research Orientation

Against this background, this research aims to analyze
the roles that the U.S. and EC public decision processes
have played in the negotiation of international agricultural
agreements under the GATT. A knowledge of how these

processes have influenced past outcomes might then be used

4
to assess how the U.S. and EC political systems might
influence future negotiations.

The research takes the events of the Tokyo round of
GATT negotiations as a case study for examining the role in
GATT of the public decision processes of the U.S. and the
EC. The knowledge of the policy processes gained from this
analysis is then applied to a particular set of new trade
proposals to try to see how the process might influence the
passage of such future proposals in a new round of trade
negotiations. This is achieved by modeling the new proposals
quantitatively and making the results of this analysis
available to policy participants for comment. In this way
some measure of a likely reaction from the policy process to
these proposals, if they were presented in a new round of
negotiations, might be gained. The manner in which policy
processes influence actual outcomes of negotiations might
thus be gauged.

The specific policy proposals for achieving
liberalization that will be analyzed are contained in the
GATT ' 3 Committee on Trade in Agriculture ( CTA)
recommendations concerning the new round of multilateral
trade negotiations. The broader knowledge of the U.S. and EC
public decision processes as they relate to GATT is
developed through the case study of Tokyo round events.
Pursuit of the questions raised in the research concerning
the impact of the policy process itself is framed around an

empirical analysis of the CTA proposals. Knowledge of the

 

5
process is then used, together with the calculations of
economic impacts of the proposals, to analyze more
thoroughly the economic and political feasibility of
implementing the CTA proposals.

The CTA proposals are principally concerned with two
areas; subsidies on primary products (currently addressed by
ArticLe XVI of the GATT) and market access and the use of
quantitative restrictions on access (Article XI of the
GATT). The committee has proposed that both Articles be
considerably reinforced. To limit the scope of this
research, the analysis focuses only on the market access

proposals.

1.2 Research Methods
1.2.1 Building the Broader Conceptual Framework

The research calls for a political economy model (in
addition to the techniques utilized in the empirical
analysis). As such there is no well-established, appropriate
body of theory from which to develop a framework capable of
answering all the questions a research endeavour of this
nature may seek to ask. At best, various concepts must be
drawn together from political science, economics and other
relevant disciplines, to establish a set of hypotheses that
may be tested and further specified by the case studies that
comprise this research.

In this respect, decision and political exchange

theories (as developed by such authors as Allison, Neustadt,

 

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Buchanan and Tullock, and Olson) are particularly useful.
Other bodies of literature such as organization, regulation
and interest group theories have also contributed.

From such theoretical sources it is possible to build a
conceptual framework consisting of a series of hypotheses in
a manner similar to and building on the work of Petit
(1985). Petit's framework is built upon two hypotheses:

1. Policies are the outcome of a dynamic process driven
by conflicts of economic interest regulated by political
institutions: and

2. In the long run, economic forces play a critical
role in determining the evolution of agricultural
policies, but their influence does not obey a purely
economic rationality.

Petit talks of policy decisions coming "out of a black
bOX’ called "political bargaining," a. process ‘that ‘takes
place among organizations shaped by the state of economic
interests and of institutions" (1985, p. 18). By developing
a case study of the decision processes of the U.S. and the
EC for establishing international agricultural trade
policies and domestic agricultural policies, it is hoped to
reveal something of the internal nature of the "black box"
and to develop more detailed hypotheses regarding the inter-
relationships between organizations, political institutions
and policy outcomes.

These hypotheses are developed in a process of

iteration between a review of the theory and development of

7
the case study; theory suggests the nature of the hypotheses
while case study parameters determine their detail.

Two distinct areas are identified as important to the
framework. First is an understanding' of how' the public
decision process works in the context of international
agricultural trade negotiation. Within this, the key focus
is the distribution of power between the various interests
involved, with particular attention being paid to the
different classes of bureaucrats and their respective
constituencies. A major objective of this research is to
describe the involvement and interactions of the various
parts of the federal government in the U.S. and the
community institutions in the EC that deal with agricultural
trade issues. The case study of the events of the Tokyo
round will contribute to this goal.

The second area of major importance to the framework is
that of perceptions; namely actors’ perceptions of political
feasibility. Here the key interplay is that between interest
groups and bureaucrats. Perceptions are of a temporal nature
and have changed considerably from the Tokyo round to the
present. Therefore analysis of recent decision making in
domestic agricultural policy can be used to gain a measure
of present attitudes and perceptions. It can also help in
developing an understanding of the relationships between
domestic and international policy.

The questions concerning the distribution of power

between bureaucrats are analyzed by researching past

 

 

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8
multilateral negotiations in terms of the actors involved
and what they did. Attention is focused on the U.S. and EC
during the Tokyo round in sufficient detail to answer the

relevant questions raised by current circumstances.

1.2.2 Case Study Methods

The analysis of the Tokyo round has focused on two main
sources: written accounts of the events and interviews with
participants in those events and current agricultural trade
policy participants. The majority of the interviewing was
conducted in the U.S. and therefore the research is weighted
towards analysis of the U.S. decision process and positions.
However, it has been possible to interview a number of EC
representatives and others knowledgeable of the EC in
Washington D.C..

The interviewing was completed between September and
November, 1986. A question outline was developed in two
parts. The first was inquisitive of the events and
procedures of the Tokyo round. The aim has been to outline
more accurately the different channels of decision making
within the U.S. and EC bureaucracies at that time. The
intention of the second series of questions is to identify
how the policy process has changed since the Tokyo round and
to identify the attitudes of policy participants towards
proposals for the new round.

Tokyo round participants interviewed included both

individuals that are still involved in agricultural trade

9
policy as well as those whose only involvement was during
the Tokyo round. Additionally, current policy participants
that were not a part of the Tokyo round were also
interviewed. A full list of interviewees is provided in
Appendix B.

The majority of the research was completed by December,
1986, at which point the new round had been announced at the
Punta del Este meeting of GATT contracting parties. However,
the analysis contained in the concluding chapter also takes
note of the events of the first half of 1987, which
contained a number of international meetings, the content of

which are likely to affect the final outcomes of the round.

1.2.3 Empirical Analysis of the Market Access Proposals

An important element of this research is to identify
the countries and interest groups that would be affected by
implementation of the changes proposed by the CTA, and the
manner in which they would be affected. Time and resources
make it impossible to extend the research over all GATT
members, so the study is limited to the U.S. and the EC.
These two however are probably the most prominent and
influential trading members of the GATT (Japan might also
have been included in this categorization, but is excluded
to contain the scope of the research).

To make the scope of the project more manageable, the
quantitative analysis is concerned only with the market

access proposals. Trying to define the boundaries of the

10
subsidies question is outside the scope of a project of this
size.

The CTA proposals for reform of the market access
provisions follow three lines of action:

1) bringing those quantitative restrictions that
currently escape Article XI disciplines under the aegis of a
reinforced Article XI;

2) bringing remaining forms of restrictions not
specifically' covered by' the General .Agreement.‘under' the
reinforced Article XI or the most appropriate article; and

3) generally to improve the binding and reduction of
tariffs on agricultural products as the major form of
allowable protection.

Reinforcement of Article XI:2(c)(i) (see Appendix A for
the full text of Article X1) is the most important
objective. This is to be done by maintaining the existing
domestic "restriction of production" criteria for the
introduction of new import restrictions and requiring
effective regulation of production as a basis for the
continuation of existing non-conforming restrictions.

In general, it is considered that successful
negotiation to the point where reinforced Article XI
disciplines are observed is as much as can be expected from
a new trade round, at least initially. Thus the immediate
short run impacts are of most interest and therefore no
attention will be given to the possibility of the

quantitative restrictions being converted to a tariff base

——-——v

 

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and being subject to further downward negotiation over the
longer run.

It is recognized that the project must also limit the
commodity base of the overall analysis. The criteria that
were considered in making the decision on which commodity or
commodity group to include in the analysis are:

1) the importance that the commodity has played in past
negotiations, such that basing the institutional analysis of
the decision process on that commodity is likely to provide
useful and interesting results;

2) the degree to which there is or is not balance in
the impacts that are felt by the U.S. and the EC through
implementation of the proposals, such that negative and
positive pressures can be identified and analyzed in the
decision processes of both the U.S. and the EC; and

3) the methods that are available for producing the
quantitative part of the analysis for the various
commodities, such that the maximum number of types of
impacts can be identified.

Each of these criteria are considered in turn. Firstly,
in the Kennedy and Tokyo rounds of negotiations, a number of
commodities were of particular importance. These are the
"big three": grains, dairy products and meats. Some duty
reductions on individual commodities outside these groups
were negotiated in both rounds, but the majority of the
negotiating effort focused on these three most important

temperate product groups.

 

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In terms of the second criteria of balanced impacts,
given the fact that the institutional analysis focuses
exclusively on the U.S. and EC, it would be useful to choose
a commodity group that has impacts in both and preferably an
interaction of impacts between the two also.

For generating the quantitative analysis of impacts
under various scenarios, a number of possibilities exist.
Firstly secondary data could be used if it were of
sufficient applicability. Studies currently being conducted
elsewhere are addressing the same general question, but it
is doubtful they are of a specifically similar nature to be
the sole source of quantitative input to the analysis. These
studies are used instead as a supplement to the analysis
that is developed in this research.

An alternative approach would be to use an econometric
model, such as the MSU Agriculture Model. The advantage of
this approach, as compared to doing some simple price times
quantity calculations, is that the assumptions made would be
somewhat more controllable and explicit, and the analysis
would contain a greater degree of detail. Nonetheless, the
assumptions would still be heroic, as is the case in any
modeling exercise.

Having given consideration to the above criteria and
the particular characteristics of the commodity groups
considered, this research focuses on the grains, taking
advantage of the capabilities of the MSU Agriculture Model.

However, to provide some balance in the likely negotiating

13

scenarios, dairy products are also considered since there is
some likelihood that U.S. - EC negotiations could polarize
around a grains/dairy trade-off. As no modeling capability
exists at MSU for the international dairy sector, and its
development is beyond the scope of this project, secondary
data from the sources listed above are relied on, and used
in conjunction with the MSU grains scenarios.

It is not intended. that exact impacts of the CTA
proposals be predicted. Indeed, that is not possible at so
early a stage in the negotiations. Rather, a broad picture
of impacts is drawn for use in subsequent chapters with the
political economy framework in order to develop the analysis
of the role of the public decision processes.

The analysis contained in this research is
conditionally normative in nature. It combines knowledge of
how the policy process works with quantified likely impacts
of the CTA proposals, and draws some inferences as to where
pressures are likely to occur within the political system
when reform proposals are debated. Thus, the research
attempts to meet its main. objective: creating' an
understanding of the dynamics of public decision processes
as they relate to the formulation of international

agricultural trade policies.

1.3 Research Outline
Chapter Two outlines the conceptual framework developed

for the political economy analysis. Emphasis is placed on

14
the work of Allison and Petit, while drawing on many other
sources from the economics literature. The resulting
framework, embellished by these other contributions builds
on the "rational actor," "organizational process" and
"governmental politics" models developed by Allison,.

Chapters Three, Four and Five are all concerned with
the events of the Tokyo round of negotiations. Chapter
Three, drawing on. written and interview ‘material, is a
descriptive overview of the principal events of the
agricultural part of the negotiations. In Chapters Four and
Five these events are reinterpreted and analyzed through the
three models developed in Chapter Two, relying particularly
on interview material. Chapter Four views the events from
the perspective of the U.S. decision process. This is
repeated from the viewpoint of the EC decision process in
Chapter Five.

Chapter Six is taken up with the empirical analysis of
the market access proposals. First, the proposals are
outlined in detail. This is followed by a description of how
the MSU agriculture model was used to model these proposals.
Finally the results of the analysis are presented in terms
of the impacts these proposals are predicted to have on
world trade.

These results are then presented in monetary impact
terms at the start of Chapter Seven, which aims to assess
the likely position of the U.S. and the EC to the proposals.

The results were shown to current policy' process

15
participants to elicit reactions on their implications. The
chapter is completed by some observations on the political
feasibility of the market access proposals based on these
reactions.

In the concluding chapter, Chapter Eight, the analysis
is broadened out to assess the positions of the U.S. and the
EC to agriculture in the new round as a whole, and not just
in relation to the market access proposals. This is followed
by a brief discussion of the overall prospects for the new
round. Chapter Eight concludes with some comments on the
success of the approach of this research and future research

needs.

CHAPTER TWO

THE CONCEPTUAL FRAMEWORK

This research calls for a political economy model, in
addition to the techniques utilized in the empirical
analysis. There is no well-established, appropriate body of
theory from which to draw an integrated framework capable of
answering all the questions a research endeavor of this
nature may seek to task. .At Ibest, various concepts and
hypotheses must be drawn together from economics, political
science, and other relevant disciplines, to establish a set
of hypotheses that may be tested and re-specified further on
the basis of the case study element of this research.

Thus it is necessary to review the literature in the
areas that are relevant to the research questions at hand.
From such theoretical sources it is possible to build a
conceptual framework consisting of a series of hypotheses in
a manner similar to, and building on, the work of Michel
Petit. Petit speaks of policy decisions coming "out of a
black box called ’political bargaining,’ a process that
takes ‘place among' organizations shaped. by the state of
economic interests and of institutions." By developing a
case study of the decision processes for establishing
international agricultural trade policies of the U.S. and
the EC, it is hoped to reveal something of the internal
nature of the "black box” and to develop more detailed

hypotheses regarding the inter-relationships between

16

17
organizations, political institutions and policy outcomes

(Petit, 1985, p. 18).

2.1 Literature Review

Petit's approach, which relies heavily on the seminal
work of political scientist Graham Allison (1973), includes
many elements of the economics literature. Those that are
found to be useful are briefly reviewed here followed by a
review of Allison's work and finally that of Petit.
Organization theory is included in the consideration of
Allison’ s work because of it's central importance to his

theses.

2.1.1 Economic Theory Contributions

Economic theory has been primarily concerned with
explaining the actions of "economic man" in the marketplace
where goods and services are bought and sold. Microeconomic
theory provides a model of how decisions are made concerning
the utilization of scarce resources in an interdependent
world. However, economists have applied the principles of
this theory beyond the common conception of the marketplace
to include that of the "political marketplace" also.

The definition implied for this "political marketplace"
is meant to include a broad range of concepts from the
notion of government as a separate actor providing public
goods and. jperforming’ regulatory functions that. the

marketplace fails to provide, to the processes by which

18
political power is gained and political decisions are
brokered. The contribution of Randall Bartlett is very
useful in understanding the manner in which economic theory
has been expanded from basic microeconomics to include these
elements.

Standard microeconomic theory perceives man as acting
rationally in the pursuit of self-interest, either as a
consumer aiming to maximize utility or as a producer aiming
to maximize profits. Bartlett accepts these premises but
adds two new sets of actors that are also self-interested,
rational maximizers: government, or perhaps more accurately
politicians, who maximize votes, and bureaucrats (who serve
the government) that maximize their own security (Bartlett,
p. 26).

Bartlett can be accorded credit for the conception of
bureaucrats as maximizers of security. However, there is a
wealth of ideas drawn from economic theory behind the
inclusion of governments as 'vote :maximizers in such an
apparently simple expansion of the classical model
(notwithstanding its limitations when considering
quantitative analysis). The relevant literature will now be
addressed chronologically starting with the work of Anthony
Downs. In his Economic Theory of Democracy Downs aims to
provide a behavioral rule for democratic government
consistent with general equilibrium theory. Given the fact
that in most democracies there are set rules on terms of

office regulated by recurring elections, an incumbent

19

government is constrained by the pressure of future re-
election. In the economic sphere there are no such bounds,
but it becomes obvious that the economic actions taken by
government are chosen based on the perceived ability of
these actions to maximize political support since voters to
a large extent measure political performance in economic
terms. This in turn leads to the conception of government as
vote 'maximizing, since re-election is ‘the rational goal
(Downs, p. 20).

Satisfying voter demands and the manner in which
preferences are expressed is a similar concern in the work
of James Buchanan and Gordon Tullock. In their book The
Calculus of Consent they provide a framework which is well
described by the subtitle of the book: "Logical Foundations
of Constitutional Democracy." The authors derive their
foundations from the overlapping disciplines of economics
and political science, in a search for a method to aggregate
both revealed and non-revealed preferences while paying
attention to the costs of making decisions. The difference
in approach from Downs is the construction of "a model of
collective choice-making that is more closely analogous to
the theory of private choice embodied in the theory of
markets..."(Buchanan and Tullock, p.8).

While Downs has focused largely on the role of the
political parties as "government,” Buchanan and Tullock
emphasize individual motivations, both of the politician and

the voter. Thus the notion of individual and group decision-

in).

bi

20

making costs becomes central. Costs are determined not only
by the rules for making decisions but also by the way in
which individuals are collectively organized (p. 63). At an
early stage there are gains from having decision rules
requiring less than unanimity. Thus the analysis leads to
the conception of government serving the wishes of the
people, who in turn will organize into interest groups to
gain adequate representation.

Any model that deals with interest groups, or more
general 1y col lective action , must acknowledge the
contribution of Mancur Olson. In his book The Logic of
Collective Action, Olson expands the Buchanan and Tullock
analysis by further describing how groups are formed for the
purpose of providing public goods. Much of Olson's original
analysis relates to the agricultural community, and his
description of the general farm organizations illustrates
well how his "By-Product" theory of group formation
overcomes the 4"free rider" problem; by providing other
desirable services as well as lobbying for public goods,
these organizations can form and thrive (p. 157). Similarly
his "Special Interest" theory which he applied to an
explanation of lobbying in the business community can be
applied to agriculture today. With the increasing
specialization of agriculture, farming interests can perhaps
be better served by smaller groups with more specific goals

(p. 143). Thus, in U.S. agriculture this helps to explain

21
the emergence of the commodity' groups as a strong and
influential force in the political process.

Another body of literature developed since the time of
Bartlett’s work helps to shed further light on both the
government and the bureaucracy. This literature is concerned
with the theories of regulation and rent seeking. Both deal
with how preferences are articulated and achieved within the
political process.

Examining the demand for and supply of regulation by
the policy process, several insights into the determinants
of policy can be gained. This is so despite the fact that
regulation theory does not take the notion of self-interest
to its logical conclusion - such that bureaucrats maximize
their own material welfare - as noted by Hirshleifer and
Becker. Stigler suggests that while it might be supposed
that regulation exists to benefit the national interest, in
fact regulation of an industry is generally sought and
gained by that industry for its own benefit. This is in part
a result of the information costs involved, which dictate
the delegation of responsibilities within the bureaucracy,
with this smaller group then being subjected to the
pressures of interest groups that have stakes in a
particular sphere (Stigler, 1970 and 1971).

Peltzman has further refined Stigler's ideas into a
model for predicting who will gain or loose from regulation,
based in a manner similar to the public choice literature,

on the notion that the regulator, i.e. government, is a vote

22

maximizer (Peltzman, p. 224). As Petit notes the appeal of
this regulation theory is the obvious applicability it has
to what has occurred in the agricultural policies of
developed countries: producers have had a say in designing
policies that protect them from the free market, but which
are not necessarily in the national interest (Petit, 1985,
p. 13).

Rent seeking theory can be seen as a development from
regulation theory; for example, the regulations sought by
producers described above have provided them with an
economic rent that did not previously exist. These ideas
were first proposed by Anne Krueger who developed a model of
competitive rent seeking to illustrate a condition relevant
to this study. In the case where rents are generated through
the imposition of quantitative restrictions on international
trade, she showed that the economy suffered a welfare loss
overall and that this loss was greater than the equivalent
loss if tariffs were used (Krueger, p. 291). Thus in
agriculture, while domestic producers (and also importers)
may gain a rent from import restrictions, society as a whole
looses out. The difference in approach from standard
international trade theory is the orientation of seeing the
regulations as the result of rent-seeking by domestic
producers and import license holders.

As Buchanan notes, the attraction of rent seeking
theory is its institutional nature, allowing its application

to issues of public decision making (Buchanan, Tollison and

23
Tullock, Eds., p. 14). Yet the theory provides little
insight to the nuances of how rent seeking might occur under
different forms of institutional design. This aspect is
easier to pursue from the perspective of political science

and organization theory, to which attention is now turned.

2.1.2 Political Science Contributions

This research endeavor is firmly based in economic
theory but has benefitted greatly from exposure to certain
political science contributions. These will be reviewed in
the context of how they relate to the single most important
source, namely Graham Allison's Essence of Decision. In this
book, Allison defines three policy models and illustrates
their merits by analyzing their ability to describe the
decisions taken during the 1962 Cuban Missile Crisis.

Allison’s first model has the perspective of government
as a unitary decision making unit and then suggests that it
needs to be "supplemented, if not supplanted, by frames of
reference that focus on the governmental ‘machine - the
organizations and political actors involved in the policy
process" (p. 5). Thus his subsequent approaches go into
increasing detail on the organizations and the roles of
individuals involved. As this spectrum is spanned, the
reliance on economics diminishes while more use is made of
other political scientists' contributions. What parallels
this, is the amount of information required to do thorough

analysis in each framework; as the complexity increases so

24
do the informational requirements. The different models are
outlined below in this order.

The basic properties of the first model, called the
Rational Actor model come from economics. The decisions
coming out of government are seen to be the decisions of a
single unit that aims rationally to maximize particular
"payoffs" or "utility". Rational choice implies the ability
to rank alternatives and choose between them based upon a
knowledge of their separate consequences (Allison, p. 29-
30). With such a model two basic propositions result: as the
costs of an alternative increase, its likelihood of being
chosen decreases, and when the costs decrease, the
likelihood of that action being chosen increases. The level
of insight gained using this model is akin to what Schelling
has called "vicarious problem solving": the analyst places
himself or herself in the shoes of "government" with the
perspective of an individual (Allison, p. 35).

A much higher degree of complexity of analysis is
obtained in Allison's second model, labelled the
Organizational Process model. In this approach government
becomes a group of organizations rather than a unitary
actor. These organizations are viewed through the lenses of
organization theory and economics. Following the early work
of Chester Barnard's The Function of the Executive and
Herbert. Simon's Administrative Behavior, Allison traces the

development of these theories through the seminal books

25
Organisations by March and Simon, and A Behavioral Theory of
the Firm by Cyert and March.

Governmental action is seen as the output of "a
constellation of loosely allied organizations on top of
which government leaders sit" (p. 80). These different
organizations have responsibility for different areas of
public policy, and as such are responsible for how they
approach the tasks in that area: problems are thus factored
out amongst and within agencies resulting in fractionated
power. As a result of organizations gaining primary
responsibility in a particular area, parochialism may
inevitably result.

The activities of the organization can be characterized
in a number of‘ ways. First, goals are seldom formally
mandated but evolve as constraints that define acceptable
performance. These goals are attended to in a sequential
manner through the use of standard operating procedures that
can be combined in different ways to suit the particular
problem at hand as best possible. An organization will
contain a "repertoire" of "programs" of standard operating
procedures to deal with different situations. Standard
operating procedures are necessary to coordinate the diverse
actions of the individuals within an organization that are
important to achieving particular outcomes. It is therefore
necessary for reliable performance that these procedures are
”standard" and. therefore they’ do :not change quickly or

easily.

26

Furthermore action is characterized by avoidance of
uncertainty through "negotiated environments" with other
organizations such. that, there are: clear' demarcations of
responsibilities and established practices. Where further
uncertainties cannot be dealt with in this way, "standard
scenarios" are developed for different eventualities. Where
these are perceived to be inadequate, organizations engage
in "problem—directed search" which focuses on finding a way
to avoid the discomfort of unfamiliar situations. Generally
learning and change are slow regardless of whether it comes
from routine or search problem-solving. However, change can
be rapid as the result of extreme situations such as severe
budgetary feast or famine, or dramatic performance failures
(Allison, pp. 81-85).

The central coordination of all these organizations is
complex and involves most importantly the performance
measures and information available to government leaders and
the system of rewards and punishments for organization
members that are exercisable by Ihigher' authorities. The
actual influence that leaders have over government behavior
is constrained by individual organizations' goals and
standard operating procedures.

The output of government at any one time, t, will only
be incrementally different from that at time t-l. Thus the
best predictor of what will happen at time t+1 is what
happens at time t. Thus there is considerable rigidity in

possible government behavior which naturally leads to

27

concern over "administrative feasibility": "A considerable
gap separates what leaders choose (or might rationally have
chosen) and. what organizations implement" (p. 93).
Governmental output is seen in the short run as action
largely determined by present standard operating procedures
and programs, while in the long run it is seen as output
importantly affected by organizational goals and standard
operating procedures.

While Allison's description in this model of the policy
process limits itself to organizations that are a formal
part of the government, the framework can be easily extended
to include other classes of actors that interact with
government, such as interest groups. Already it is apparent
that this model of organizational process has added many
levels of detail to the rational actor approach and allows
the policy process to be viewed in a less static manner.

Allison’s third model, a "governmental politics"
approach, is richer in both detail and dynamics. It also
requires the most information for its application. In model
II the leaders of government were viewed as a "monolithic"
group sitting on top of the different organizations that
make up the government. Model III aims to look more closely
at the constituent members of the leadership: "Each
individual in this group is, in his own right, a player in a
central competitive game. The name of the game is politics:
bargaining along regularized circuits among players

positioned hierarchically within the government. Government

28
behavior’ can thus. be understood... as results of these
bargaining games" (p. 144).

In developing this model, Allison has drawn on the work
of Richard Neustadt whose book Presidential Power was one of
the first forceful attempts to analyze the exercise of power
in government. Neustadt distinguishes between formal power
vested by statute, constitution and their interpretation,
and power in the sense of the effective influence on the
conduct of others. It is the latter that really counts, and
is why the central theme of the analysis can be summed up in
one phrase: "Presidential power is the power to persuade"
(p. 10). As Neustadt notes:

The constitutional convention of 1787 is supposed

to have created a government of "separated

powers." It did nothing of the sort. Rather, it

created a government of separate institutions

sharing powers (p. 26).

So while the President may superficially be considered
in charge, in fact his authority merely guarantees what
Neustadt refers to as "clerkship." To rule, the President
must pursue bargaining advantages which arise primarily from
"professional reputation" and "public ‘prestige." Despite
other advantages the President may have, he is unlikely to
persuade unless "the men he would persuade... [are]
convinced in their own minds that he has skill and will
enough to use his advantages. Their judgement of him is a
factor in his influence with them" (p. 44). Also, those he

would persuade "have more to think about than his

professional reputation. They also have to think about his

29
standing with the public outside Washington. They have to
gauge his popular prestige. Because they think about it,
public standing is a source of influence for him, another
factor bearing on their willingness to give him what he
wants" (p. 64).

As Allison observes, "the focus of Neustadt's attention
is not action as the result of a bargaining game but rather
Presidential choice. To understand policy, one must peek
over the President's shoulder" (p. 149). But to more fully
understand bureaucratic politics one must look beyond the
choices before the President, and also consider the wider
bargaining among the policy elite. Thus Allison describes
the contributions to this in the political science
literature with particular reference to the work of Almond,
Lindblom, Schilling, Huntington and Hilsman before outlining
his own governmental politics paradigm.

In Allison’s approach governmental actions are seen as
political resultants (in contrast to organizational output
in Model II):

Resultants in the sense that what happens is not

chosen as the solution to a problem but rather

results from compromise, conflict, and confusion

of officials with diverse interests and unequal

influence: political in the sense that the

activity from which decisions and actions emerge

is best characterized as bargaining along

regularized channels among individual members of

the government (p. 162).

The organizing concepts of the paradigm can be viewed

as strands in the answers to four interrelated questions,

which are considered in turn:

30

1. Who Plays? Rather than viewing government as unitary
or a group of organizations, it is individuals in different
jobs; chiefs, staffers and ad hoc players. What a particular
player must or can do is defined by their position in
government.

2. What determines each player’s stand (i.e. behavior)?
Certain factors are relevant. First, each player is subject
to parochial priorities and perceptions. This is compounded
by organizational parochialism; in order to motivate members
of his organization, a player must be sensitive to the
organization’s orientation. This in turn can lead to goals
and interests that are circumscribed by the needs of the
organization, not least of which is its own health and
security (similar to Bartlett’s formulation). These are some
of the dimensions that the individual contemplates in taking
a particular stand on an issue requiring decision and
action. Depending on the perceived stakes, different actors
may well see different faces of a particular issue and their
final behavior will usually be the result of deadlines; the
need to take action forces a decision on their stand.

3. What determines each player’s impact on results?
Power, using Neustadt’s definition, is the key. Power is a
blend of bargaining advantages, professional skills, and
other players’ perceptions of the two. Allison elaborates
that "power wisely invested yields an enhanced reputation
for effectiveness. Unsuccessful investments deplete both the

stock of capital and the reputation. Thus each player must

31
pick the issues on which he can play with high probability
of success" (p. 169).

4. How does the game combine players’ stands,
influence, and moves to yield governmental decisions and
actions? Much is decided by the individual player’s role
within "action. channels". These are the chains of events
that lead to particular outcomes. For example the budget
action channel is the chronological series of events from
department submissions, Office of Management and Budget
(OMB) review, presidential review and submission,
congressional review, authorization and appropriation,
presidential signature, OMB apportionment, agency
obligation, and ultimately to expenditure. With a given
action channel for a set of issues, the major players are
pre-selected, with their opportunities for influencing
different parts of the process already determined. Thus the
channel determines "who’s got the action" (p.170).

The rules of the game also influence how individuals
affect governmental outcomes. Some rules are explicit in the
constitution, the law, administrative rules or an agency’s
standard operating procedures. Others are more subtle. Rules
establish roles and action channels and constrict acceptable
actions by sanctioning some, and making others illegal or
just ungentlemanly. Thus action is a political resultant,
where under conditions of uncertainty, "each player pulls

and hauls with the power at his discretion for outcomes that

32
will advance his conception of national, organizational,
group, and personal interests" (p. 171).

From these organizing concepts, Allison develops a
number of general propositions. Government action does not
presuppose government intention. The sum of different
behaviors and intentions will provide an outcome more likely
than not different from the original intention. Solutions
are not achieved. by global thinking' but. by individuals
attending to their part of a problem, using the priorities
and perceptions that result from their particular position
within the policy process. The individual’s "task is to
persuade other players that his version of what needs to be
done is what their own appraisal of their own
responsibilities requires them to do in their own interests"
(p. 177).

Shortcomings befall the process. Poor perception, wrong
expectations and miscommunication can all occur, which,
combined with the fact that there are always many issues
being dealt with at once, leads to reticence of individuals
to speak their mind fully or take a stand until forced to by
events or deadlines.

Allison adds finally that style of play can have an
influence on outcomes, stating that career bureaucrats,
those entering government from the private sector and
political appointees all behave differently because of

differences in longer-range expectations (p. 179).

33

Through applying these three models to the events of
the Cuban missile crisis, Allison shows what can be learned
from each. No one model is right and the others wrong.
Rather different aspects of political outcomes and the
policy process are illuminated by each. One criticism of
Allison’s work is that it is excellent for providing ex
poste analysis, but less equipped to support prescriptive
analysis. In a mechanistic sense this may be true, but it is
believed that an ability to describe the workings of the
policy process with reference to the past takes one a long
way toward understanding how that process will affect future

policy decisions.

2.1.3 Michel Petit’s Research

While many agricultural political scientists and
agricultural economists have written on the agricultural
policy process and agricultural policy, most of this writing
has been the narrative of the "anointed few" who have been
in the profession and the policy environment long enough to
be permitted observations that are usually of a personal
nature. Michel Petit however has approached the topic from
the bottom up, trying to link together in an overall
framework, the lessons that can be drawn from the theory
provided by both the economics and political science

disciplines and only then adding personal experience and

34

observations as additional analytical tools.1 The result is
an approach that can be used by those analysts wishing to
examine the policy process, but unfortunately not
sufficiently advanced in their careers to have garnered
significant amounts of "hands-on" experience. This approach
however does not obviate the need to gain data on the
intimate workings of principal organizations and players
within the policy process.

Petit takes. as his. precursor, Dale Hathaway’s
Government and Agriculture which aims to provide a "model of
political behavior" when considering political processes. In
a world where individuals and groups hold different beliefs
and values, Hathaway assumes "that the primary function of
the political process is the compromising of these
conflicting or competing values and the discerning of the
relevant beliefs in a fashion that. maximizes the
satisfaction of the relevant groups in society" (p. 185).
This assumes as given the current distribution of power but
is a clear departure from neo-classical economics where
social welfare is maximized. Thus it becomes necessary to
develop the distinction between economic and political
factors in the policy process (Petit, 1980, p. 41).

The framework that Petit develops is outlined in his
1985 IFPRI Research Report, where he starts out by reviewing

much of the same literature that has been covered in this

 

1. Others have attempted to endogenize government
behavior into econometric models; see Rausser et al.

35

chapter. "The literature :review... offers ‘useful jpieces:
ideas, concepts and hypotheses that capture important
aspects of the phenomena under study. But they must be
assembled and completed to form a general, conceptual
framework for interpreting the policy making process". This
process is at once characterized as being sequential,
subject to uncertainty and is organized by the dialectical
relationships between economic interests and the
organization of these interests to influence policies.
Expectations become important and actors "display the whole
variety of attitudes identified with human behavior in the
face of uncertainty (gambling, hedging, waiting to see,
seeking more information, and so forth)" (p. 16).

From this perspective Petit builds his framework on two

general hypotheses:

1. In the short run, policies are the outcome of a
dynamic process driven by conflicts of economic
interest regulated by political institutions; and

2. In the long run, general economic forces play a
critical role in determining the evolution of
agricultural policies, but their influence does not
obey a purely economic rationality, since these
forces are exercised through the mediation of the
political process (p. 16).

These hypotheses are then expanded on in a descriptive

manner. Policy-making is driven by the influence that

economic interests exert on government. Often this takes the

36
form of the information that groups provide in the
inevitable situation of uncertainty.2 Noting Olson’ s
contribution to how interest groups are formed, Petit seeks
to review their behavior, which he sees as analogous to the
way organizational behavior is described under Allison’s
second model.

In trying to describe how all the different interest
groups and government organizations interact and impact on
one another, Petit refers to the contribution, in the case
of U.S. agriculture, of Talbot and Hadwiger. In their book
The Policy Process in American Agriculture the authors
present a thorough description of the policy process of the
day, but fail to abstract out to a comprehensive conceptual
framework of analysis that can carry forward to today.3 Part
of what is missing is the ability to explain how political
organizations affect the structure and functioning of
interest groups and vice versa. Petit’s attempt to elucidate
this subject is by way of analogy to the theater:

The analogy is interesting because a major part of

the action is public. There are, however,

important events occurring behind the scenes.

Groups and government organizations interact

through their representatives who are the actors
in the policymaking' process. The role of each

 

2. Further' consideration. of ‘the importance of
uncertainty is provided in the next section as an expansion
of Petit’s work.

3. More recently, the best available descriptions of
the U.S. agricultural policy process are found in Bonnen,
1980 and 1984, while an excellent collection of essays is
found in The New Politics of Food, edited by Hadwiger and
Browne. In the latter, disparate issues are covered well,
but a unifying framework is lacking.

37

actor is defined by his position, but his script
is not fully written, and he has some room for
improvisation[§_i_q]. As in all plays, some actors
are more important than others. Perhaps, as in
ancient Greek drama, a chorus exists; it is made
up of observers and commentators explaining what
is going on - not taking part in the action but
often lamenting the ending they foresee (p. 18).

From here Petit proceeds by defining the concept of
long term economic forces as evolving from a process that
agricultural policymakers can only minimally influence, such
that they can be considered exogenous variables. In order to
explain. how these forces affect. policies, they' must be
linked to the conflicts of influence that are inherent in
policymaking. The hypothesis is that "long-term economic
trends affect the configuration of interests at stake in a
policy debate, and this generates pressure for change. For
instance, agricultural price declines lead to pressures by
farmers for government intervention.... This hypothesis
gives a clue for interpreting changes in the position taken
by various actors in the policy debate..." (p. 18).

Petit summarizes the main features of the framework
with the following description and figure:

Following Allison’s lead, policies are viewed as

"political resultants" of a bargaining process in

whidh policy debate plays a central role. Policy

decisions during period t (Dt) come out of a black

box called "political bargaining," a process that

takes place among organizations (org.t), shaped in

period t by the state of economic interests (Ec.

Int.t) and. of institutions (Inst.t). Long 'term

economic forces (LTEFt) at period t influence

[economic interests] Ec. Int.t. LTEF are assumed

to be exogenous, although they are partially

influenced by policy decisions. Similarly,

institutions are mainly exogenous. Observation of

the policy debate reflects the nature of the
political bargaining process (pp. 18-19).

38

Exogenous influence

 

 

V

LTEF > LTEFM

 

 

 

 

 

 

 

fl
/
/
. ’/
Political | Political
EC. mtg-#018,.» liamaininn [Ir-DEC In! ,,,—>()rgm-——D bargaining H
. \
\
\\
\
Inst, ; lnsl,,,.———-.

Exogenous inllurm P

Figure 6.1 Recursive representation of the dynamic
policymaking process

It is acknowledged that in the long run political
institutions themselves are influenced by the policy
process. This is in accord with the concept of induced
institutional innovation as developed by Ruttan and Hayami,4
where institutions change under the effects of economic
forces. As Petit states: "This influence can only be exerted
through the political process" and may indeed follow "some
form of rationality. . . brought about through a political
regulation process" where, ”if high public officials feel
that the public interest is jeopardized too much by. . .
public interest groups, and if they feel they can
politically afford to, they will intervene." The efficiency
with which this regulation occurs is the subject of the

 

4. It also is consistent with the earlier work of
Shaffer on institutional obsolescence and innovation.

39
regulation and rent-seeking theories previously mentioned
(p. 19).

In applying the framework to the subject of what Petit
terms the ”confrontation between the U.S. and the EC on
international trade of agricultural products," the analysis,
while providing some useful insights, disappoints somewhat;
it does not appear to take full advantage of the richness in
detail that the framework provides, presumably for a lack of
data. This illustrates the point made in connection with the
differing data needs of the three models developed by
Allison.

Along with a number of co-authors, Petit makes better
progress in providing analytical detail in a case study of
the agricultural policy formation process in the EC (Petit,
et al.).5 Thus the framework, along with the other
theoretical contributions reviewed, are seen. as 'the ikey

elements of the approach followed in this research.

2.2 A Public Decision Process Model
2.2.1 Synthesis of the Literature

The review of the literature illustrates how, in
addressing public policy, concepts from economics and
political science are intertwined and are best able to
answer issues when used together. Both literatures assume

self-interested rationality guided by economic measures of

 

5. The specific insights on agricultural trade policy
that are gained from both of Petit’s papers are dealt with
in subsequent chapters.

40
performance. Most of the complexities discussed are captured
in the simplicity of Bartlett’s approach, which is an
excellent tool for organizing thought:

1. consumers attempt to maximize utility;

2. government attempts to maximize votes;

3. producers attempt to maximize profits: and

4. bureaucrats attempt to maximize their own security.
He also summarizes the behavioral assumptions:

1. all agents are primarily motivated by self-interest;

2. all agents are rational in pursuit of self-interest;

3. all agents labor under the constraint of uncertainty

and hence are subject to influence in the making of

market and political choices through the medium of

information subsidization (p. 36).

This third assumption concerning uncertainty needs
further elaboration. Many of the authors cited above express
concern over its influence, but it is thought that, for the
purposes of this research, further insights can be found and
should be employed.

The contributions of two other economists are
important. Though their writings are primarily about the
firm and the operation of the marketplace, the lessons are
applicable to the organizations that make up the policy
process. First, Oliver Williamson shows how firms can
mitigate the negative effects of an uncertain world by
internalizing within the firm as many decisions as possible.

Firms choose to do this because of their finite ability to

41
assimilate knowledge. Williamson terms this "bounded
rationality", and states that when combined with complexity
and opportunism, it creates "information impactedness,"
making for an uncertain decision environment. By
internalizing as many functions as possible within the firm
these uncertainties are minimized. In the realm of
government this explanation of behavior can illustrate why
different agencies compete for "turf" so as to minimize
their exposure to uncertainties (Williamson, 1975 and 1981).

Ronald Heiner approaches the question of uncertainty
from the position of its relationship to standard economic
optimization theory. In criticizing standard theory Heiner
suggests that:

... observed regularities of behavior can be

fruitfully understood as "behavioral rules" that

arise because of uncertainty in distinguishing
preferred from less-preferred behavior. Such
uncertainty requires behavior to be governed by
mechanisms that restrict the flexibility to choose
potential actions, or which produce a selective
alertness to information that might prompt
particular actions to be chosen. These mechanisms
simplify behavior to less-complex patterns, which

are easier for an observer to recognize and

predict....Thus, it is in the limits to maximizing

that we find the origin of predictable behavior

(p. 561).

The approach helps to explain the standard operating
procedures, programs and repertoires of organization theory
and Allison’s second model. These are seen as "social
institutions" which are "regularities in the interaction
between agents that arise because of uncertainty in

deciphering the complex interdependencies created by these

interactions" (p. 573). Our ability to influence those

42
institutions - regarded as "political" in that they
influence economic outcomes — becomes the sphere of
"’constitutionalism,’ defined broadly as the design of rule-
mechanisms to restrict the flexibility of government to
react to whatever influences might prompt it to engage in
vulnerable activities" (p.586).

Bartlett’s own orientation on the role of uncertainty
is closer to the ideas of Williamson. Uncertainty results in
the possibility of "influence production" through the use of
"information subsidization." It is best summarized by way of
analogy to the "Blind Date Problem":

If my cousin is coming to town and I want my

friend to take her out, I subsidize his

acquisition of the information that she has a

charming personality and beautiful blue eyes. I

neglect to tell him that she has three of them and

weighs some four hundred pounds. My subsidization

of selective information is aimed at leading him

to a conclusion he quite possibly would not reach

if he had all the relevant facts at his disposal.

However, his experiences with me as the source of

information in this one case ‘may lead. him ‘to

distrust somewhat my account of things when I

present them at other times in the future.... he

may tend to discount the information that I

provide him at reduced cost. We can easily include

such a discount factor in the analysis... (pp. 33-

34) .

Though .Allison and Petit deal ‘with. uncertainty' and
information costs, the further attention as outlined above,
that can be given to the issues adds depth to the models
developed. Having described the relevant literature and the
relevance of its different elements to one another, it is
now possible to turn to a description of how these are

combined for the specific purposes of this research.

43

2.2.2 Structure and Hypotheses of the Framework
General

As has already been noted, the manner in which Petit
has utilized his framework in case studies prompts a desire
for a more structured approach. Therefore, the approach that
is taken in this research follows the methods of application
utilized by Allison in his case study. Whereas Petit takes
an overall look at a particular case, in this research two
separate approaches will be developed, after the basic facts
of the case study have first been outlined. While these
approaches follow .Allison’s structure, they utilize the
insights of Petit and the other economists not covered in
Allison’s models.

The first approach will follow the case study using
Allison’s Organizational Process paradigm set against
Petit’s recursive model of policymaking. This will be
followed by analyzing the case study through Allison’s
Governmental Politics paradigm, again within Petit’s
framework. The reasons for this. approach. are 'threefold:
first it provides greater discipline (and therefore focus),
than Petit’s narrative approach; second, it allows for the
contrasting availability of data on different aspects of the
case study: and most importantly, by using Allison’s model
III, it is suggested that it will be possible to reveal more
of the nature of the political bargaining "black box" than
has hitherto been the case.

44

It is not possible to add any more detailed general
hypotheses to the framework than provided by Petit, except
to say that his hypothesis -- that long-term economic trends
affect the configuration of interest at stake in the policy
debate thereby generating pressures for change -- may be
expanded into specific hypotheses within the context of a
particular case study. This aspect will be addressed in the

next section.

Agricultural Trade Policy
Within the specific context of the negotiation of

international agricultural trade policies, two distinct
areas are identified as important to the framework. First is
an understanding of the distribution of power between the
various organizations involved, with particular attention
being paid to the different classes of bureaucrats and their
respective constituencies. The case study will describe the
involvement and interactions of the various parts of the
federal government in the U.S., and the Community and
national institutions in the EC that deal with agricultural
trade issues.

The second area of major importance to the framework is
that of perceptions; namely actors’ perceptions of political
feasibility. Here the key interplay is that between interest
groups and bureaucrats. Perceptions are of a temporal nature
and have changed considerably since the Tokyo round to the

present. Therefore, a part of the analysis will aim to

45
consider recent decisions taken over both domestic and
international agricultural policy in order to gain a measure
of present attitudes and perceptions. This can also help in
developing an understanding of the relationships between
domestic and international policy.

In elaborating on the long-term economic forces that
impact on the trade policymaking process, consideration of
the history of this policy arena leads to the inclusion of
the following specific hypotheses:

1. Budgetary outlays have become a :major force in
creating pressures to change policies for the primary
goal of limiting expenditures:

2. Agricultural commodity price declines lead to
increasing pressures from farmers for government
intervention over prices:

3. Declining farm profitability, when perceived to be
the result of failure to achieve full potential on
world markets, creates pressure for government
intervention over trade; and

4. Domestic policies set the limits for negotiation of
international agricultural trade policies.

Taken individually, it would not appear difficult to
substantiate each of these hypotheses. However, the
interaction of the hypotheses has interesting implications
for the content and negotiation of agricultural trade
policy. While this researCh aims to test the validity of the

framework’s hypotheses, it is recognized that

46

incompatibilities potentially exist between them. The first
three hypotheses are not necessarily compatible with the
fourth, and the first is not necessarily compatible with the
second and third. This points up an interesting question for
the research: to what extent is it possible, when studying a
particular set of issues within the policymaking process, to
outline specific hypotheses any more detailed than the two
general hypotheses of Petit’s framework?

To a large extent, the outcome of the new round of
negotiations will depend on which of the suggested
hypotheses are dominant. Will the impact on domestic
programs of the need to contain budget costs be larger than
the impaCt of including or not including domestic policies
in the package to be discussed in the new round? Through the
case study and applied analysis that follows it is hoped
that a contribution to the answer of this question can be
made. Furthermore the study may contribute to a clearer and

more detailed specification of the framework’s hypotheses.

CHAPTER THREE
THE TOKYO ROUND OF TRADE NEGOTIATIONS:

A CASE STUDY

The aim of this chapter is to outline in general form
the history of agriculture in the GATT, with an emphasis on
the Tokyo round of negotiations. Much of the detail of the
Tokyo round is dealt with in subsequent chapters. Here, the
goal is simply to outline the major events in order to set
the stage for the analysis of the next chapters. These will
analyze the Tokyo round through Allison’s Organizational
Output and Governmental Politics approaches. The present
chapter can, to an extent, be viewed as utilizing Allison’s

Rational Actor perspective.

3.1 Background and History of Agriculture in the GATT

The General Agreement on Tariffs and Trade (GATT) was
one of the products of the post World War II effort to bring
a new order to the international economy. It’s beginnings
originated from the same time as the institution of the
World Bank and the International Monetary Fund (IMF) at
Bretton Woods in 1947. The GATT, as it evolved, was the
residue of a failed. negotiation to create a ‘third new
international organization which would have been known as
the International Trade Organization (ITO) (GATT, 1984).

The ITO was to have been a United Nations agency

responsible for the oversight of world trade. However, when

47

48

it became clear that the overambitious charter would not be
ratified by all, what was salvaged became the GATT: "It
began as only one wheel of a larger machine, the ill-fated
International Trade Organization, and, when that larger
machine fell apart before leaving the assembly line, this
wheel became a unicycle on which burdens of the larger
machine were heaped" (Jackson, p. 3). Thus the GATT began
as a temporary cut and paste job signed by twenty three
countries, and has survived to today as the major legal
forum for the regulation of international trade, now with
ninety one signatories.

The General Agreement is a single document laying out
in a series of Articles, rules for the conduct of trade.
These Articles cover a few fundamental principles and aims.
The first, known as the "most-favored-nation" clause, calls
for non-discrimination in the conduct of trade. Other
Articles indicate that tariffs are to be the principle tool
that is to be permitted when protection is granted, with a
ban on the use of quantitative restrictions. Furthermore
efforts should be made to "bind" tariffs; that is, agree to
maximum tariff levels for each and every item subject to
protection. The Agreement also provides for consultation,
conciliation and dispute settlement under its own auspices.

(GATT, 1984, pp. 2-6).

49
3.1.1 From Bretton Woods to the Dillon Round

The text of the General Agreement that was signed by
the original contracting parties was intended to apply
equally to both agricultural and non-agricultural trade.
However, at the time of drafting, the "special circumstances
of agriculture" were recognized, and several agricultural
exceptions to the basic principles were included in the
text. Thus, while certain political realities had been
ignored in trying to set up the all-encompassing ITO, the
GATT at least recognized the political realities of dealing
with agriculture.

Two exceptions should be noted. First, Article XI
contains a general prohibition on the use of quantitative
import and export restrictions such as quotas. However
agriculture benefits from three exceptions: ( 1) temporary
export restrictions may be imposed to relieve food
shortages: (2) import restrictions can be used where
necessary for the enforcement of domestic programs aimed at
limiting domestic production or marketings, or for the
temporary removal of surpluses; and (3) restrictions may be
used in applying classification, grading and marketing
standards. The most often used exception is the second, and
this is the subject of the applied analysis within this
study (Article XI is reproduced in Appendix 1).

The second major exception is contained in Article XVI
which prohibits the use of export subsidies but provides an

exception for agriculture provided such subsidization does

50
not result in a "more than equitable share of the world
market" being gained by the subsidizer. However, contracting
parties should "seek to avoid" the use of such subsidies.

The Agreement provides that contracting parties "can
meet from time to time" to pursue the aim of "the
substantial reduction. of tariffs and other barriers to
trade." This has been the objective of the seven "rounds" of
multilateral trade negotiations that have taken place to
date. The first three rounds - Geneva (1947); Annency
(1949): and Torquay (1950-51) - concerned themselves
primarily with tariff reductions on nonagricultural
products, and therefore need not be mentioned any further
(U.S. Senate, 1986, p. 10).

The fourth round in Geneva (1955-56) was similarly
concerned with tariff cutting, but had one important
agricultural issue. This was the granting of a waiver from
the General Agreement, which allowed the U.S. to' apply
quantitative import restrictions on a range of agricultural
products, whether or not U.S. domestic programs had
production or marketing controls. The waiver was requested
so as to enable the president to fulfill his obligations
under Section 22 of the Agricultural Adjustment Act of 1935,
as amended in 1951 such that "no trade agreement or other
international agreement heretofore or hereafter entered into
by the United States shall be applied in a manner
inconsistent with the requirements of this section." Thus

the waiver permitted the use of import restrictions in

51
conjunction with any U.S. Department of Agriculture program
whenever it was deemed necessary for the smooth operation of
such programs (U.S. Senate, 1986, p. 7).

The Dillon Round (1960-62; named after Douglas Dillon,
then Secretary of State and leader of the U.S. delegation)
was the first round to deal significantly with agriculture,
and was the first round in which the EC (at that time named
the European Economic Community -- the EEC) negotiated as a
single bloc. The negotiations centered on the effects of the
newly instituted EC, with the prospect in agriculture of the
establishment of a Common Agricultural Policy. The major
work of the round was in transforming the tariff rates that
had been previously applied by the six member countries into
a common schedule, both for agricultural and nonagricultural
products. The pending imposition by the EC of the variable
levy complicated the negotiations resulting in failure to
conclude substantive agreements on wheat, corn,' rice,
sorghum and poultry. These commodities were however covered
by "standstill agreements" that reserved the U.S.’s right to
reach agreements at a later date consistent with GATT
obligations (Curtis and Vastine, pp.23-26).

A number of concessions, hardly noticed however, were
granted by the EC. These were to be of great significance in
later years and up to the present time. A duty free binding
was granted on entry of soybeans and corn gluten feed, and
near duty free bindings were granted on soybean meal, other

oilseeds and cotton. At the time these commodities were not

52
of significant importance in trade between the U.S. and the

EC, but are extremely important today.

3.1.2 The Kennedy Round

The Kennedy Round was the first that was referred to as
a "trade negotiation" in contrast to the previous rounds
which had all been referred to as "tariff negotiations."
This was the first time the contracting parties made
concerted efforts to deal with nontariff barriers to trade.
The impetus for the new round came largely from the U.S. ,
mostly out of concerns over a declining balance of
international payments, especially when compared to the EC
which by 1961 had increased its reserves by' over $6.5
billion since the inception of the Community in 1958 (Evans,
p. 134) .

Given the lack of progress in the Dillon Round, the
U.S. administration began to campaign for new trade
legislation that would enable them to proceed with vigor in
a new round of negotiations. The 1962 Trade Expansion Act
was a significant achievement for the administration. For
the first time Congress had granted the president authority
to negotiate across the board rather than on a product by
product basis. This was considered politically expedient in
order to deal with the challenge of the common economic
front presented by Western Europe (Dam, p. 67).

As well as emphasizing negotiation of nontariff

barriers, the 1962 Act created the position of the Special

53

Representative for Trade Negotiations within the Executive
Office of the President. This was the first time Congress
had vested responsibility for the negotiations in a single
high ranking official. The Special Representative’s staff
and office were created by executive order to carry out the
congressional mandate of overseeing and coordinating the
trade policy activities of the different government agencies
(Curtis and Vastine, p. 9).

The GATT Ministerial Declaration of May 21, 1963,
launching the new round stated that "the negotiations shall
provide for acceptable conditions of access to world markets
for agricultural products... in furtherance of a significant
development and expansion of world trade in such products."
Both the U.S. and the EC were committed to negotiate on
agriculture but there tended to be philosophical differences
in approach. The U.S. considered that much could be achieved
by across the board tariff cutting in addition to work on
nontariff barriers, while the EC pursued a more managed
approach on a commodity by commodity basis. The U.S.
approach reflected the view that agriculture could be
successfully brought into a more market orientated
environment, whereas the EC felt that legitimate domestic
policy considerations interfered to the extent that this was
not possible. Thus the ‘EC proposed ‘the concept of the
"montant. de soutien," the 'margin of support over’ world
prices given to producers, as being a measure that could be

subject to binding negotiation.

54

This was the first time a proposal had aimed to link
domestic policies to the trade negotiations. However the EC
proposal was rejected by the US and others for a number of
reasons: there was no commitment on access; it preserved the
sanctity of the variable levy; and it could have been
applied to soybeans, negating the benefits of the previously
granted zero duty binding (U.S. Senate, 1986, p. 14).

The U.S. on the other hand had proposed binding access
commitments, suggesting that 15% of the EC market be
reserved for exporters. The EC listened to this approach but
was only prepared to offer 10% of their grain markets, which
was not acceptable to the U.S.. With the EC refusing to
guarantee a share of their domestic market sufficiently high
to satisfy the U.S., and the U.S. rejecting the EC approach,
the round was doomed to failure in dealing with nontariff
barriers to agricultural trade.

Modest tariff concessions were negotiated in
agriculture once it became clear progress would not be made
elsewhere. The U.S. granted concessions to the EC on $238
million worth of agricultural imports from the Community,
while the EC granted the U.S. concessions on $279 million
worth of U.S. agricultural exports to the Community (USDA,
1967, p. 90-91).

Attention also shifted to the negotiation of the
renewal of the International Wheat Agreement. It was hoped
that. this could. be expanded. to become an International

Grains Agreement with additional specific provisions for

55

food aid. The .final outcome at the conclusion of the
negotiations in 1967 was an agreement that only had price
provisions for wheat (this however fell apart in 1968 as
surpluses on world markets forced prices below the agreed
minimum). The Food Aid Convention that was negotiated
provided that 4.5 million metric tons of grain would be made
available annually to the developing countries. This was
more successful in operation, and was renewed and expanded
in 1971 and 1980.

The lack of progress in‘ the Kennedy Round toward
solving some of the fundamental problems in agricultural
trade can be attributed, in part, to a practical
consideration: the EC was still in the process of designing
and implementing its Common Agricultural Policy. While the
principles were well established by the time of the
negotiations, the exact nature of their implementation was
still being resolved amongst the member states (Curtis and
Vastine, p. 51). Thus in a sense it was impossible for the
Community to negotiate concessions to a policy that was not
yet fully in place. This was true given that the mechanisms
and design of the policy were not considered by the EC to be
subjects for negotiation within the GATT. Alternatively it
may be asserted that the status of the Community’s internal
organization was merely used as a block to achieving
agreements. Further, U.S. foreign policy considerations that

included maintaining a strong united Western Europe, meant

56
that the U.S. did not pursue the EC as vigorously as it

might, and thus also contributed to the lack of progress.

3.2 Launching the Tokyo Round
3.2.1 The Decision for a New Round

Even as the Kennedy Round came to a close, the
contracting parties were considering the prospects for
future progress on unresolved issues. Five months after the
Kennedy Round Agreements were signed, the GATT contracting
parties established a Program of Work to lay the groundwork
for a new round (Hudec p. 214).

As preparatory’ ‘work. continued. within. the. GATT
secretariat, other steps were taken towards a new round.
Internationally, a "High-Level Group on Trade and Related
Problems” was established by the Organization for Economic
Co-operation. and Development (OECD). The Group :met
throughout 1971 and in August 1972 concluded that a new
round was necessary "not only for the direct benefits it
will bring but because without it the divisive forces of
protectionism will grow stronger, with the risk that the
world will slip back into an era of restriction and
ultimately of contraction of the international economic
system" (OECD, 1972, p. 110).

In the U.S., President Nixon established the Commission
on International Trade and Investment Policy (the Williams
Commission) to produce "recommendations designed to meet the

challenges of the changing world economy" (Williams

57

Commission Report, p. ix). The final report, published in
July 1971, expressed a concern that the U.S. had not
benefitted to the full extent from the tariff concessions
granted it in previous rounds, mostly because countries used
nontariff barriers to negate the effects of tariff
obligations. The EC was specifically singled out as a major
culprit in this regard. The report concluded that the U.S.
could gain most by a renewed attempt at liberalizing
international trade through an attack primarily on nontariff
trade barriers (Destler, p. 137).

The EC meanwhile was working on the development of an
"overall approach" that could form the basis of a common
position within any negotiation. There was considerable
discord amongst the member states of the recently enlarged
Community and agreement was finally reached in June 1973 at
Luxembourg only through the use of the now famous Luxembourg
compromise. This gave an individual state the right to veto
a proposal, if it felt its own national interest was
significantly threatened.

The approach that was adopted for agriculture was
forthright, though not totally inflexible. The essential
elements were twofold. First, the principles and mechanisms
of the CAP, charged with upholding the objectives of Article
39 of the Treaty of Rome, "should. not be called into
question and are therefore in no way a matter for
negotiation." Second, the objectives for agriculture could

be best realized through stabilization of markets, which

58
would most readily be achieved by negotiation of commodity
agreements: in the words of the "overall approach, " the
Community would "propose the negotiation of a price
mechanism (minimum and maximum prices) accompanied by
storage measures in order to regulate supply... for each
product" (reproduced in Golt, 1974, p. 65).

Thus, led by U.S. initiative, the major trading nations
concurred on the need for a new round of negotiations under
GATT auspices, and turned their attention first inward to
consider their priorities for the new round and then to the

launching of the round itself.

3.2.2 The Tokyo Declaration

The ministerial meeting of September 1973 was preceded
by considerable discussions bilaterally amongst the major
players both in Geneva‘ and national capitals. Thus a
declaration was adopted without too much difficulty. This
was possible because generally, and especially as far as
agriculture was concerned, any potential conflict was
avoided by adopting a very general wording on aims: "The
negotiations shall aim to... include, as regards
agriculture, an approach to negotiations which, while in
line with the general objectives of the negotiations, should
take account of the special characteristics and problems in
this sector" (CIEP, p. 112-113). All together six areas for
negotiation were identified for the new round: tariffs,

nontariff measures, multilateral safeguards, tropical

59
products, the GATT framework itself, and of course,
agriculture. The fact that agriculture was identified as a
separate agenda item was a significant departure from

previous rounds.

3.3 The Nixon/Ford Years

The impetus given to the new round by the U.S. was in
part a response of the Nixon Administration to growing
protectionist pressures within the country and a sense of
crisis with regard to trade policy. In order to stave off
protectionist legislation and in order to gain authority to
negotiate the Administration turned attention to its own
proposals for trade legislation.

The development of enabling legislation was a slow and
tedious process that has been excellently documented by I.M.
Destler from which the following summary of its features is
drawn (Destler, chs. 9—11). The Trade Act of 1974 allowing
the President to enter into agreements in the new
negotiations was finally signed into law on January 3 1975,
by President Ford.

Part of the delay in generating the legislation was
attributable to the general legislative slowdown resulting.
from the turmoil created by the Watergate scandal. However a
:more significant reason was the contentiousness of the
issues, resulting in long hard fights in Congress. What
finally emerged exceeded the expectations of the original

proponents within the Administration who had been looking

60
for considerable latitude in negotiating authority. They got
it.

The president was authorized to eliminate tariffs on
goods carrying duties of 5% or less, and to reduce higher
tariffs by up to 60%. On nontariff barriers, agreements
negotiated. in. Geneva. 'were subject. to congressional
ratification in the form of implementing legislation. The
legislation contained no specific provisions ‘for
agriculture, Congress having reserved its oversight
privileges as regarded nontariff negotiations.

Despite reaching apparent consensus at Luxembourg, the
EC was still struggling’ to reach overall consent on a
mandate that covered the now nine members of the community.
Complicating the process was the uncertainty created over
the issue of UK membership which had been reopened following
the election there in February 1974. It took until the
following February for the EC to arrive at an agreed
directive (Golt, 1978, p. 1).

Substantive progress could not be made in Geneva until
all participants had required enabling legislation in place.
Thus with the U.S. as the principle instigator of the new
round tied up domestically until January of 1975, and the EC
similarly indisposed until a month later, little progress
was made up until that time. The first year was spent
sorting out the procedures for negotiation on the six areas
‘that had been identified in the Tokyo Declaration. Separate

groups were set up in each area, which meant a separate

61
group for agriculture. This group then had three sub-groups;
grains, meat and dairy products.

With domestic requirements settled, the Trade
Negotiations Committee of the GATT was able to instruct the
groups to proceed with substantive negotiations in February
1975. It very soon became clear that little could be
achieved immediately for the negotiations as a whole since
it would be impossible to conclude the negotiations before
the next U.S. presidential election in 1976. And it was
obvious that anything negotiated up to that point could be
amended by a new Administration.

Within agriculture, philosophical differences in
approach between the U.S. and EC arose concerning the
nontariff questions. The ‘U.S. did. not. want. to consider
commodity agreements or any other form of market sharing
within the GATT (although the U.S. did lead in exploring the
renegotiation of a wheat agreement within the IWC) . But
having accepted the EC position on the non-negotiable status
of the CAP, it became difficult for' the ‘U.S. to :make
concrete proposals, since other approaches to the basic
problems would necessarily include modifications to domestic
policies. The EC, for their part, stuck doggedly to the
principle of negotiating commodity agreements. Because of
this stalemate, attention turned to preparing for the offer
and request procedure for tariff reductions, a complicated

enough business to keep the negotiators busy.

62

Thus, a round that had been trumpeted for completion in
1975 was doomed not really to get moving until 1977 for
political reasons. Economic conditions also contributed to
the slow progress. The problems created by high levels of
inflation through this period diverted attention away from
Geneva towards finding domestic solutions to the problems
created by these inflation levels (Destler, pp. 193-197). It
was not until after the U.S. election that the momentum

began to pick up.

3.4 The Carter Years

The differences between the U.S. and the EC over
agriculture in particular were perceived within the GATT to
be the main reason for the lack of progress before the U.S.
election. As a result of the blockage over agriculture,
little progress was made elsewhere in the negotiations. A
sense of urgency developed with the coming of a new
administration, since the negotiating authority provided by
the 1974 Trade Act would expire within the lifetime of this
new administration. Section 331, that allowed the president
to waive imposition of countervailing duties while engaged
in negotiations expired on January 3, 1979, while overall
negotiating authority expired one year later (GATT, 1979,

pp. 12-13).

63

3.4.1 Breaking the Deadlock

Knowing full well that the fate of the negotiations
therefore rested upon itself, the Carter Administration
resolved to push ahead. With this new administration, there
was now less of an atmosphere of adversarial ideological
righteousness and more an atmosphere of "can-do" pragmatism.
This was felt most directly and immediately in the
agriculture negotiations where there was a significant shift
in the U.S. strategy towards the negotiations. This strategy
encouraged discussion of the approach favored by the EC. The
new administration’s attitude was that it was worth talking
about all possibilities in the attempt to find solutions.
Having convinced the other principle players, namely the EC
and the Japanese, of this new determination to move forward,
an accelerated timetable for the negotiations was agreed to.

In agriculture what this meant was the U.S. would begin
to talk to the EC about the principles involved in commodity
agreements and market sharing. This was the approach that
the EC had been stressing from the start, so it was now
possible to consider seriously reaching substantive
agreements on nontariff barriers to agricultural trade.
However this U.S. strategy did not in any way presuppose
that the administration would endorse commodity or market
sharing agreements. Just to be talking concretely about

different alternatives was a move forward.

64

3.4.2 Concluding the Negotiations

With this new momentum, the traditional tariff offer
and request procedure got under way, and the commodity sub-
groups in Geneva began to tackle the international
agreements issues. The grains sub-group ceased to meet,
having ceded the lead responsibility in this area to the
work that was going on in London within the International
Wheat Council (IWC) under the auspices of the United Nations
Conference on. Trade and Development (UNCTAD), the. usual
forum for discussing commodity agreements. It was believed
that at the appropriate time the results achieved in London
could be brought into the GATT framework as part of the
results of the overall negotiations (USTR, 1978, p. 24).

Both the Dairy and Meat sub-groups moved forward with
discussions of international agreements to cover their
respective commodities. The Dairy Group prior to 1977 had
made progress only on technical, analytical and definitional
matters. By the fall of 1977 two proposals had been
submitted to the group, one by the EC and one by New
Zealand. The EC proposal contained provisions for exchange
of trade information, an arrangement for’ milk. powders,
butterfat and butter with minimum and maximum prices, and
agreed price and access disciplines on cheeses. .The New
Zealand proposal was somewhat more modest with price
provisions only applying to milk powders (USTR,1978, p. 24).
The common elements of these proposals were combined into a

single document, which underwent a series of revisions with

65
the price proposals being put in and taken out again and
again. By the time the negotiations concluded two separate
texts were submitted with no further attempts being made to
reconcile them. Thus both were available for signature by
the contracting parties (GATT, 1980, p. 13).

Within the Meat subgroup, the EC and Australia
submitted proposals. The EC proposal called for a
multilateral framework that would provide information, a
forum for consultation and the conclusion of specific
bilateral and plurilateral agreements that might include
export restraints and price agreements.1 The Australian
proposal called for negotiation of access commitments on a
bilateral offer and request basis, coupled with a
multilateral oversight body designed to disseminate
information and provide a forum for discussions (USTR, 1978,
p. 24-25). Again the two proposals were combined into a
single document and the agreement that finally emerged used
the lowest common denominator of the differing proposals. An
International Meat Council would be established covering
bovine meat as a forum for exchange of information and as a
source of recommendations of "possible solutions" to serious
imbalances in the world beef market (USTR pp. 38-39).

In the tariff and quota concessions modest gains were

made in respect of individual offers and requests. Overall

 

1. "Plurilateral" is a term used in GATT negotiations
to mean amongst many but not all parties, to be
distinguished from "multilateral" meaning involving all
parties that are signatories to the GATT.

66

the U.S gained concessions on exports valued at $3.8 billion
while granting concessions on $2.4 billion worth of imports
(USDA, 1981, p. 5). Half of the concessions on exports
resulted from one action, namely' the tariff’ binding on
soybean exports to Japan. The EC granted the U.S.
concessions covering trade valued at $960 million while the
concessions granted by the U.S. were mostly on increases to
Section 22 quotas, and it is therefore difficult to estimate
what proportion benefited the EC, since all exporters to the
U.S. would be competing for these concessions (U.S. Senate,
1979, p. 46).

It should also be remembered that these figures
represent the total value of exports and imports on which
concessions were granted, and not the value of the
concessions themselves. The value of the concessions varied
from product to product between countries but would be a
fraction of the trade value involved.

Meanwhile, many of the participants that had entered
the GATT grains sub-group were actively involved in the
discussions being conducted in the IWC. Given the new
momentum of the negotiations as a whole, much energy was
invested in concluding a new grains agreement. The
International Wheat Agreement of 1971 was due to expire on
June 30, 1979 providing an additional deadline to the
impending conclusion of the MTN.

It was hoped that the new agreement would contain

specific economic provisions in two dimensions, at least in

67
the wheat market. First. it ‘was. hoped. that. minimum. and
maximum prices could be established, and second, that these
would be backed up by agreements on specific levels of
stockholding amongst signatory countries. This was to be a.
classic buffer stock commodity agreement, with agreed upon
price triggered stockholding levels.

There was also a hope of negotiating a coarse grain
Trade Convention that would mirror the IWC and the councils
being set up under the meat and dairy agreements in their
roles of providing information and a forum for consultation.
The Food Aid Convention was also subject to a renegotiation.

In February 1979 the negotiations were abandoned and
the Wheat Trade Convention of the 1971 IWA, with its lack of
economic provisions, was extended. The negotiations had
foundered on an inability to agree on three factors: the
level of each country’s reserve stock contributions;
separate economic provisions for developing countries to
ease the financial burden of their reserve obligations: and
the levels of the price triggers for the reserve system
(USTR, 1979, pp. 58-59).

By far the most serious reason for failure was not the
disagreements that revolved on a North-South axis, but
rather a failure to agree between the EC and the U.S. on the
trigger prices. Throughout the negotiations, the EC operated
as an importing wheat consumer, despite the looming prospect
of export refund expenditure in that market. Thus the EC

viewed the stock take-up and release prices proposed by the

68
U.S. as too high, while the U.S. viewed the EC’s price
proposals as too low.

These views were reinforced in relation to reserve
levels. The U.S. felt the EC prices would lead to reserve
levels that were excessive, while the EC thought the U.S.
levels would not provide for adequate food security. There
was also disagreement as to the appropriate size of the
spread between take-up and release prices. By the conclusion
of the negotiations the gap between the two’s proposals had
been narrowed to approximately $10 per metric ton, still a
substantial way apart. A renewal and extension to the Food
Aid Convention was finally agreed under UNCTAD after the
GATT negotiations had closed.

One area of the overall negotiations that. was not
specifically centered on agriculture nonetheless had the
potential to have a major impact on agriculture. The
Subsidies and Countervailing Duties Sub-Group developed a
set of codes as an annex to the General Agreement. During
the Kennedy Round the topic was approached, but the EC had
only been interested in developing a code on countervailing
duties while the U.S. insisted subsidies be included also.
Compatible terms of reference could not be found and the
project was abandoned.

Overcoming these old differences in approach was
difficult in the Tokyo Round. The first years were spent
purely on technical and informational matters. It was not

until 1978 that substantive negotiation began. At this stage

69
the U.S. wanted the codes to apply equally to industrial
goods and agricultural commodities while the EC sought to
exclude agricultural products (GATT, 1979, pp. 54-60).

At the conclusion of the negotiations both the U.S. and
the EC had gained and given ground. Agricultural commodities
were included in the agreement but not in any significantly
binding way. Previously export subsidies in agriculture had
been disallowed where they resulted in gaining a "more than
equitable share of the world market." The new code sought to
clarify and further tighten the definition of this concept.
Under the code the use of such subsidies would be disallowed
if "used in a manner which displaces the exports of another
or involves material price undercutting in a particular
market" (USTR, 1980, p. 42).

As the negotiations drew to a close, it became clear
that sufficient progress had been made in agriculture for
the U.S. not to walk away from the negotiations as a whole,
as had been its threat at the start of the round. However it
was also clear' that. many' agricultural issues ‘were left
unresolved or unsatisfactorily resolved. Therefore an
attempt was made within the negotiations to provide some
form of framework for further discussion that would continue
after the negotiations concluded. The aim would be to
monitor the outcome of what agreements had been reached and
provide a forum for a continued dialogue on possible
improvements to the agricultural trading system. It was out

of this element of the negotiations that the GATT Committee

70
on Trade in Agriculture was instituted, providing a direct

link between the Tokyo Round and the Uruguay Round.

3.4.3 Implementing the Agreements

In the U.S. the results that were brought back from
Geneva for Congressional approval were greeted with some
enthusiasm. The implementing legislation proceeded through
Congress with less difficulty than could possibly have been
expected. The most visible resistance came from Senators and
Representatives from Wisconsin who were concerned with the
concessions that had. been. granted. on Section 22 cheese
quotas; they accounted for five of the total of only eleven
opposing votes (Destler, p. 202).

In the EC there was also much rejoicing at the
implementation of the agreements. Within the agricultural
sphere, there was a sense of having successfully defended
the sanctity of the principles of the CAP. This was
perceived to be a wider success, in that the CAP was seen as
one of the strongest pillars of the community, and thus to
achieve success here was to achieve success for the strength

of the Community as a whole.

3.5 Reflections on Agriculture in the GATT

Superficially’ it. would. be ‘very’ easy to review’ the
history of agriculture within the GATT and conclude that the
experience has been one long tremendous failure. However

this would ignore the realities of the complex economics and

71

politics of agricultural trade issues. Since before the GATT
existed, countries have had domestic programs in place aimed
at regulating agriculture in one way or another for what
were considered legitimate reasons. It is only as the world
has become increasingly interdependent that the effects of
such. domestic ‘policies ‘have impacted forcefully on
international markets.

When the GATT was conceived, the need to coordinate
domestic policies internationally was not perceived to the
extent it is today. Thus the text of the General Agreement
can be excused for its lack of attention to this issue.
However, certainly from the Kennedy Round on, the need for
considering the international impacts of domestic policies
has been acknowledged, and yet little progress has occurred
in regulating negative impacts. Can this be explained
generally or in the specific case of agriculture?

The reasons are many, but certainly some of them have
their origin in the domestic policy processes of the
principle participants. It has often been argued that the
U.S. State Department has only been prepared to protect
foreign policy interests as opposed to foreign economic
policy interests. The introduction of the Special Trade
Representative was in part a response to this concern. In
the EC the agricultural Council of Ministers has been
characterized as a group of ministers for agriculture, thus

leading to a bias in policy making.

72

In both the U.S. and the EC, the farm interest groups
have managed to maintain a hold over the political process
quite incommensurate with their relative contribution to the
economy overall. Their evolution is an interesting lesson in
institutional innovation at the political level, especially
in the U.S.. One of the main differences that had occurred
in the political process from the time of the Kennedy Round
to the Tokyo Round was the "shift from representative to
participatory democracy" in the wake of Vietnam and
Watergate. Within the government there was an attempt to
make all transactions more public, while at the same time,
the Congress became more fractured with a corresponding
dispersal of power amongst its members. The response amongst
the farm interests was acceleration in the decline in the
power of the general farm organizations and the rising
prominence of the "single interest" commodity groups
(Bonnen, 1984, pp. 62-65).

When these factors are considered together in the
context of agricultural trade negotiations, it becomes
clearer why a free trade economic rationality has not always
won out. Serious attempts have been made within GATT to
address the fundamental issues facing world agriculture, but
it is domestic political realities that have dominated
outcomes. In answering special interest concerns it is more
likely that more protectionist, rather than liberal, trade

measures are instituted.

73

It can be seen that the combination of small
institutional changes in decision making processes and
movements in long term economic forces have led to what
changes in outcomes have occurred, as predicted by Petit. A
closer examination of domestic policy processes should
indicate the relative influence that can be brought to bear
when attitudes and positions of key organizations and
individuals are modified.

By revealing some of the elements that make up the
"black box" of political bargaining, it may be possible to
indicate future directions of policy from an examination of
the policy process itself. With this in mind, attention is
now turned to this subject by way of a more detailed
consideration of the agricultural negotiations of the Tokyo

Round.

CHAPTER FOUR
THE U.S. PUBLIC DECISION PROCESS FOR

AGRICULTURAL TRADE NEGOTIATIONS

4.1 The Actors

In the previous chapter the details of the Tokyo Round
of negotiations were described from the perspective of the
participation of the U.S. and the EC. In the description,
decisions taken were credited to the "U.S." or the "EC" as
unitary decision makers, in the manner of Allison’s Rational
Actor model. The aim here is to develop that analysis beyond
such a simple conception of the decision making process.

In order to do that, the different actors that make up
the "U.S." or the "EC" must be identified. In this chapter
the organizations that make up the U.S. policy making
environment will be outlined, after which the events of the
Tokyo Round will be analyzed by placing these actors into
Allison’s second and third models. There can be no
generalized or systematic description of the individual
high-ranking officials that form part of the Governmental
Politics approach, since they are particular to specific
events in time. Therefore specific references to this class
of actor will only be made as called for in the analysis of
the case study events themselves. Here the purpose will be
to outline the organizations that are the subject of
analysis under the Organizational Output approach. The

description of these organizations and the events of the

74

75
Tokyo round outlined throughout the chapter are based
primarily on the interviews conducted with participants, but
also on the secondary materials as cited. Where there are no
citations, inferences have been drawn from the interview
material and are generally only included if they were

corroborated from at least two sources.

4.1.1 The Presidency

The President. is 'the. closest approximation of
government as a unitary decision-maker. But it is
immediately obvious that his ultimate decisions are based on
the advice received through a number of coordinating
mechanisms and channels. These exist both inside the White
House and with other agencies.

The area of agricultural trade policy falls under the
broader classifications of foreign economic policy and even
foreign policy. It is therefore important to consider the
mechanisms that exist to service these wider constituencies.
Certain elements such as the Office of the Special Trade
Representative (STR, which later became the Office of the
U.S. Trade Representative; USTR) and the Council of Economic
Advisors (CEA) remained constant over the period of this
study, and are dealt with last. However other forums came
and went under the three administrations that were occupied
with the Tokyo Round.

President Nixon created the Council on International

Economic Policy (CIEP), headed by an assistant to the

76

President for international economic affairs, as his
principle policy forum in this area. CIEP’s mission was to
provide "a clear top-level focus for the full range of
international economic policy issues," and to "deal with
international economic policies (including trade,
investment, balance of payments, and finance) as a coherent
whole" (Williams Commission, p. 278). With a large mandate
and a correspondingly large staff, CIEP ‘was viewed as
unwieldy, competitive for turf, and in business for itself.

President Ford shifted the focus of coordination to the
Economic Policy Board (EPB), a smaller group where numbers
were contained mostly to five key cabinet-level participants
with a staff of four that met frequently amongst themselves
and with the President. The strong link to the President
accounted. for' much. of its ‘better’ ability' to coordinate
issues than had been the case in CIEP (on whose staff the
EPB nonetheless had some reliance).

With the Carter administration, the CIEP went out of
existence and the EPB was replaced by the Economic Policy
Group (EPG). This was conceived on similar lines to the EPB,
but very rapidly came to include many more participants at
both the cabinet and staff levels. With meetings of often
over thirty participants, the President seldom involved
himself with the group and relied more on the coordinating
and facilitative role played by his Domestic Policy Group

(DPG), which would review much of the output of the EPG.

77

Under these top-level committees, the 1962 and 1974
trade legislation had provided for interagency review
mechanisms up to the cabinet level. For the Tokyo Round,
with passage of the 1974 Act, this took the form of the
Trade Policy Committee, chaired by the Trade Representative,
at the Cabinet level. The relationship of this committee to
those described above varied over the course of the

negotiations, as will be described below.

The Council of Economic Advisors

The importance of the role played by the Council of
Economic Advisors (CEA) is often circumscribed by the nature
of the other policy coordinating mechanisms employed by the
president as described above. In the agricultural sphere it
is further defined by the personality of the agricultural
economist on, the. Council and. his relationship ‘with the
Chairman, whose sense of the priority to be given
agriculture is also important. In form, the role of CEA did
not change over the period of analysis, but the substance of

its contribution changed for the above reasons.

The Office of the U.S. Trade Representative

The above title was created by the 1979 Trade
Agreements Act. Previously this position had been "the
Office of the Special Representative for Trade
Negotiations," and prior to that, simply "the Special Trade

Representative (STR)." The increasing grandeur of the title

78

reflects the increasing importance that the position has
played over time. The position was originally created under
the 1962 Trade Expansion Act to invest in a single official
responsibility for the Kennedy Round of negotiations. The
creation of the CIEP under Nixon created a conflict between
the two as to who had the lead role, and following much
political wrangling, STR was given "Office" status under the
1974 Act and CIEP gradually became subordinated to Ford’s
EPB (Destler, pp. 154-55).

At the conclusion of the Tokyo Round it was felt that
there was a further need for reorganization of trade
responsibilities given the moderate performance of Carter’s
EPG and the success of STR. There was talk of creating a
Department of Trade, but this never materialized. Following
the demonstrable success of STR both in the Tokyo Round and
in concurrent. domestic ‘trade complaints cases, the
reorganization invested increased responsibilities within
STR and providing it with the new name, the Office of the
United States Trade Representative (USTR) . This reflected
the fact that its functions now extended beyond trade

negotiations and into all areas of trade policy.

4.1.2 The Congress

As one congressman has observed, "Congress is a
collection of committees that come together in a Chamber
periodically to approve one another’ 8 actions" (cited in

Allison and Szanton, p. 103). The main action does not occur

79
on the floor of the House or of the Senate but in the
various committee rooms and conference committees where a
few congressmen debate the details of legislation. A number
of committees are important in the development of trade
policy in general and agricultural trade policy
specifically.

In terms of multilateral negotiations within GATT the
key committees are the Ways and Means Committee in the House
and the Finance Committee in the Senate. Under the 1974
Trade Act each committee had five advisors to the MTN. Both
of the committees also have Trade Subcommittees where the
primary responsibility for oversight of the negotiations
lies. The advisors to the MTN were chosen from both the
main committees and the subcommittees.

In terms of agricultural trade issues within the GATT
negotiations, final congressional responsibility lies with
these committees. However the Agriculture committees can be
actively involved in the negotiations, and they have their
own agricultural trade or foreign agricultural policy
subcommittees. Members and staffers of these committees were
actively involved in the interagency review process and
often travelled to Geneva to testify throughout the course
of the Tokyo Round. The influence of these committees on the

outcomes for agriculture can be large.

80
4.1.3 The Executive Agencies

Almost all departments had some stake in the Tokyo
Round. However the size of stakes involved varied
enormously, both in absolute terms and in relation to
particular issues that arose. The Agencies that could be
said to have had a stake in all aspects of the negotiations
were State, Treasury and Commerce. Other agencies were
important to certain issues, but for the purposes of this
research, it will be sufficient to focus on these three. The
Department of Agriculture (USDA), of obvious importance,
will be dealt with below.

Up until the time of the Kennedy' Round ‘the State
Department had the lead role in GATT negotiations. The honor
had been conferred as an apparently logical outgrowth of
State’s role in conducting foreign policy. However with each
round of negotiations various groups began to complain that
their economic interests had. been subordinated, at
considerable expense, to overall strategic foreign policy
goals. For example, in agriculture during the Dillon Round
many believed that the U.S. had not been tough enough in
trying to limit the trade restrictive aspects of the EC’s
farm policy. It was believed this weakness had occurred
because State did not want to slow the development of the
Community, which it considered important to overall U.S.
strategic foreign policy goals.

Whether strategic versus economic foreign policy goals

should dominate one another is open to debate, but it became

81

clear that both at least should have an equal chance to be
heard and judged. It was such consideration that led to the
creation of the Special Trade Representative within the
neutral ground of the Executive Office, and the consequent
diminution of State’s role. Logistically State’s role
remained strong for two reasons: its foreign service
officers constituted the majority of the participants
actually in Geneva or seconded to STR, and it controlled the
official communications channels between Washington and
Geneva. However, the former aspect was weakened under the
1979 reorganization when Commerce was granted authority to
organize and administer the U.S. commercial attaches
stationed overseas.

The Treasury Department, with its traditional role of
conducting overall economic policy has always been keenly
interested in countering State’s stature in the conduct of
trade negotiations. Treasury furthermore was charged with
the implementation of a number of aspects of trade policy.
The most important of these certainly over the time period
under consideration was imposition of countervailing duties
in unfair trade practice disputes. However Treasury has been
traditionally staffed and administered by economic purists
with considerable leanings towards a free trade or laissez
faire doctrine. It was precisely this laissez faire approach
that led to charges of a reluctance to impose duties, with

the result that under the reorganization of trade

82

responsibilities pursuant to the 1979 Act, this area was
given over to the Commerce Department (Destler, p. 208).

Prior to this time the Commerce Department had not had
very much leverage to represent fully its constituent’ 5
views in the trade policy arena, the principle action
revolving around a State/Treasury axis governed by
presidential mediation. Commerce was usually represented in
the various White House cabinet level forums outlined above,
but apparently with less absolute influence than State or

Treasury.

The erertment of Agriculture

In terms of agricultural issues, USDA is the flag-
holder for constituent interests. Within USDA trade policy
issues have been dealt with by the Foreign Agricultural
Service (FAS), since its inception in 1954. Created with the
specific mission of increasing U.S. agricultural exports,
FAS became the center of trade expertise on agricultural
matters, and thus could be considered in this respect suited
to the role of international negotiator. And in fact FAS
gained that very authority within the GATT negotiations.
Before the creation of STR, State had been required to
acquiesce to joint negotiation of agricultural trade policy
with FAS, and once STR was created, it too shared the
spotlight with FAS despite on paper having the clear lead in
negotiating authority. USDA also holds responsibility for

implementation of other aspects of agricultural trade

83
policy, such as Section 22 of the Agricultural Adjustment

Act.

4.1.4 The Interest Groups

Amongst agricultural interests there are two distinct
forms in which they are represented. These are the general
farm organizations and the commodity groups. The former date
back to the Grange and include most importantly the Farm
Bureau. Other newer, but less influential, organizations are
the National Farmers Union, the American Agriculture
Movement and the National Farmers Organization. General farm
organizations have over the years had an immense amount of
influence on agricultural policy. They have had a strong
presence in Washington and developed close ties to USDA and
the agriculture committees in the Congress.

In more recent years, the single-interest commodity
groups have risen in prominence. This has occurred because
of concurrent trends in agriculture and in the political
process. As increasing specialization has occurred in
agriculture, a farmers’ interests are more often better
served by an organization that represents solely the
farmers’ principle production enterprise. At the same time
that these commodity groups were emerging, the political
parties were in continuing decline, resulting in a
fragmentation of the political process. A key force in this
was the reform over the 1970s of electoral and party rules,

as well as the rules of Congress, as access to individual

84

politicians became more important than allegiance to and
backing of a party. The commodity groups have been able to
target their efforts on key politicians that could be
identified specifically with their narrow interests, often
through political action committees, while the general farm
organizations have struggled to maintain influence over a
wide range of interests.1

Most observers would agree that since the early 19705,
these groups have had greater influence on agricultural
policy than the general farm organizations. Both types of
organization were important in the Tokyo Round through their
lobbying particularly of USDA and Congress, but also of STR
and the White House. The other interest groups affected by
agricultural trade policy, namely consumers and taxpayers,
as in most areas of political decision-making, have been

poorly represented in the trade negotiation process.

4.1.5 Actor Interactions

Before proceeding to the detail of the case study, a
brief outline will be given of the mechanisms for dialogue
between decision process participants, as they existed
during most of Tokyo Round following enactment of the 1974
Trade Act. The Act provided. mechanisms for interagency
coordination and for government/private interest

interactions.

 

1. For a discussion of both the evolution of the farm
groups and the changing nature of the political process, see
Bonnen, 1980 and 1984.

85

The 1974 Act refined the interagency policy
coordination mechanism that had been established under the
Trade Expansion Act of 1962. The Trade Policy Committee was
established as the top tier of a three tier structure,
meeting at the cabinet level with individual secretary
participation dependant on the particular issues under
review. Issues rose to this level only when not resolved at
the lower levels. Beneath this committee was the Trade
Policy Review Group which meets at the Assistant Secretary
level to review those issues that have not been resolved at
the most junior level of interagency coordination, the Trade
Policy Staff Committee. This committee is comprised of
agency representatives at the office director level. Given
the breadth of trade policy, this staff level committee is
further broken down into subcommittees and taskforces. At
the conclusion of the Tokyo Round there were seven
geographic subcommittees, twenty five functional
subcommittees and eight taskforces at the technical working
level (Rossmiller, pp. 166-167). Of greatest importance to
agricultural interests in the context of the negotiations
were the subcommittees for Agriculture, Agricultural
Commodity Agreements, and Antidumping and
Subsidies/Countervailing Duty Measures. Also important were
the subcommittees for Licensing Code/Quantitative
Restrictions, and Western Europe, and also the EC

Enlargement Taskforce.

86

The 1974 Act also established committees to provide a
formal channel of communication between the government and
private interests. There is a presidentially appointed
Advisory Committee for Trade Negotiations to oversee and
input to the overall progress of the negotiations. In
addition there are committees representing industrial,
agricultural and labor interests. In the agricultural sphere
there is a policy committee and eight technical committees.
The membership of the Agricultural Policy Advisory Committee
(APAC) is made up of producers, processors, traders and
consumers. The Agricultural Technical Advisory Committees
represent the interests of the principle agricultural
commodities: cotton, dairy, fruits and vegetables, grain and
feed, livestock and livestock products, oilseeds and oilseed
products, poultry and eggs, and tobacco.

It is within all of these structures that the various
actors within U.S. agricultural trade policy decision making
are mandated to operate. The analysis below will outline the
extent to which these mechanisms actually influenced policy

outcomes over the course of the Tokyo Round negotiations.

4.2 An Organizational Output Approach
4.2.1 Analysis of the Tokyo Round

From the U.S. perspective, once it had been agreed
internationally to pursue a new round of negotiations, the
most immediate concern was passage of trade legislation that

would enable the President to enter into negotiations. The

87
major agricultural issue was whether negotiations should be
conducted across the board or on a sector by sector basis,
and, indeed, whether this aspect should be legislatively
decided.

The administration, through STR, wanted maximum
flexibility, while other interested groups expressed their
views directly to Congress. Industry feared that across the
board negotiations would lead to industrial concessions at
home for the sake of making a breakthrough on access for
agricultural exports. Agricultural interests were split
between import competing sectors and the exporting sectors.
The National Livestock Feeders Association and the American
Farm Bureau, in meetings with USDA, expressed the view that
agriculture had been "sold down the river in previous
negotiations" because of a sector by sector approach, and
therefore pushed for across the board negotiations. The
National Milk Producers Federation (NMPF) sided with
industry, worried that in an across the board negotiation
their quotas on imports might be ransomed for access
concessions from other countries.

What finally emerged was a compromise position.
Industry and the dairy sector had their way in the House
with passage of the Karth amendment which provided that the
nontariff barrier agreements "shall be negotiated, to the
extent feasible, on the basis of each product sector of

manufacturing and on the basis of the agricultural sector."

88

In the Senate, the Finance Committee sided more with STR and
the agricultural exporters and incorporated a compromise
wording that became the law. The Karth amendment was
qualified by the phrase, "to the extent consistent with the
objective of maximizing overall economic benefit to the
United States." Also a clarification was added with respect
to agriculture: "to the maximum extent feasible,"
agricultural trade liberalization "shall be undertaken in
conjunction with" industrial trade liberalization (Destler,
pp. 157, 178-179).

One further agricultural issue arose in connection with
the Trade Act. This concerned the manner in which any
negotiated nontariff barrier agreements were to be
implemented. Again the dairy sector, this time joined by the
livestock sector, were afraid of having their import
protection. bargained away. They thus *wanted. Congress to
maintain some oversight over implementation of any
agreements, so as to protect themselves since they exerted
some influence over congressional outcomes. This view was
similarly shared by industry creating a significant pressure
on Congress. The provision was included in the bill, but in
such a manner that it would have been extremely difficult
for Congress not to have implemented agreements concluded by
the President.

From where had such fears in the agricultural community
arisen? The National Milk Producers Federation, in making

its case cited the results of the so-called "Flanigan

89
report. " This was a study that had been conducted at the
request of Peter Flanigan, the chairman of CIEP, by FAS
within the Department of Agriculture. Although the study was
designed to look at alternative scenarios of possible
outcomes of the negotiations for agriculture, it implicitly
sided with a proposal for removing import barriers that
largely served to protect the U.S. dairy and livestock
sectors in exchange for access to European grain markets.

The report claimed three potential gains from such a
course of action: improvement in the balance of payments:
reduction in government expenditure: and a significant
increase in farm incomes. Exports would rise by $9.5 billion
and imports by $1.3 billion giving an improvement to the
balance of trade of about $8 billion (Flanigan Report, p.
10). However the increased imports would be almost entirely
in the dairy sector, resulting in what NMPF secretary
Patrick B. Healy testified would be the "studied destruction
of the American dairy industry" (Destler p. 176).

How had an agency such as FAS managed to upset its
constituency so much? The Tokyo Round of negotiations was
the first time that nontariff barriers had been so
explicitly dealt with in agriculture. In previous rounds,
the kind of analysis that FAS had been used to submitting
had been rather drier fair concerned with the impacts of
different levels of tariff cuts on individual commodities.
This was the first time analysis had been conducted in the

GATT context with an emphasis on domestic policies and thus

90
such a strongly political dimension. In pursuing its
standard operating procedures for conducting analysis, the
results were presented straightforwardly, and FAS failed to
recognize the considerable political impact of the report
siding so strongly with one position in their findings.

The impact this incident had on passage of the Trade
Act was small compared to the long lasting effect it had on
the way USDA, and FAS in particular, conducted themselves in
the negotiations as they got underway. While publicly
standing tall and acknowledging that Section 22 quotas might
still be subject for negotiation, in private dealings with
the agricultural interests, the Department was at pains to
assure that the report did not constitute an administration
position, but was just one possible option. In so doing, the
possibility of this option ever becoming the USDA position
was effectively ruled out.

With passage of the 1974 Act and the establishment of
the advisory committees, USDA avoided further discomfort in
their dealings with constituents by relying, without
resistance, on the advice proffered in the meetings by the
commodity groups. They especially listened to the NMPF from
then on. Thus the events can be seen as having been shaped
by the rigidity of FAS’ goals and operating procedures.

Putting this episode behind, the administration was now
charged with focusing on concrete work within the Geneva
negotiations. This did not prove to be any easier, with the

administration appearing to be caught between a rock and a

91
hard place. On the one hand, USDA wanted to reaffirm its
market oriented approach but did not want to further offend
the commodity interests. On the other hand, amongst the
agencies there were differences of opinion as to the overall
approach to take for agriculture.

One of the first issues where this became apparent was
in grain policy. There was at this time growing pressure
from third world countries for the establishment of
international grain reserves, a concept that was logically
subscribed to by the State Department, in the context of its
overall foreign policy goals. Should such a policy
initiative be pushed under the auspices of GATT or the IWC?
STR thought GATT was appropriate, since concessions on
grains could be traded in other parts of the negotiations,
while State and Agriculture sided for the IWC. Inclusion of
the Soviet Union, not a GATT member, was one obvious reason
shared by both. Further State felt the less developed
countries would appreciate the gesture of operating in the
IWC, under UNCTAD auspices, where it was perceived they had
a larger say than in Geneva under GATT. Agriculture did not
want the tOpic discussed under GATT for precisely the reason
STR wanted it: USDA did not want to lose leverage on other
agricultural issues. STR was outnumbered and the talks were
proposed for 'London under the IWC, although informational
discussions continued in the GATT (Destler, p. 88-96).

With talks initiated under this forum, attention was

then focused on remaining agricultural issues that could be

92

addressed in the GATT. Here the basic differences in country
approaches began to emerge: the U.S. wanted agriculture to
be treated no differently than industrial goods, whereas the
EC clearly wanted a separation. This is how it appeared in
Geneva, but such a U.S. position resulted from the differing
inputs of a number of organizations, many of whose positions
have been stated above.

State was still pushing for global negotiations, and
elements of USDA were also. But after the Fianigan affair
FAS was taking a low profile approach, and listening hard to
the advice of the technical committees that were divided on
commodity lines. While STR had the lead role in
negotiations, in terms of technical expertise and therefore
negotiating back-up, they were very dependent on USDA and
FAS in particular. Thus with FAS not strongly pushing
overall negotiations, and the EC very much holding to their
view that the negotiations should be separated out, it was
easy for a gradual acquiescence toward the European
approach. By the time the Trade Bill had been passed and
meaningful negotiation could begin, the U.S. was ready to
accept setting up subgroups in GATT to deal with the three
major commodity areas.

Acquiescence to the EC was not total, since there was
still within USDA and STR a resistance to contemplation of
commodity agreements or market sharing schemes. Thus most of

1975 was spent in arguments between the U.S. and the EC on

93

just exactly what issues the subgroups were competent to
address.
In an attempt to break the deadlock in 1976, talks focused
on those commodities outside these groups for which adverse
trade effect findings had been reported in the initial
stages of the negotiations. By the end of the year many
bilateral and plurilateral consultations had been
communicated to all participants. However "the exercise was,
of course, essentially one of notification, examination and
dialogue, with no commitment as to how or where the actual
negotiations would be undertaken" (GATT, 1979, pp. 22-23).

With the 1976 election results came a change from a
Republican to a Democratic administration as Jimmy Carter
took over the Presidency. Immediately, timing became a key
influence, with negotiating authority due to expire within
the lifetime of the new administration, just two years away.
In order to achieve any success in the negotiations as a
whole, the deadlock in agriculture had to be broken. With
less of a commitment to free trade ideology, the Democrats
were able to take a major change in policy direction: they
agreed to talk with the EC about the possibility of
arranging commodity agreements. This created a major storm
in Europe, with the Europeans being completely caught off-
guard. In the U.S. there was some reorientation of goals and
objectives such that the agencies involved had to adapt to

new ground rules .

94

It was agreed that the work on grains should continue
to be conducted under IWC auspices entirely for the time
being, and so the GATT grains subgroup ceased to meet, many
of the participants simply relocating to London. The same
U.S. agencies that had been involved in the original food
reserve proposal debate took up positions again over the
grains talks. However this time there was considerably more
consensus. Further since the talks were outside GATT, lead
responsibility was given to USDA. What emerged as a U.S.
position was mostly consistent with the Department of
Agriculture position: there was to be no talk of market
sharing, but an attempt would be made to conclude a buffer
stock type of wheat agreement, with specific stockholding
and price trigger requirements. All agencies agreed that
feed grains be excluded, as their was little to be gained
there from the U.S. perspective. However it was agreed that
feed grains might be covered by a convention without
economic provisions.

How was it that just by changing the administration,
there appeared to be so much more harmony among the
different agencies’ approaches to the agricultural
negotiations? One significant common goal had been
established: the negotiations Ihad. to Ibe concluded. in a
manner that would be seen as a success for the incoming
administration: there was very little time to do it in, and
therefore agency differences should be kept to a minimum. In

spite of what parochialism inherently existed, after a

95
period of indirection, most organizations were willing and
able to get behind a common goal. There was little need to
change the nature of agencies’ day to day operations: rather
just a reorientation of policy perspectives to accompany any
analysis conducted.

One factor that aided smooth progress was the
delineation of responsibility for particular commodity
areas. During the Nixon/Ford period State had been very
involved in grain policy formulation and had thus forced
some mediation by STR. Now however, with some encouragement
from STR, State concentrated on sugar negotiations, leaving
Agriculture to deal with grains. STR was thus happy and able
to take a back seat on both.

Long term economic factors had also had an influence on
actors’ perceptions of the stakes involved. The disharmony
within the. Nixon. and Ford .Administrations ‘was. partly a
reflection of the unstable and depressed nature of the world
economy. The uncertainties that had been created between
1971 and 1973 by the move to floating exchange rates, world
food shortages and the oil price shock, heightened the sense
of what was at stake in the negotiations. An adverse and
uncertain world led agencies to play their cards closer to
their chest and rely more heavily on standard responses to
situations. In contrast, by the time the Carter
administration arrived, the monetary system had somewhat
stabilized or at least people had got used to its new

behavior, commodity markets had become more predictable with

96

prices returning closer to historical levels, and the impact
of higher oil prices had been figured into peoples’
expectations. Although inflation continued to be a problem
this could at least be factored into calculations of
negotiation strategies. In this more stable environment the
stakes in the negotiations seemed and indeed perhaps had
become less critical in absolute economic terms. Thus the
perceived value of differences among constituent interests
diminished in intensity, making for smoother working
relationships.

In the agricultural negotiations FAS was able to
concentrate on the familiar details of the offer and request
procedures of the tariff negotiations that now got underway
seriously. Parts of the nontariff negotiations, mostly over
quotas on specific commodities outside the three main
groups, also were included in these negotiations. As
progress was made on these items the sense that the
negotiations could be made a success slowly began to
surface.

However the success that was perceived in this more
traditional area of the negotiations helped to create an
impression that failure to make substantial progress on the
more contentious nontariff barrier issues would be more
easily accepted. Thus the negotiations in the dairy and
meats subgroups became more of a face-saving operation, from
STR’s and even FAS’ perspective, than a serious attempt to

resolve the fundamental economic issues. This was

97
particularly so, since at this stage it was still believed
by all agencies that a meaningful wheat agreement could be
concluded, which would be the crown of the agricultural
negotiations.

It was because of these attitudes that, for the first
time in the negotiations, the U.S. delegation did not table
concrete proposals or counter-proposals. The proposals for
dairy were submitted by the EC and New Zealand while the
meat proposals were submitted by the EC and Australia. In
the grains negotiations however, the U.S. was at the
forefront since it was still believed there was a lot left
to play for.

Thus the negotiations drew to a close with a reasonable
consensus within the U.S. government on what could or should
be achieved. The provisions of the Dairy and Meat agreements
were primarily of a consultative nature, and therefore would
not offend the economic interests of any agencies’
constituents. A consensus also existed between STR and USDA
that the differences that remained between the EC and the
stated U.S. position over the wheat agreement were
sufficiently large to justify admitting failure in this
area. Enough had been achieved elsewhere, as well as in
other agricultural areas, for the negotiations to be
considered a success overall.

Throughout this active period of negotiation under the
Carter Administration, the interest groups had voiced their

concerns in the political and technical advisory committees.

98

The working relationships between the groups and their
government counterparts continued to be as good as they had
been under the Republican administrations. Relations were
good, even though the advice of the interest groups was not
so blindly heeded, because in very few instances were U.S.
interests going to lose out under the new administration’s
approach. Also, the groups were listened to without any
direct feedback being provided as to where their concerns
ranked amongst the administration’s priorities. If a group
did not feel it was getting heard it could always try and
influence the process in another way. This usually meant
making its case to Congress. Over the course of the
negotiations only two organizations, the National Milk
Producers Federation and the National Cattlemans’
Association felt compelled to do this formally.

STR had specific responsibility for the subsidy
negotiations which included their impact on agriculture. The
position taken over the treatment agriculture should receive
under the Countervailing Duties and Subsidies Code was
shaped in part by one other development in the agriculture
group negotiations. While recognizing that many agricultural
issues had been unresolved, USDA and STR also realized that
:many good working relationships had developed amongst their
own officials and between other countries’ officials
including those from the EC. It was thus felt that there
could be a profitable continuation of dialogue after the

:round was concluded, that might aim to resolve some of these

99

issues. Thus STR did not push as hard as it might to bring
agriculture more fully under the stricter disciplines of the
code. It was felt that this could be the subject of future
discussions, since it was not worth risking losing the whole
code for the sake of agriculture when the U.S. negotiating
deadline was so rapidly approaching. Thus the U.S., through
both USDA and STR, pushed for what became the Multilateral
Agricultural Framework. In turn this led to the creation of
the GATT Committee on Trade in Agriculture, which provided
an appropriate forum for some of the preparatory work now
being discussed for the new round.

With. the negotiations. in. Geneva. concluded. all 'that
remained was the passage of the requisite implementing
legislation. Because of excellent relationships between STR
and Congress throughout the course of the negotiations, what
had been agreed to in Geneva was, almost without exception,
already known to be acceptable to the “Congress. Thus the
1979 Trade Agreements Act went through what participants
termed "nonmarkups" in the Finance and Ways and. Means
committees, follow by a "nonconferance" between them, before
proceeding to an almost unanimous vote of approval: 395 to 7

in the House and 90 to 4 in the Senate (Destler, p. 202).

4.2.2 Adequacy of the Framework
The foregoing analysis illustrates how expanding the
conception of government as a unitary decision maker to

include both politicians and bureaucrats as distinct classes

100

of actors adds considerable depth to policy outcome
explanations. The strategies followed in the Tokyo Round
negotiations were clearly not the outcome of a single line
of logic or point of view, but resulted from the mix of
ideas and orientations of a number of different
organizations. Each had a particular input to the whole that
emerged.

The analysis permitted the explanation of how it was
that a change in the U.S. position in the negotiations could
occur, while at the same time the day to day operations of
most participants were little changed. As Allison notes, the
framework, as well as providing new answers to the same
questions as raised before, asks a whole set of new
questions also.

One factor that emerges is the strength of the
hypothesis that domestic policy considerations constrain the
options open for negotiation of international trade policy.
By viewing government as a unitary decision maker this is
less than apparent, but when the goals of different
organizations are addressed it becomes more obvious. The
Operation of domestic USDA programs had an effect on the
latitude of approaches that were available to negotiators.

While many new questions have been raised and addressed
it will be seen that further insights can be gained by
subjecting the events of the Tokyo Round to an analysis
using Allison’s third or Governmental Politics model as the

basis.

101
4.3 A Governmental Politics Approach
4.3.1 Analysis of the Tokyo Round

A closer examination of the dynamics of Tokyo Round
events that this framework allows, will reveal additional
insights into how final outcomes were reached and what their
primary determinants were. One of the first issues that
arose was the position taken by USDA in and over the
Flanigan report. In the analysis above it was easy to see
how this situation created an awkwardness for the
administration, but it does not explain how this was allowed
to occur. An examination of the personalities involved does
point to an explanation.

The report had been prepared as an internal document
for use by CIEP. The report’ s coordinator, Howard
Worthington, Associate Administrator of FAS, philosophically
agreed with the free trade orientation of the report.
However the content of the analysis went against the grain
of many peoples’ orientation at FAS, so it was not
altogether surprising that the report ended up in the hands
of Senator Hubert H. Humphrey, Chairman of the Senate
Agriculture Subcommittee on Foreign Agricultural Trade. Once
Humphrey made it public by placing its contents in the
Congressional Record, the administration, with USDA in
concurrence, disavowed the report saying that it was in no
sense an administration position (Saylor, p.260). FAS was
thereby placed back in a more familiar light with their

constituents. It also served Humphrey’s purpose of being

102
seen to protect his constituents, who happened to be similar
to if not the same as those of FAS. Worthington later left
FAS to join closer philosophical soulmates in the Treasury
Department.

That the White House so vehemently disowned the report
was in some sense due to the overly cumbersome nature of
CIEP. While the report may have said what Flanigan wanted,
the sheer number of people involved in the council made it
difficult to reach consensus in its meetings. As one
observer noted, at a CIEP meeting to discuss agriculture at
around that time there were fourteen people present: one
each from Agriculture, State, Treasury and Commerce, and
then ten from the White House!

In order to understand how STR was preempted on where
grain. reserve negotiations ‘were to Ibe conducted, it is
necessary to consider who the principle players were in each
agency.' The key here, was the role played by Henry
Kissenger, then Secretary of State, who considered the issue
a useful and important way of reestablishing credibility
after the 1973 soybean embargo, where State had been
preempted by George Schultz at Treasury. Thus Kissenger took
the initiative by announcing at a speaking engagement that
an administration reserve proposal would soon be tabled,
despite the fact that there had been no inter-agency
discussion of the issue up to that time. Such action forced
‘the issue onto USDA’s agenda, which would have preferred not

to deal with reserve stock proposals at all, since this

103
would have backed up the EC commodity agreements approach to
the MTN. But having been preempted, USDA was more prepared
to side with State and call for talks under the IWC, than
allow STR to have the talks conducted under GATT.

Thus Kissenger, following his parochial interests and
using his undoubted influence with the President, was able
to set and dominate the agenda for discussion of the issue.
Secretary of Agriculture, Earl Butz, siding with Kissenger
rather than fight the issue, was thus better placed to
influence the final outcome of the proposal than if USDA had
opposed State from the start. And in fact, the final
proposal submitted to the IWC was a watered down version of
State’s original intentions that better suited USDA’s goals
(Destler p. 95).

Attention was then turned to events in Geneva. The
position taken by STR over procedures and coverage as
outlined above, with its apparent indecisiveness, was
further compounded in agriculture by feuding amongst some of
the senior administrators at FAS. There was no great
pressure from above to remedy the inherent lack of
direction, since this fitted well with White House goals at
that time. A presidential election year was approaching, as
well as elections in Germany and Japan. It was inevitable
that no substantial agreements could be concluded in the
time remaining before the elections. Any tentative
agreements that were reached could easily be undone by a

change in administration. Thus until the elections were

104
resolved there was little incentive to push hard on
difficult issues: let the next crowd handle it, and if it
was going to be the same people, then after the election
would be the appropriate time.

After the election, as the Carter team began to fill
vacated offices the sense of listlessness became apparent.
Upon entering FAS, the new administration officials were
quite candidly told by senior staffers that their presently
available staff resources were being underutilized at that
time. Further, in trying to establish what policy positions
had been adopted within the agency with regard to the
negotiations, the picture that emerged was that the only
policy direction as such was that which was provided by the
commodity groups through the technical advisory committees.

The new attitudes to change all this that began to
prevail were as much a reflection of one man as anything
else. Putting such a political "supremo" as Robert S.
Strauss in the position of Special Trade Representative
indicated to the world that the administration meant
business in the negotiations. Strauss had been chairman of
the Democratic National Committee for the previous five
years. Only a person with such undoubted public standing and
professional reputation could, as one participant recalls,
in an early meeting with his European counterparts intone "I
didn’t get rich being stupid: let’s cut a deal," and be

respected for it. Such a pragmatic approach was to invade

105
all levels of the U.S. decision making process, and thereby
to a large extent the negotiations themselves.

The clout that Strauss embodied enabled him to dictate
to an extent the direction and policy content of the
negotiations. Approaches were put forward for agriculture by
Strauss that were often news to most if not all of USDA and
FAS. Staffers have noted that the initial list of
agricultural commodities over which agreement was necessary
for a successful negotiation that Strauss presented to the
Europeans, had not been openly debated amongst the U.S.
agencies. At least if the top officials were being
consulted, they were not indicating this to their staffs.
Strauss’ personal standing, within the administration and
especially with the Congress, enabled him to behave in this
way.

But as noted, it was a sense of pragmatic teamwork that
established itself rather than dictatorship. This could not
simply be ascribed to newly shared common organizational
goals. To a large extent it was due to the personalities of
the people involved in the various agencies. By luck or
design, or a combination of the two, there soon developed
mutual respect amongst the key administrators, and amongst
different agency staffs. Strauss was the apex of this, given
his undoubted access to the President and the force of his
personality and reputation. His task was to get deals made,
often leaving the details to others since he acknowledged

that his trade expertise was limited. Within STR, in most

106

instances on agriculture, Strauss was happy to delegate
authority in Washington to his deputy STR. This was Alan W.
Wolff, who served as a source of continuity and
institutional memory within STR, having survived from the
Republican administrations. He developed strong working
relationships with his chief counterparts in State,
Agriculture, and to a lesser extent Treasury. These were
respectively, Julius L. Katz, State’s long time commodity
specialist, now Assistant Secretary for Economic and
Business Affairs, Dale E. Hathaway, Under Secretary of
Agriculture for International Affairs and Commodity
Programs, and C. Fred Bergsten, Assistant Secretary of the
Treasury.

Hathaway himself was in a somewhat unique position in
that the Secretary of Agriculture, Bob Bergland, a former
Minnesota congressman, was neither that interested in or
knowledgeable about trade and thus delegated most of the
responsibility for the negotiations to Hathaway. Hathaway
also developed strong working ties, as did Katz, with Jim
Starkey who was the assistant STR for agriculture. Starkey
had previously been director of Trade Operations at FAS and
thus had the confidence of that agency. While the inter
agency committee procedure functioned smoothly and usefully
over this period, a lot of the key inter agency negotiations
were handled strictly between these three. It was this close
personal rapport that enabled the delineation of

responsibilities over the grain and sugar negotiations.

107
While each agency might have had organizational goals that
would direct them to protect turf and be involved in both,
Katz and Hathaway, who were already friends of many years,
were able to get each organization out of the other’s way.
Katz personally was the greater sugar expert and Hathaway
knew the grain markets better.

The backgrounds of the individuals involved also
ensured a good relationship with the congress. From STR’s
perspective, there couldn’t have been anyone more suited
than Strauss. At State, Katz by virtue of his long track
record there, had mustered respect on the Hill. Within USDA,
Bergland as a former Congressman was well suited for
dealings with Congress, as was his Administrator of FAS, Tom
Hughes, who was part of the Minnesota political scene. The
Deputy Administrator of FAS, Thomas R. Saylor, had worked on
the Senate Agriculture Committee for Hubert Humphrey for the
previous four years, and thus had a good rapport with and
many contacts in the Congress.

Despite the apparent harmony at home the picture in
Geneva was not quite as rosy for two reasons. The most
obvious reason was that the EC were still tough negotiating
adversaries, despite the shift towards their position by the
U.S.. This was further compounded by a less than harmonious
relationship between the STR and agriculture representatives
present. The Deputy STR in Geneva, Alonzo L. McDonald, had
taken to heart the idea of coming round to the EC position

considerably more seriously than anyone else. This made it

108
difficult for the senior FAS representative present, Ernest
Keonig, to pursue a course for agriculture consistent with
the wishes of Washington.

The specific situation was that in agriculture McDonald
was prepared to talk about market sharing schemes, while in
Washington all agencies, including STR, were prepared only
to consider commodity agreements. McDonald could pull rank
on Keonig thus putting FAS at a disadvantage in representing
agriculture’s views in the actual negotiations. It took the
intervention of Strauss, through requests from Keonig via
Hathaway, to remedy the situation periodically, but this
left a continuing scar on working relationships within the
U.S. delegation in Geneva for the remainder of the
negotiations.

As the substantive elements of the negotiations
proceeded, the convergence towards a general consensus of
views within the U.S. administration allowed a conclusion to
be reached. The only area where there might have been some
friction was in the grains negotiations. As original
proposers of the grain reserves scheme, the State Department
might well have pushed closer to the EC position on the
wheat proposals. However this did not create a problem
because of the gentlemanly nature in which State had bowed
out of those negotiations in return for Agriculture bowing
out of the sugar negotiations.

Throughout the negotiations the influence exerted by

the interest groups was mitigated in one important respect.

109

FAS and USDA were able to avoid serious responsibility for
defending constituent interests because of the presence of
Strauss as STR. Who could legitimately stand up to him? If
the interest groups had a serious gripe they were better off
taking it to the Congress, where there was more chance of
influencing the STR. And after all, STR did have the lead in
the negotiations. With a weaker STR it would not have been
as easy for USDA to have sidestepped issues, certainly with
the NMPF.

Having said this, some observers have also noted that
the show made by the dairy lobby was precisely that. After
the Flanigan affair they were quite happy to accept that
nothing worse than a marginal renegotiation of Section 22
quotas would occur. Thus their noise was mostly for the sake
of creating a show for their own constituents, the
individual dairy farmer members.

At the end of the negotiations one of the outcomes on
which much stock was placed for the solution of future and
unresolved problems was the Multilateral Agricultural
Framework. This finally led to the work of the CTA in
preparation for the new round, but failed to create any real
achievements in the interim. The basis of establishing the
mechanism for discussion had been. the good working
relationships among most participants that had developed in
the last two years of the negotiations. However these
personal bonds soon began to break down as over time people

changed positions or moved out of government both in the

110

U.S. and the EC. The earlier basis for success thus slowly
disappeared explaining why so little was achieved between
1980 and 1983. It was not until there was a new action-
forcing agenda that progress was again made. This did not
occur until November 1982, following the GATT ministerial
meeting at which time it was decided to push forward toward
a new round.

The smooth passage of the implementing legislation
through Congress at the conclusion of the Tokyo round,
served as further testament to the critical role played by
Strauss and several other key officials in the various
agencies who had maintained good working relationships with
the relevant congressman over the course of the
negotiations. An additional outcome of the respect that STR
had garnered with Congress was that the legislation provided
for a reorganization of trade responsibilities within the
government which was fully intended to further cement STR’s
position. The debate ranged as far as transforming STR into
a fully fledged Department of Trade, but in the end the
changes were considerably more modest. The details of these
changes and their impact on the policy process will be

further dealt with below.

4.3.2 Adequacy of the Framework
This third look at the events of the Tokyo Round has
raised yet more questions and provided additional answers.

The focus on key decision makers in each of the

111
organizations influencing the decision process has further
shown how agency positions are shaped, often reflecting the
particular biases or expertise of top administrators.

By examining how the interest groups exert their
influence on individuals, both in Congress and other
organizations within the decision making process, it becomes
easier to verify and expand on specific hypotheses of the
framework. Interest group pressure has over time lead to the
creation of many domestic programs that aim to support the
rural community, particularly through raising farm incomes.
Where these programs fail to provide adequate support,
pressures develop for protectionist legislation. It was in
such a situation that the Nixon Administration took the
initiative and turned the momentum around into an initiative
for trade liberalization.2 However the domestic farm lobby
was able to constrain severely‘ the approaches taken in

Geneva, once the Flanigan report was made public.

4.4 Reflections on the U.S. Public Decision Process

First some general observations will be made about the
function of the U.S. public decision process at the time of
the Tokyo Round. This will be followed by some observations
on how that process is different today. This will provide

the necessary background for the later analysis of how the

 

2. The final outcome of the 1974 act exceeded all
expectations. Most observers had expected more protectionist
legislation, with less negotiating authority for the new
round. See Destler, chs. 9-12.

112
policy' process itself’ may impact ‘the ‘upcoming' round of

negotiations.

4.4.1 The Public Decision Process During the Tokyo Round

Interviewing past and present participants in ‘U.S.
agricultural trade policy, one fact becomes very clear.
Regardless of individuals’ positions within the process, all
observers agree that the nature of the inter-agency review
process is something to cherish. It provides an excellent
opportunity to air and hammer out differences in approach.
Regardless of the pursuit of individual and organizational
self-interest that inevitably takes place within the
process, it is felt that what emerges at the end is likely
to be as close as one could ever get to the so called
"national interest."

Although the three tier committee structure was
outlined before the analysis, little specific reference was
made to it in describing the details of the events as they
occurred. The reason for this is that existence of the
process and the precedent it sets for communication is what
is important rather than the form in which communication
occurs. As many observers have noted, the meetings that
occurred did not always follow a textbook description of how
the process might have been supposed to work. The most
important thing is that inter-agency discussion exists. As

the case study illustrates, the personalities involved often

113
influence outcomes more than the formal structures under
which they are brought together.

An example of this is the top tier, the cabinet level
Trade Policy Committee. Over the course of the negotiations
this group rarely if ever met. During the Nixon years it was
supplanted by CIEP, while in the Ford administration most
decisions were made in the EPB. In the Carter Administration
the locus of cabinet level decision was the EPG. The players
were the same, so it :made little difference ‘where the
decisions were taken.

One point of possible significance on this issue
however, is the importance -of the role of committee
chairmanship. The TPC would be chaired by the STR, while the
EPB or EPG would be chaired by the Secretary of the
Treasury. Before the Carter Administration this was less
crucial since no major decisions were going to be taken, and
in the case of Strauss as STR, the matter made little
difference since he possessed as much political weight as
his cabinet level counterparts regardless of the formalities
of committee chairmanship.

Over the course of the Tokyo Round some changes in the
process did occur, mostly concerning the role of the STR.
After surviving the threat of being merged with and becoming
subordinate to CIEP, the role of the STR grew in
significance over the course of the round. The position was
originally conceived as being that of a mediator and arbiter

between constituent interests who was answerable directly

114
only to the president and Congress. The major views to be
balanced were those of national security and foreign policy,
domestic economic interests and trade policy itself.

In theory if decisions were taken in the TPC such
neutrality might have been possible, but in practice it
would have been difficult. In any event most cabinet level
decisions were taken in economic policy councils thereby
creating the need for STR to take stands on particular
issues. This development was probably for the better as
without it the position of STR would not have provided the
opportunity for leadership that it gained under Strauss.

The leadership role of the position was further
cemented by the reorganization that followed passage of the
1979 Trade Agreements Act. The creation of the Office of the
United States Trade Representative (USTR) and its subsequent
evolution will affect the functioning of the policy process

in the upcoming negotiations.

4.4.2 The Public Decision Process Today

USTR today has an even stronger lead in trade policy.
In the intervening years since the conclusion of the Tokyo
Round, the agency has become increasingly involved in all
aspects of trade policy, not just multilateral negotiations.
On the familiar ground of negotiations, USTR has organized
many bilateral talks including the recently concluded free
trade area negotiations with Canada. USTR has been

increasingly involved in domestic trade injury cases in

115
conjunction with the International Trade Commission (ITC)
and other agencies.

The 1979 Act also affected the roles of a number of
other agencies. Treasury lost control of enforcement of
countervailing duty decisions to Commerce, who also gained
the foreign commercial service role formerly played by the
State Department. However, it is felt by present observers
that in the context of international negotiations, the role
played by Commerce will be no more important than in the
past. State and Treasury with their prerogatives on foreign
and economic policy will maintain their prominence.

Under the Act, Agriculture retained its rights over
implementation of agricultural trade policy while USTR has
over time further solidified its control over policy
formulation. It has been noted that this is partially a
result of the combination of weak leadership within FAS and
strong agricultural support within USTR. The appointment to
the position of trade representative of Clayton K. Yeutter,
an agricultural economist and previous Under Secretary of
Agriculture and Deputy Trade Representative, further ensures
that USTR will take a lead role in agricultural matters.

An important change that has occurred in the policy
process is the manner in which issues are managed.
Throughout the Tokyo Round issues were dealt with in the
classic bottom-up manner of government. Those issues amongst
agencies that could not be resolved at the staff level were

brought to the attention of the Trade Policy Staff

116
Committee. Any unresolved issues coming from there were then
dealt with in the TPRG and, if still unresolved, in the TPC
or economic policy forum at the cabinet level, with the
occasional final involvement of the President.

Most interviewed observers agree that 'today' in. the
Reagan Administration this pyramid-like arrangement has been
inverted. Policy positions are now more often formulated in
a top-down manner. Today, as one staffer observes, rather
than providing the relevant analysis for a set of issues for
higher level debate, staff get requests for supporting
analysis on an issue decided upon and communicated down from
above. With the return of a Republican administration, there
has also been a return to policy more dictated by
philosophical values rather than analysis and pragmatism.
Thus the balance of' power' that. exists amongst. the top
cabinet level players becomes a more crucial issue. This too
would appear to be significantly different than in either
the Republican or Democratic administrations that were
involved in the Tokyo Round.

Today access to the President appears to most observers
to be even more difficult to obtain than it was during the
final reclusive days of the Nixon White House. A close tab
is kept on the hierarchy that exists amongst the various
cabinet ministers. The key players for agriculture in the
present administration along with Yeutter are: the Secretary
of State, George P. Shultz: the Secretary of the Treasury,

James Baker: and obviously the Secretary of Agriculture,

117

Richard Lyng. Daniel Amstutz, the Chief Negotiator for
Agriculture and former Under Secretary of Agriculture for
International Affairs and Commodity Programs will also play
an important role, given his personal standing within USDA
and Lyng’s apparent willingness to delegate to him. Some
observers went as far as to call Amstutz the "real Secretary
of Agriculture," while he was Under Secretary.

The access these players have to the President and
therefore their ability to set a top-down agenda is very
much influenced by the nature of White House organization as
implemented by the Chief of Staff. Howard Baker, while
viewed not to be so obsessed over access as his predecessor
Donald Regan was, is nOnetheless said to be the access
controlling gate-keeper to the President. Only Shultz and
perhaps Baker are thought to have direct access. Lyng
through his California connections to Reagan is thought to
heme a better relationship than many others, while Yeutter
in the key position of Trade Representative appears less
well placed, although the regard with which his technical
abilities are held improve his position.

As in previous administrations most cabinet level
discussion of trade issues occurs in the Economic Policy
Council (EPC), as opposed to the TPC. It is difficult to say
much more in terms of what impact these personalities may
have on the new round, especially given the turmoil over the
Reagan Administration’s foreign policy that exists at the

time this is being written. The fact that there is a

118
presidential election in 1988 will limit the real progress
that can be made, though certainly a lot of preparatory work
has been and will be done.

Some comments however can be made regarding the likely
impacts on the policy process of changes that have occurred
in economic factors. Since the time of the Tokyo Round the
federal budget deficit has become the most important
economic fact of life for the U.S.. This is the case both in
terms of economic reality and in terms of perceptions. If
the issue was not already focused before, it became so with
the enactment of the Gramm-Rudman-Hollings legislation. The
deficit situation has altered the decision calculus of all
participants in the policy process.

Its impact on the agricultural negotiations of the new
round is going to be realized in terms of the connection
between the cost of commodity programs and the status of
world commodity markets. It is being increasingly asserted
that the hypothesis that budget pressures will impact the
range of what can be legislated, is going to be realized
with increasing meaning in agriculture. Budget pressures,
coupled with the most expensive agricultural legislation of
all time, are going to force domestic agricultural policies
more firmly on the GATT negotiating agenda.

This situation is reinforced by one of the other
economic changes that has occurred. After the brief food
crisis of 1973/74, world agriculture entered into and has

remained in chronic overcapacity. With every third U.S. acre

119

grown for export, the pressure of this situation is
especially acute. The resulting depression of world prices
and continued low returns in farming despite unprecedented
program expenditures, means that international solutions are
all the more necessary. There is a sense amongst
participants that the new round will be a last chance to
stave off a U.S. drift towards agricultural protectionism.
The necessity to deal with the overcapacity question forces
domestic policy issues onto the GATT agenda.3

Recently it was possible for then Under Secretary
Amstutz to say that Section 22 quotas are a definite
bargaining chip and nobody flinches. This is quite a
contrast to the sentiments that pervaded the Flanigan
affair. Thus, it can clearly be seen how changing economic
circumstances have altered the policy process by affecting
what is perceived as being politically feasible or even
necessary.

All these events clearly illustrate the validity of
Petit’s hypothesis that in the long run economic factors
influence outcomes. And having considered the issues from
the perspective of the different organizations that make up
the government it easy to understand why the final effects
of that influence may not always follow an economic
rationality. The understandings gained of how the policy

process has worked in the past and works presently will be

 

3. For an excellent set of papers on some of the issues
and their economic background that will be faced by the U.S.
and the EC, see the Curry Foundation, 1985.

120
useful in analyzing the political feasibility of some of the
agricultural proposals currently under consideration for the

new round.

CHAPTER FIVE
THE EC PUBLIC DECISION PROCESS FOR

AGRICULTURAL TRADE NEGOTIATIONS

The analysis in this chapter has been constrained by
data limitations. By comparison to the analysis of the U.S.
decision process, data was less available both in respect of
‘written material and policy participants that were available
to be interviewed, since it was possible only to interview
EC representatives now present in Washington. It has
therefore been impossible to carry the analysis as far as
was done in the previous chapter.

As has been noted, in following Allison’s approach of
applying different models, each model used has different
data requirements. It was concluded that insufficient data
had been obtained to conduct an analysis using the
Governmental Politics approach. Therefore this chapter will
be limited to a discussion of the principle organizational
actors involved and an analysis using the Organizational
Output approach.

Secondary sources are quoted where they have been used
throughout the chapter. However the principle source has
been interview material, relying on both EC representatives
and U.S. representatives’ knowledge of the EC. Most
observations or inferences have been corroborated by at

least two interviewees.

121

122
5.1 The Actors
5.1.1 The EC Commission

The Commission, though not having the power of decision
that is vested in other’ community institutions, is the
central player in community policy in that it is the
originator of policy proposals and implementor of policies
once decisions have been taken. The Commission is made up of
a number of branches or departments known as Directorates
General that are overseen by the President of the Commission
and Commissioners that are appointed by the member states.

In agricultural trade policy there are two Directorates
General that are of importance: DG ‘VI, the Directorate
General for Agriculture, and DG I, the Directorate General
for External Relations. DG VI is one of the largest entities
within the Commission accounting for approximately 10
percent of the administrative staff. Its size and the
importance that agriculture plays in overall community
matters has lead to a display by DC VI of a degree of aloof
separateness from the rest of the Commission. This is
reflected in its internal structure which somewhat mirrors
the structure of the whole Commission (Petit et al., p.
103).

The primary responsibility of DG VI is the development
and implementation of agricultural policy as embodied in the
Common Agricultural Policy (CAP). It is through the
maintenance of the CAP that the bureaucratic security of the

members of DC VI can be assured. High priority is placed on

123
this task by others outside of DC VI, since the CAP is the
most tangible product and visible element of European unity
that the EC has managed to produce. Its survival reflects
the health of the Community as a whole. Thus those within DG
VI are sometimes viewed with a degree of deference by those
elsewhere in the Commission.

Despite such exalted status, technically when it comes
to the negotiation of international agreements, DG I has an
unequivocal lead in all matters. Indeed, under the Treaty of
Rome the Commission is invested with sole responsibility for
negotiations on behalf of the Community and therefore also
its member states. And this authority is invested within the
Commission in DC I. In practice, because of the division of
technical expertise among the Directorates General, when
agricultural issues are under discussion DG I relies heavily
on input from DG VI. This usually goes as far as DG VI
preparing the original policy position papers, which are
then subject to review by DG I. More often than not the
position adopted by DG I is a close reflection of the wishes
Of DG VI.

Above the Directorates General are the Commission
President and the Commissioners, whose overall objective is
to be guardian of the Community’s achievements in the
institutional, political, economic and social domains. The
primary power enabling such guardianship is the Commission’s
institutional right to be the proposer of' policy

initiatives. In recent years this has to some degree been

124
subordinated to the member states meeting in the various
Councils of Ministers, and at summits of the Heads of State
now referred to as the European Council (Swann, p. 63).

The agenda that the Commission pursues is influenced by
the Presidency of the Community. Although the President of
the Commission occupies a two year term, the Presidency of
the Community as a whole rotates between the member states
on a six month basis. A previous President of the
Commission, Gaston Thorn, has observed. that there is a
tendency for each member state as it occupies the chair to
"behave as if it were controlling the destinies of the
Community." The concerns of a particular country can be
promoted while that country holds the presidency and thus
the realization of national interests can be influenced

considerably in this manner.

5.1.2 The Council of Ministers

There is in fact no single Council of Ministers, but a
series of Councils. Each Council represents a particular
policy area. The Council has the major political role within
the Community through its power of decision over Commission
recommendations. The Council is the most visible point at
which the conflict between EC and member state interests can
become apparent. Ministers must aim to balance Community
interests with those of their own member states, through

which they were elected to their positions.

125

In the context of agricultural trade, there are three
councils that are of interest. The first is the Council of
Agricultural Ministers. This is made up of the Ministers of
Agriculture from each of the member states. In its dealings
with other actors at the Community level, the agricultural
council can be viewed as behaving as a unitary actor. In
contrast the decision making that goes on within the Council
is characterized by the personalities of the different
Ministers of Agriculture and their respective member state
constituencies. As a ‘unitary actor’ the Council aims to
defend the principles and workings of the CAP, while
internally Ministers aim to defend their individual national
gains under the CAP. In dealing with agricultural trade this
dichotomy still exists but is less important because of the
common external protection afforded by the CAP. Protecting
the national interest is almost analogous to protecting the
CAP in this situation. Differences will occur because of
different national commodity mixes.

The second Council of Ministers that is important is
the Foreign Affairs Council made up of member state Foreign
Ministers. This council is responsible for the EC’s external
relations and thus reviews and acts on the proposals of DC
I. Because of the political nature of external affairs, this
Council may also consider any other area of policy that has
international implications. Thus it will be vitally
interested in agricultural proposal 8 that a f f ect

international markets and any agricultural trade

126
negotiations. While DG I conducts negotiations, the Council
will play an important role in developing the Commission’s
negotiating mandate.

The Financial Council of Ministers has become of
increasing importance to agricultural and agricultural trade
policy over the years, because of the growing budgetary
consequences of such policies. Like the agricultural
council, individual council members play a dual role:
externally protecting the budget from the demands of
specific councils, such as agriculture for the CAP, and
internally ensuring that the member state represented gets a
fair deal in respect of the costs and benefits of programs.
Their role relates directly to the hypothesis that budgetary
considerations place limits on policy outcomes.

As previously noted, the emergence of what is known as
the European Council, namely summit meetings of Community
Heads of State, is playing an increasingly important part in
Community decision making. This is a role that was neither
provided for nor predicted by the Treaty of Rome but has
become an important and accepted. part of ‘the operating

procedures of the EC.

5.1.3 The EC Parliament

Originally representatives were appointed to the
Parliament by the member states, but today it is made of
elected representatives, following reforms of the Treaty of

Rome. Despite the involvement of the community voters in its

127
composition, the Parliament is the least powerful of the
Community institutions. The Parliament is consultative
rather than legislative. Before the Councils make decisions
they are obliged to consult with the Parliament. However in
most cases they are not obliged to let the opinions
proffered affect the content of their decisions.

The one power the Parliament does have is the authority
to dismiss the Commission, should it fail in the
Parliament’s eyes, to fulfil its obligations. However the
parliament has no role in the appointment of new
Commissioners. This power has never been exercised, and as
Swann notes, this is because most of the displeasure of the
Parliament derives from the decisions of the Councils of

Ministers rather than the Commission (p. 70).

5.1.4 The Interest Groups

Interest groups are specifically connected to the
structures of the Community through the Economic and Social
Committee. This is a consultative body of representatives
from the member states from different sectoral backgrounds
representing economic and social life. Members are selected
by the Council from lists presented by the member states.
Like the Parliament, in certain instances the Council and
Commission are obliged to consult the committee. But similar
to the Parliament it has no real power and does not play a

significant role.

128

Within agriculture, one Community structure is of some
significance to how member state governments pursue their
agricultural interests. This is the Special Committee for
Agriculture. The Committee was originally established by the
Council of Agriculture Ministers to expedite review of the
proposals for the establishment of the CAP in 1960 (Tracy,
p. 270). Today it still exists as a group of permanent
representatives from the member states that report directly
to the agricultural Council. It is asserted that this
institutional body is where the basis for consensus between
member states on agricultural issues is initially verified
at the government level (Petit et al., p. 105).

Outside of government the agricultural interest groups
have an input to issues that affect the agricultural
community. They are represented together by COPA, which is
the french acronym for the Committee of Agricultural
Organizations. The aim of this body is to present as common
a stand as possible for the various national farm
organizations. As such COPA is continually consulted
formally and informally by the Commission and the Council to
test the acceptance among the farm population of specific
policy proposals.

For COPA to represent a common stand is by no means
easy. Community farmers are frequently divided by national
and commodity differences. Therefore most of the largest
national general farm organizations and some commodity

organizations have their own offices in Brussels.

129
Negotiations occur amongst these organizations in an attempt
to project a common stance, but they also operate on their
own, consulting directly with the Commission and Council, to

represent their particular membership.

5.2 An Organizational Output Approach
5.2.1 Analysis of the Tokyo Round

The EC communicated its willingness to enter into a new
round of negotiations with a Council declaration to that end
in December 1971. This was followed in February 1972 by a
joint declaration with the U.S. confirming their intention
"to begin, and give active support to, wide-ranging
negotiations in. GATT." From. this. point until the. Tokyo
Ministerial meeting the EC concerned itself with preparing
the approaches it would follow in the negotiation.

Given that the Commission had unique responsibility for
the negotiations it was important for the member states to
feel that ‘their' national interests *were adequately
represented before commitment to a particular approach. Once
commitments were entered into by the Commission in Tokyo it
would be very hard for member states to alter their
direction. Thus the EC planned the preparation of a
documentary description of an "overall approach" to the
negotiations that would have to be agreed upon by the
European Council according to the principles of the

Luxembourg compromise.

130

The compromise was a decision that had been reached
several years earlier allowing a member state to veto a
Community decision if it felt the decision significantly
undermined its national interest. Thus in all matters of
major concern the EC operated on the basis of unanimity. In
order to reach unanimity policy statements such as this
"overall approach" would often reach toward the lowest
common denominator.

In agriculture, the Commission developed a set of
proposals for the new round. The proposals originated in DG
VI and then were reviewed by DG I. The essence of the
overall proposal was that elements basic to the Community’s
unity could not be called into question. In agriculture the
CAP was viewed as one such element, its form justified by
the special characteristics of agriculture. Thus the
proposal was that "its principles and mechanisms should not
be called into question and are therefore in no way a matter
for negotiation." Thus the objective for the new round would
be to expand world agricultural trade "in accordance with
existing agricultural policies." The way foreseen to do this
was through market sharing and commodity agreements, which
would be the elements of EC proposals in the negotiations.

The approach suggested by DG VI was perfectly
acceptable to DG I. The latter were quite aware of the
difficulties this would likely cause with the U.S. and other
agricultural exporters. However the CAP was viewed by all as

essential to EC unity and on these grounds alone should not

131

be called into question. The interest groups also found the
approach to be favorable as at the time the proposals were
put forward, European farmers were doing better under the
CAP than if they were receiving world prices.1 Therefore it
was moderately easy to reach unanimity within the
agricultural Council, and overall unanimity on all aspects
of the proposals was reached at the Luxembourg summit on
June 25-26 1973. The text of the "overall approach" was then
released (reproduced in Golt, 1974, pp. 59-68).

The Tokyo Declaration in no way compromised the
approach developed by the EC, and was also open enough in
its references to agriculture to leave the U.S. with some
hope of achieving their own goals. Quite what latitude
existed for the EC is open to debate, but as Golt noted in
1974, after a virtual negotiation between the nine member
states to reach unanimity prior to the Geneva negotiations,
the possibilities for the Commission negotiators to make
changes to the approach were severely constrained. The EC
had less room for maneuver, but Golt concluded at the time
that "the effects of these constraints on the ultimate
outcome should not be exaggerated.... But they are bound to
influence the pace of the process" (1974, p. 11).

Indeed, most actors within the EC did not exaggerate

this fact, believing that there was every likelihood that

 

1. It is interesting to note that just a few months
after agreement on this approach was reached, world
commodity prices soared above EC levels. The outcome of
internal EC negotiations might have been quite different if
they had started just a few months later.

132

the Commission negotiators might be swayed in some small way
from the "overall approach." Thus DG VI had permanent
representation. in Geneva, as did. national ‘ministries. of
agriculture and the interest groups: although the internal
negotiation was supposed to have been concluded in
Luxembourg in June 1973, in reality it continued in Geneva,
Brussels and the national capitals throughout the
negotiations.

In commenting on the roles played by the different
actors, given the data uncovered by this research, it is
difficult to say much more than the following. All appeared
to share the primary goal of ensuring that outcomes did
correspond to the "overall approach." In agriculture this
meant an intransigency in position in the face of the strong
free trade orientation of Republican administrations in the
U.S. over the first years of the negotiations. Once progress
began in 1977, DG VI was accorded full responsibility for
the grains negotiations in London thereby reducing the
number of active EC players. The interest groups had their
input to these negotiations both directly to the negotiators
and through their agriculture ministers, meeting as the
Council.

In Geneva DG VI took the technical lead in backing up
DG I over the remaining areas of negotiation. By the
conclusion of the negotiations all actors could feel
satisfied in having kept the principle negotiators true to

the original "overall approach." Golt’s prediction that the

133
rigidity of the approach might not affect the final outcome
was for the most part proved wrong. Over the course of the
negotiations the EC position changed little if any. Although
a grains agreement was not concluded, the round was
considered a moderate success. In agriculture the
preservation of the sanctity of the CAP was announced to be
an implicit recognition by other countries of the validity

of the EC and its mechanisms.

5.2.2 Adequacy of the Framework

0 While the level of explanation in this analysis has not
been comparable to the treatment of the U.S., this is in no
sense a diminution of the framework. Two factors have
contributed. The first, previously mentioned, is a lack of
data. With more information on the specific activities of
the organizations involved, further insights would
undoubtedly be gained.

However the second factor relates to the positions of
the various actors involved. Compared to the U.S. situation,
the EC actors had considerably more homogeneous goals both
from economic and political perspectives. Thus, it is likely
that the organizational outputs of the different actors
would be in the same direction. Part of the success of the
framework is its ability to show how differences in
organizational outputs contributes to final overall

outcomes. Where there is little difference to begin with, it

134
is hard for the framework to increase understanding of the

process.

5.3 Reflections on the EC Public Decision Process

Like most occurrences within the EC, change in
institutions is slow. Since the time of the Tokyo Round
there has been little if any substantive change to the EC
political process itself. There have been some reforms aimed
at increasing the power of the Parliament. At this stage it
is too early to say whether these will have any real impact.
Most observers believe that they will not. Aside from this,
the balance of power' and roles of the other Community
institutions remains as they were at the time of the Tokyo
Round.

Changes in long term economic trends have however
created implicit changes in the policy process. For the EC
the most significant change has been the transformation from
an importer of many key commodities to a surplus producer,
at a time of chronic overcapacity in world agriculture. The
impact of this situation is most strongly realized by the
ever increasing cost of the CAP. Today the CAP represents
70% of the total EC budget, while farmers represent only
approximately 10% of the population. This has created strong
pressures to limit expenditures and examine the nature of
the programs creating the expenditures.

The open ended nature of the support system has been

curtailed in recent years. Dairy quotas were imposed

135

internally in 1984, and co-responsibility levies were
introduced for grains in 1985. However it is acknowledged
that these have failed to halt the increasing costs of the
CAP, as export refund expenditures continue to climb. The
solution 'to this. problem. is ‘thus inextricably' bound to
international markets. Thus now more than ever before, the
content of those domestic policies seems to be subject for
international discussion and negotiation.

The certainty with which all actors within the
community got together behind an "overall approach" in the
Tokyo round no longer exists in such an environment. One
outcome of this, that is affecting the new round already, is
that no attempt has been made to develop an overall
approach. Individual issues will be dealt with on an ad hoc
basis as and when they arise. This element of uncertainty
adds to the likelihood that the EC will proceed with a more
flexible approach. Faced by this prospect, individual
organizations involved will have to resort to protecting
their parochial interests for themselves, thereby creating
an environment more analogous to the situation that has and
does exist in the U.S.. This may lead to a higher likelihood

of making substantial progress in the new round.

CHAPTER SIX
ANALYSIS OF THE MARKET ACCESS PROPOSALS

FOR THE NEW ROUND

6.1 Outline of the New Proposals
6.1.1 Background to the New Round

In following the development of the Punta Del Este
Ministerial Declaration, one could very easily suppose that
this was the first time many of the issues of the new round
had been pondered. This would be a mistaken assumption,
certainly in the case of agriculture. Much effort over a
long period of time has gone into trying to develop a
suitable approach within GATT for attacking the current
problems faced by world agriculture.

At the conclusion of the Kennedy' Round, there ‘was
already a desire to resume negotiations soon. One of the
main areas where this need was felt was agriculture. At the
conclusion of the Tokyo Round it was again believed by most
involved that insufficient progress had been made in
agriculture. Although no explicit agreement was made to plan
for a new round, work did continue within the GATT
secretariat on. elaborating' approaches tol deal with
agriculture. This took concrete shape in the formation of a
committee under GATT auspices specifically instituted to

develop such approaches.

136

137
The Commirree on Trade in Agriculture

At the conclusion of the Tokyo Round, attempts were
made to establish a Multilateral Agricultural Framework for
further consideration of agricultural issues. There was some
difficulty in agreeing on the form such a framework might
take and the final text simply recommended that the
Contracting Parties "further develop active co-operation in
the agricultural sector within an appropriate consultative
framework" and that "the definition of this framework and
its tasks be worked out as soon as possible" (GATT, 1979,
p.147).

Work to this end continued within the GATT and at the
November 1982 Ministerial Session the GATT Council was
instructed. to establish. a formal Committee on. Trade in
Agriculture "to make recommendations with a view to
achieving greater liberalization in the trade in
agricultural products" (GATT, L/5424). By this time the U.S.
had expressed its intention to push for a new round of
negotiations and it was therefore understood that the new
committee would lay the groundwork for this in the
agricultural sphere.

The Committee on Trade in Agriculture (CTA) formally
came into being by decision of the GATT Council at its
meeting on 26th January 1983. The first meeting was set for
March when a chairman would be designated. The choice, of
Chairman was a crucial decision that could have a major

influence on the progress of the committee. An early

138
recognition by all was that no substantial progress could be
made in agriculture without the concurrence of the EC, and
therefore most agreed the chairmanship should go to a
European.

A further concern was the country in the community from
which the chairman should come. Given the perception held by
many, including the U.S. , of the moderation of the Dutch
approach to community affairs and its similarities in
philosophy to the U.S. and other major agricultural
producers, the popular choice became Aart de Zeuuw. One
other factor gave this selection appeal to those outside the
community: de Zeuuw was not a Commission person and
therefore could be expected to have less of a closed mind
towards the possibilities of reform of the CAP. Many
observers have attributed much of the success of the CTA to
date, to an appropriate selection of Chairman. De Zeuuw’s
subsequent appointment to chair the Uruguay Round
Agriculture Committee is a testament to the perception of
his success.

The CTA’s initial examination of trade measures
affecting market access and supplies led to the development
of a set of recommendations that were submitted to and
approved by the Contracting Parties on 30th November 1984
during their Fortieth Session. The recommendations suggested
that:

1. The conditions should be elaborated under which

all measures affecting trade in agriculture would

be brought under more operationally effective GATT
rules and disciplines.. . To this end.. as a basis

139

for possible future negotiations.. (a) all
quantitative restrictions and other related
measures affecting imports and exports are brought
within the purview of strengthened and more
operationally effective GATT rules and
disciplines.. : (b) all subsidies affecting trade
in agriculture, including export subsidies and
other forms of export assistance, are brought
within the purview of.. effective GATT rules and
disciplines. With regard to export subsidies and
other forms of export assistance.. both the
following approaches should be elaborated in
parallel:

- an approach based on improvements in the
existing framework of rules and disciplines:

- an approach based on a general prohibition
subject to carefully defined exceptions, in
conjunction with improvements in the existing
rules and disciplines and. their application:..
(GATT, L/5753, pp. 1-2).

The result of this mandate has been a continuing
elaboration of a number of recommendations in the form of
various possible alternative approaches to tackling the

problems of trade in agriculture.

The nta e Este eclaration
The complete text of the section of the ministerial
declaration dealing with agriculture is reproduced below:

CONTRACTING PARTIES agree that there is an
urgent need to bring' more discipline and
predictability to world agricultural trade by
correcting and preventing restrictions and
distortions including those related to structural
surpluses so as to reduce the uncertainty,
imbalances and instability in world agricultural
markets.

Negotiations shall aim to achieve greater
liberalization of trade in agriculture and bring
all measures affecting import access and export
competition under strengthened and more
operationally effective GATT rules and
disciplines, taking into account the general
principles governing the negotiations, by:

(i) improving market access through, inter elia,
the reduction of import barriers:

140

(ii) improving the competitive environment by
increasing discipline on the use of all direct and
indirect subsidies and other measures affecting
directly or indirectly agricultural trade,
including the phased reduction of their negative
effects and dealing with their causes:

(iii) minimizing the adverse effects that
sanitary and phytosanitary regulations and
barriers can have on trade in agriculture, taking
into account the relevant international
agreements.

In order to achieve the above objectives, the
negotiating' group having' primary responsibility
for all aspects of agriculture will use the
Recommendations adopted by the CONTRACTING PARTIES
at their Fortieth Session, which were developed in
accordance with the GATT 1982 Ministerial Program
and take account of the approaches suggested in
the work of the Committee on Trade in Agriculture
without prejudice to other alternatives that might
achieve the objectives of the negotiations (GATT,
MIN(86)/W/19, pp. 11-12, emphasis added).

It is clear from the wording of the text as a whole and
particularly from the bold faced clause that the work of the
CTA is intended to be used as a starting point and
centerpiece of the agricultural negotiations. The
recommendations elaborated to date are consistent with the
language of the Ministerial Declaration, and can therefore

be considered as potential outcomes of the negotiations.

6.1.2 The Overall Nature of the Proposals

Once the objectives of the CTA had been approved at the
Fortieth Session of the Contracting Parties, the task became
one of making the general recommendations operational "as a
basis for possible future negotiations" (GATT, AG/W/9 Rev.
2, p.24). Following the outline of the Recommendations,
approaches were developed side by side in the areas of

market access, subsidies and sanitary and other technical

141

barriers. Such a division however was not meant to obscure
the desire "to move from the present situation in which only
some measures affecting trade in agriculture aresubject to
GATT rules and disciplines that are either less than
effective or are not applied effectively, to a situation in
which substantially all measures affecting trade in
agriculture are subject to improved and more effectively
applied rules and disciplines" (GATT, AG/W/9 Rev. 2, p.2).
The coverage was to be comprehensive but necessarily divided
by type of trade distorting mechanisms: tariffs and
subsidies, for example, would be discussed within their own
separate groups.

A further aspect of the comprehensive nature of the
coverage was the recognition of the need to reinforce the
linkages between domestic agricultural policies and the
international market under Articles XI and XVI: "the basic
notion is that a balance should be established between
legitimate domestic and international trade interests: ..
for this purpose, the existing linkages in Articles XI and
XVI.. should be developed and strengthened in a manner which
more clearly defines the extent to which the pursuit of
domestic agricultural policies should be permitted to impact
on trade by restricting or displacing imports or increasing
exports" (GATT, AG/W/9 Rev. 2, p.2).

From this point therefore specific policy proposals
were developed in each separate area while an overall

compatibility between them was maintained. The emphasis of

142

analysis in this research has been placed on the market
access proposals for the reasons noted in Chapter One. Thus,
detailed description of these proposals is presented in the
next section. The aim here is to outline the proposals in
broad principle along with some detail on the proposals in
other areas, such as subsidies, that are not dealt with at
length in the subsequent analysis.

As has been noted, the process of developing specific
alternative proposals occurred through time and is in fact
an ongoing process. Necessarily this research has had to
pick a particular point along that time-path for study.
March 1986 has been chosen, the time of publication of the
CTA’s second draft elaboration of Recommendations (GATT,
AG/W/9 Rev. 2). Though work within the CTA has continued
past that date, it is probably fair to say that the
substance of these proposals has changed little and that
they represent the background to the agreements reached in
Punta Del Este. They will certainly be part of the starting
point of the actual negotiations.

The approaches developed relating to market access,
discussed in the next section, can be summarized by quoting
the CTA:

In general two distinct strategies for bringing
substantially all measures affecting access under
more operationally effective disciplines can be
said to have emerged in the course of the
elaboration process. One would involve the
introduction of tariffs as the sole or principle
method of protection. The other would seek to
establish an equivalence of commitment or

discipline for each category of trade restrictive
measures, with a range of approaches having been

143

suggested as to how this might be achieved (GATT,
AG/W/9 Rev. 2, p.4).

The subsidy question is approached in two alternative
ways. First a number of options are suggested as means to
improve the existing framework of rules and disciplines. The
order in which they are listed implies no particular order
of merit. The first suggestion calls for establishing a
method of pre-determining equitable market shares and then
allowing individual countries to apply whatever subsidies
they chose so long as the equitable share is not exceeded.
Also the effects of the subsidization should not have a
depressing effect on world prices (GATT, AG/W/9 Rev. 2,
Annex B-I).

.A second approach suggests the fOllowing interrelated
improvements: that obligations to discuss possible adverse
effects of subsidies are converted to obligations to take
remedial action: that a readily ascertainable indicator of
what constitutes an "equitable (market) share" be introduced
as a reference: and that a regime should be considered in
the case where agricultural primary products are
incorporated in processed agricultural products (GATT,
AG/W/9 Rev. 2, Annex B-II).

A number of further approaches are developed along
similar or complimentary lines. These deal respectively with
the issues of serious prejudice, equitable market shares and
application of the subsidies code (GATT, AG/W/9 Rev. 2,

Annexes B-III through B-V) .

144
The second series of approaches deal with the
development of a new framework for limiting the use of
export subsidies and their adverse effects. Four specific
proposals have been put forward (GATT, AG/W/9 Rev. 2,
Annexes C-I through C-IV) and are summarized below by
quoting the CTA:
(i) that all existing export subsidies.. should
be prohibited, except food aid. Existing export
subsidies would be permitted temporarily so long
as a schedule and phase-out rules are
established... :
(ii) that the entitlement to use export
subsidies should be linked to the creation of
additional import access opportunities, on the
basis of a phasing formula... :
(iii) that countries which subsidize their
exports.. should negotiate self-sufficiency
ratios, with their right to use export subsidies
limited to.. movements in domestic consumption:
(iv) that a "producer-financed export subsidy"
exemption shouLd be developed.., with other
exceptions or disciplines to be negotiated.. ..
(GATT, AG/W/9 Rev. 2, p.19).
A number of other alternative and complimentary suggestions
have been made in this area, as well as suggestions for the
operation of sanitary and phytosanitary regulations and
other technical barriers not covered elsewhere.

It is against this background of the entire work of the
CTA, and of the Punta Del Este Declaration as a whole, that
a more detailed look at the market access proposals can be
made. Although the latter are to be analyzed quantitatively
in a ceteris paribus manner, the broader analysis requires
some knowledge of possible outcomes of other areas of the

negotiations.

145
6.1.3 The Market Access Proposals
e r O 1 d oac

Only a certain number of the market access proposals
have been developed in sufficient detail to be amenable to
quantitative modeling. However, for the purposes of context
and completeness all the proposals will be mentioned
although emphasis will be given to those that are part of
the subsequent empirical analysis in this chapter.

A "tariffs only" approach would have the objective of
allowing market forces to operate and thus liberate trade
and deal with the overcapacity problem. In essence this
would mean eliminating any special treatment of agriculture
under Article XI, with all non-tariff barriers being
eliminated. A phased transition would likely involve
negotiating bound tariffs to replace the eliminated
restrictions. Given the speculative shape of any possible
outcome, this approach does not lend itself to modeling.

.A number of approaches have been suggested for
improving the rules of the GATT, ranging from retention and
reinforcement to re-definition and modification of the
relevant principles and criteria. Three main lines of action
that would be needed in any approach have been identified by
the CTA. These consist firstly' of’ Zbringing' those
quantitative restrictions that currently escape the
disciplines of Article XI under a reinforced article. This
would undoubtedly mean the U.S. putting its import quotas

authorized. by Section 22 into 'the :negotiations. Certain

146
sugar and dairy provisions of the EC, such as those
influencing British Commonwealth country exports to the UK,
would also have to be included.

Secondly, all measures not at present explicitly
provided for in the GATT should also be brought under the
reinforced Article XI. Finally, in parallel to this
negotiation a further negotiation in the more traditional
area of tariff reductions and bindings should also be
conducted.

The detail of the approaches developed hinges on the
present form of Article XI, which under paragraph 2(c)(i)
permits restrictions under two basic conditions (see
Appendix A). The first allows restrictions where domestic
policy acts to restrict the quantities produced or marketed
domestically. The second condition is that import
restrictions shall not reduce the proportion of imports to
domestic production relative to what that proportion might
reasonably be expected to be in the absence of restrictions:
"Thus the General Agreement intended that in any case where
restrictions are imposed under Article XI:2(c)(i) to protect
the operation of a certain class of domestic income or price
support policies, a minimum level of access based, imer
L112, on a ratio between imports and domestic production,
should be respected for each and every product to which
restrictions are applied" (GATT, AG/W/9 Rev. 2, p.5).

Variable levies are interpreted as falling under the

purview of the reinforced Article. A separate GATT provision

147
which associates variable levies with the disciplines of the
last paragraph of Article XI:2 is envisaged. Thus, while the
levy mechanism may not be abolished outright, minimum access
requirements would have to be met. Where the "restriction of
production" criteria was not met, levies like import quotas
would have to be phased out.

This research aims to quantify the economic impacts of
implementation of the proposals on a commodity basis. It is
assumed that if actions are not taken to reduce domestic
production or marketings, the variable levy of the EC or the
Section 22 provisions in the U.S. would be deemed illegal.
Under this situation, no limitation on imports in any form
would be allowed and imports would be allowed to enter
unrestricted at the world price. This is in effect a "trade
liberalization to world prices" scenario.

The alternative scenarios, the conditions of which
would apply equally to the U.S. and the EC, assume that the
"restriction of production" criteria are met and that a form
of import restriction is allowable. Whether imposed as an
import quota or 'levy, the :minimum. access commitment is
assumed to be at least reached (if not exceeded).

In conformity with this approach, the proposals
developed generally have as their core the criterion of
effective regulation of production and attempt to define the
domestic policies for which restrictions may legitimately be

applied. These proposals comprise six annexes in the CTA’s

148
draft elaboration of Recommendations (GATT, AG/W/9 Rev. 2,
Annexes A-I through A-VI).

Annexes A-I, A-II and A-VI are modeled in the
subsequent analysis and are therefore dealt with in the next
section. The approach outlined in .Annex A-III aims to
strengthen Article XI:2(c) disciplines on quantitative
restrictions by creating tighter definitions of exceptions,
such as eligible domestic controls and equitable market
share. The latter should not be subject to negotiation but
should be based on some set criteria laid out in a
reinforced article. Those reStrictions that did not conform
to the new criteria would have to be phased out.

Annex A-IV is the one departure from the overall tone
and approach of the CTA’s work in this area. This scheme
calls for developing "viable and practical- rules and
disciplines on quantitative restrictions under given
realities of trade in agriculture." The basic argument is
that since the rules as written have not been working and
have been largely ignored it can be assumed that they are
already overly rigid given the special circumstances of
agriculture and should therefore be relaxed. The philosophy
is that it might be better to have weak rules that are
respected than to try to develop strict rules that will be
ignored.

Annex A-V calls for taking full account of the
specificity of agriculture in developing more operationally

effective disciplines. Thus measures that are today outside

149
the purview of Article XI could be brought under effective
GATT rules. Beyond noting the food security, world price
fluctuation impacts on domestic policies and production
instability aspects of agriculture, little is specifically
outline in this Annex on how to achieve the stated
objectives. In contrast to this situation, it is now
possible to examine the proposals that are specific enough

to be modeled.

gee Modeled Alternativee

Annex A-I can be said to have approached the existing
rules with great deference to their original form and
intended purpose and meaning. It also forms the basis of
some of the other alternative approaches. The basis of the
proposal is the concept of the level of production and ratio
of imports to production that would have existed in the
absence of restrictions and the effective regulation of
domestic production.

In dealing with effective regulation of production it
is asserted that programs which merely pgrpgre to restrict
production but which may or may not actually achieve a
restriction "would not appear to provide a sound argument
for a ’wait and see’ approach regarding the imposition of
new: restrictions.. " (p.1). However the need to regularize
existing non-conforming restrictions is acknowledged and

therefore the following possible definition of "effective

regulation of production" is offered:

150
measures which operate, and which are demonstrably
designed to operate, to stabilize or control
domestic production so as to prevent an undue
increase in production relative to trends in
domestic consumption, and which are not operated

inconsistently with commitments with respect to
imports and exports under the General Agreement

(P-Z) -

With such a definition, operational effect would be given to
the Article by introducing' a minimum access commitment
accompanying any restriction on imports. The suggestion is
that this commitment should be [x] percent of total domestic
production or the existing ratio of imports to exports,
whichever is the higher. However the approach suggests that
the level of imports should "not be derisory," meaning of no
Economic significance, and that there should not necessarily
be support for the "proposition that recent or historical
import levels necessarily represent realistic minima" (p.3).
Thus the interpretation suggested is that the minimum access
commitment should be equal to [x] percent or the ratio that
would have existed in the absence of restrictions.

How the level of production and ratio of imports to
production that would have existed in the absence of
restrictions is to be determined is not made explicit.
Obviously any means developed to establish such a ratio
would. be subject to negotiation as ‘would, perhaps, the
calculated ratio itself.

For practical purposes as well as creating an arbitrary
benchmark for dealing with difficult cases it is suggested
by way of example that the [x] percent figure might be 10%.

This is the figure used in the analysis below. In this

151
context one question raised by the CTA is whether 90% self-
sufficiency in a product would be acceptable. The
implication therefore is that the minimum access commitment
should be measured in net trade terms.

The next approach that has been modeled is outlined in
Annex A-II. The orientation of this approach is "to achieve
more secure and predictable -access by reinforcing the
existing restrictions... through the introduction of a more
direct and dynamic relationship between the size of quotas
and changes in domestic production" (p.1). While stressing
that the criteria should remain measures that effectively
restrict production, existing restrictions that were not in
full conformity with this could be continued under certain
circumstances. These would be that the size of the minimum
access commitment is linked to changes in domestic
production and that the base ratio is greater than it would
have been if the restrictions were in full conformity with
Article XI. Thus, there would be a penalty of a higher
minimum access commitment in these cases. For these
situations it is suggested that some arbitrary level be
established for the minimum access commitment and again a
level of 10% or the existing ratio, whichever is the higher,
is given as an example in the CTA’s proposals.

Annex A-VI represents another variation on the same
basic principles with an emphasis on developing the

distinction between "restriction of production" and

152
"effective regulation of production" in order to strengthen
the operation of the minimum access concept:
"Restriction of production" would be considered
to occur whenever production is lowered below the
level that would have prevailed under conditions
of free trade.. . "Effective regulation of
production," on the other hand, would apply in
those categories in which contracting parties give
effect to minimum access commitments on the
following basis. The minimum .access commitment
should incorporate two main elements: (a) an
across-the-board minimum access opportunity - say
20 per cent of the domestic market - to be phased
in over no more than eight years.. : (b) where the
contracting party maintained internal prices above
world prices and has a self-sufficiency ratio in
excess of 100 per cent, an additional access
opportunity would be required (p.1).
It is further suggested that the obligation for contracting
parties in category (b) should consist of the 20% minimum
access opportunity plus the percentage by which self
sufficiency exceeds 100%. If a country’s self sufficiency
ratio was 110%, the minimum access commitment would be 20%
plus 10%, or 30%. Thus, in general, to avoid the additional
burden domestic production would have to be reduced so that

the self sufficiency fell to or below the 100% level.

6.2 Analysis of the Proposals
6.2.1 The Michigan State University Agriculture Model
Overview of the Model

The MSU Agriculture Model is in fact three separate but
linked models which can be operated together or on a stand
alone basis. There are two U.S. domestic components, one
covering the major grains and the other the livestock

sector. The third component is the international model and

153
is the component 'utilized in 'this study. The scenarios
described below are run using the international model with a
linkage to the livestock model for building in assumptions
regarding U.S. livestock production.

The international component of the model solves
simultaneously across the three commodity groups, wheat,
coarse grains (corn, sorghum, barley and oats) and the soy
complex. The latter is broken down into the constituent
forms of beans, meal and oil. The structure of the model is
based upon approaches developed by Abbott and Mitchell where
it is argued that where governments intervene to set
domestic prices different from world prices, trade should
not. be considered. as a :residual but. estimated. directly
(Abbott, 1979: Mitchell, 1983: and Shagam, 1987). The model
therefore estimates production, consumption, net trade and
ending stocks for the three commodity groups. Supplies and
prices interact to achieve simultaneous solution across the
commodities (however in the Developed Markets region of the
model (the EC, other Western Europe, South Africa and Japan)
the prices are exogenously given to reflect the price fixing
characteristics of the EC Common Agricultural Policy).

The world is divided by the model into eleven regions
which are subsequently divided amongst three subroutines: an
export, an import and a shared market clearing subroutine.
The location of a particular region in one of the
subroutines does not influence the performance of the model

and is mostly a management convenience. Thus, it is more

154

useful to describe the regions as either importers or one of
three types of exporters. The importing regions of the model
are the Soviet Bloc, China, the Newly Industrialized
Countries, the Less Developed Countries, the Less Developed
Oil Exporting Countries and the Developed Markets. The
exporting regions are subdivided as follows: Argentina,
Australia and Brazil are surplus exporters (they do not hold
stocks in relation to price movements): Canada is considered
a contingent surplus exporter (stocks may be held under
certain policy conditions): and the U.S. which is viewed as
the residual claimant to the world market (Shagam, 1987, ch.
3). In the scenarios that follow the results for the Newly
Industrialized Countries, the Less Developed Oil Exporting
Countries and Brazil have been aggregated together under the
heading of Middle Income Countries to reduce the number of
regions under consideration since the primary focus is on
the Developed Markets and the U.S..

The baseline and four scenarios developed for this
analysis employ the current exogenous macroeconomic and
demographic forecast assumptions of the MSU model. Forecasts
for income, inflation, exchange rates and population must be
prepared for each region of the model. The procedure used
has been to generate a trend of the past ten years for each
variable and then modify this by the "expert opinion" of the
analyst in conjunction with such publications as the OECD
Outlook, the World Bank’s World Development Report, U.N.

population forecasts and private sector forecasts. (See

155
Shagam, 1987, ch. 6, for a detailed description and
rationale).

In using the model for the purposes of this research,
with its focus on the U.S. and the EC, a number of further
qualifying assumptions must be made. The most obvious and
important assumption concerns interpreting the results for
the Developed Markets region of the model. The analysis is
primarily concerned with impacts on the EC, but this area is
aggregated together with the other Western European
countries, Japan and South Africa. The relative size of the
other Western European countries and South Africa in world
trade of the commodities addressed being small compared to
that of the EC, coupled with reliance in the model on EC
prices for the whole region, allows one to consider changes
occurring as a result of modelled EC policy changes to
represent changes in EC production, consumption and trading
patterns.

This argument can be extended to Japan given the
relatively constant historical patterns of production,
consumption and trade in that country. Thus provided the
modeled changes take into account the fact that the region
covers more than just the EC, it is reasonable to assume
that deviations from a baseline as a result of these changes
are attributable to the EC. To remind the reader of this
assumption all discussion of the scenarios will refer to the

region as the Developed Markets.

156

A further assumption relates specifically to the
subject matter aspect of the scenarios. While GATT is a
multilateral forum and it’s rules apply to all members, it
is assumed in the analysis below that in the case of market
access, only the Developed Markets and the U.S. are found to
have recourse to the specific provisions of Article XI. For
the EC this is across the board as the variable levy acts to
restrict access in all commodity groups, whereas for the
U.S. this only applies to livestock products where there are
Section 22 waivers in effect. Thus, where attempts are made
to model restriction of production and minimum access
commitments, the only regions of the model that are changed
are these two. The implicit assumption is that the U.S. and
the EC, if not the only offenders, are certainly the
significant offenders in world markets.

An additional consideration might be mentioned. This is
the extent to which it is possible to assume that the US and
the EC could realistically be expected to achieve the
"restriction of production" criterion in each of the
commodity groups. In the case of dairy, it could be said
that the criterion is currently being met by both, in the US
by the whole-herd buy-out program and in the EC by the use
of production quotas. Whether the criterion is being met in
the cases of meats and grains is a little more open to
individual interpretation and therefore assumptions are made

in the individual scenarios as to how such criteria are met.

157
6.2.2 Specification of the Scenarios

Four scenarios have been run on the MSU Agriculture
model and these will be outlined in turn. In all cases where
the CTA cited specific percentage minimum access commitments
by way of example, these levels have been used in specifying
the scenario. The first scenario attempts to :model the
proposals contained in Annex A-I, described above.

Since the minimum access commitment in this proposal is
described as 10% or the ratio that would have existed in the
absence of restrictions, some 'measure of the latter is
needed. This has been achieved by developing a historical
scenario to simulate absence of restrictions in the
Developed Markets. Since the variable levy of the EC and
internal prices above world market levels acts as a
restriction on market access, the scenario attempts to
estimate that from some point in the past when the Developed
Markets operated with world market-clearing prices. This
simulates an absence of restrictions.

The date chosen to impose these on the model is 1974.
This seems to be sufficient time for the effects to work
through the model to provide forecasts for the immediate
past period. Also this date seems a good hypothetical choice
as it was a time when internal EC market prices equalled or
exceeded world prices and would thus have been a more
politically feasible time than most for the Community to
have returned to a market oriented policy. No special

modifications are necessary in the case of the U.S. since

158
there are no market access restrictions operating in the
grain markets.

Thus with EC prices set at the world market-clearing
level from 1974 onwards the model has predicted results
through 1983. A five year average from 1979 to 1983 of the
ratio of imports to domestic production under this scenario
will represent that level which might have resulted in the
absence of restrictions for the purposes of triggering
minimum access commitments in the subsequent scenario. In
the case of wheat this ratio as predicted by the model (and
the actual historical figure) is less than 10% and therefore
the 10% minimum access commitment will be used in forecasts.

For coarse grains the model predicts a figure greater
than 10% and therefore this will be used in the subsequent
projections (the actual figure is also greater than 10%).
Thus it is necessary to outline in some detail how the
figure to be used in the forecast is calculated. As has been
stated the Developed Market region of the model includes
countries other than the EC. It is therefore necessary to
try to separate out the EC contribution to the import to
production ratio. This is done by taking the actual import
and production data for both the Developed Markets and the
EC and combining it with the forecast data for the Developed
Markets to obtain a forecast of the EC import to production
ratio. Thus the forecast ratio attributable to the EC is

given by:

[Eorecast BM Imports - Actual DM Imports]+Actual EC Imports
[Forecast DM Prod’n - Actual DM Prod’n] + Actual EC Prod’n

159

The calculated average for the five year period 1979 to
1983 using this method and the data from the model
projection is 45% for coarse grains, which compares to an
actual historical figure of 20%. The implication therefore
is that in the absence of restrictions, the EC would have
been more heavily reliant on coarse grain imports.

Now to calculate the ratio for use in the model for the
Developed Markets in the subsequent scenarios, it is
necessary to deflate this figure by the proportion of
production that the EC represents in the region. This
proportion has been calculated as a five year average for
the same period, 1979 to 1983, to be 67%. Thus the correct
ratio to use in the forecast scenarios is 67% of 45% which
equals 30%. Similarly EC wheat production represents 90% of
the Developed Markets production and therefore the figure to
be used in the forecasts is 90% of 10% which equals 9%.

An assumption of this scenario is that the "effective
regulation of production" criterion of a reinforced Article
XI is ‘met. Access restrictions exist on Iboth livestock
products and grains in the EC and on livestock products in
the U.S.. Therefore the model must simulate a regulation of
production in these areas. For the U.S. this is
straightforward since livestock are explicitly included
within the U.S. livestock component of the model. However,
for the EC, which is covered by the international component
of the model, livestock are only implicitly included by the

use of Gross Domestic Product (GDP) as a proxy for livestock

160
numbers. This proxy is important because of its influence on
the consumption equations.

If assumptions are to be made about EC livestock
numbers then a direct relationship needs to be established
between the actual numbers and the proxy, GDP. Therefore
Livestock numbers have been regressed against GDP for the
period 1973 to 1983 (which was the largest time period for
which continuous data was available) and the relationship
has been inverted so that proxy GDP figures can be
calculated given assumptions on livestock numbers.

The forecast scenario assumptions for the proposal in
Annex A-I can now be fully outlined. As stated previously
the "effective regulation of production" criterion is
assumed to be met, coming into force in the 1988 crop year
using 1987 as a base. Thus it is assumed that in the U.S.
livestock numbers do not exceed their 1987 values in the
cases of beef, dairy and pork production. Numbers are
allowed to go below the 1987 value if so forecast by the
model. A similar assumption is made for the Developed
Markets: From the relationship described above a 1987 value
for GDP is calculated and in subsequent years GDP is
constrained not to exceed this value, thus simulating a
restraint on livestock production.

It is assumed that crop production is regulated through
controls on acreage directly or through a mechanism such as
a co-responsibility levy that has the indirect effect of

forcing reductions in acreage. Therefore in the model the

161
constraints are imposed on harvested area. This applies only
to the Developed Markets. In an analogous manner to
livestock, forecast values of harvested area are constrained
to a maximum of the level attained in 1987. Harvested area
is allowed to fall below this level if so forecast by the
model.

Minimum access commitments are applied in the model
only to the Developed Markets. This is done by imposing a
constraint on the net import equations for wheat and coarse
grains. The specific constraints are that net imports beyond
1987 are to be equal to 9% of Developed Market production of
wheat and 30% of coarse grain production, or the value
forecast by the model, whichever is the greater. The
foregoing set of assumptions and conditions are the basis of
Scenario 1.

Scenario 2 is an adaptation of this first run. The only.
difference between the two is the time allowed to phase in
the minimum access commitment. In the first scenario this is
done all at once starting in 1987. Scenario 2 is perhaps a
more realistic hypothetical case in that the minimum access
commitment is phased in over eight years in equal amounts.
Thus in 1987 the minimum access commitment on wheat is 12.5%
of the 9% of domestic production, or of the forecast value
whichever is the higher, and in 1988 it is 25% of this value
and so forth, until 1994 when it is fully phased in at the

9% rate.

162

The proposals embodied in Annex A-II are modelled in
Scenario 3. Since these proposals indicate that existing
restrictions can be continued provided a minimum access
commitment is honored, there is no reason to assume that the
level of production is effectively regulated. Thus all the
restrictions imposed on livestock. numbers and harvested
areas in the first two scenarios are relaxed.

The base minimum access commitment suggested is 10%
with some additional penalty linked to changes in domestic
production. To incorporate the latter principle the formula
that is adopted in this scenario constrains the wheat and
coarse grain net import equations for the Developed Markets
in the following way. Net imports in 1987 are set equal to
10% of domestic production or the fOrecast value whichever
is the higher. Thereafter net imports are set equal to that
percentage of domestic production corresponding to 10% plus
the additional percentage change in domestic production from
the previous year, or the forecast value whichever is the
higher.

In modeling Annex A-VI, Scenario 4 assumes that
countries would aim for "effective regulation of production"
rather than "restriction of production." Thus, no
restrictions are placed on livestock numbers or harvested
areas in this scenario. Here, as in Scenario 3, the focus is
on an alternative formulation of the minimum access concept,
corresponding to effective regulation of production. This is

clearly outlined in the Annex. Thus for the Developed

163
Markets, the wheat and coarse grain net import equations are
constrained such that net imports equal 20% of domestic
production plus the percentage by which self-sufficiency in
the product exceeds 100% (but not less than 20%) , or the
forecast value, whichever is the higher. This is phased in
in eight equal amounts over the period 1987 to 1994 in a

manner similar to Scenario 2.

6.2.3 The Model Results
Overview

The full results of the model for the four scenarios
are presented in Appendix C. The results are presented as
differences from a baseline in both absolute (metric tons)
and percentage terms. The actual values for the baseline and
the scenarios are also given. Coverage in all cases is the
period 1987 to 1995 and a figure is also given for the five
year average for 1991 to 1995. In ‘the next section a
narrative and interpretation of the forecasts for each
scenario is given, while the baseline is described

immediately below.

Bas esults

In the wheat market the baseline scenario forecasts
continued growth of production largely in the principle
importing regions but also to some extent in the U.S. ,
Australia and the Developed Markets. Both Canadian and

Argentine production is relatively' constant. Utilization

164
increases most dramatically in the LDC’s but does not exceed
the growth in their production and thus the level of imports
declines for these countries. Soviet Bloc imports continue
to rise, but increased utilization is satisfied from
domestic production increases and therefore stock levels
increase consistent with current Soviet policy. Generally
ending stock levels increase as global production continues
to exceed demand with the most significant increases
occurring in the U.S. and the LDC’s. This situation is
further reflected in declining U.S. exports over the period
while increased exports from Australia and the Developed
Markets more than exceed this decline. Canadian and
Argentine exports levels remain relatively constant.
Throughout the period prices remain firm approximately
mirroring changes in inflation.

In the coarse grain market the baseline scenario
forecasts increasing levels of production in all regions
except for China where there is a modest decline and the
Middle Income Countries where production remains roughly
constant. This is accompanied by increasing utilization in
all regions except China where there is a decline similar in
amount to the decline in production and in Canada where it
is relatively constant. The major increased users are the
Soviet Bloc and the LDC’s. These changes in production and
utilization result in increased imports by the Soviet Bloc
and. the iMiddle Income Countries being’ met. by increased

exports from the U.S. primarily, but also from Australia and

165

Argentina. The increased level of exports from Australia
results in that country depleting its stocks entirely over
the 1993 to 1995 period. Ending stocks are relatively
unchanged in all the other regions except the U.S. where
they continue to increase dramatically. This has a
depressing effect on world prices over the early part of the
period but a recovery has been achieved by 1995.

Within the soy complex baseline forecasts, increases in
production are concentrated in Argentina and Brazil and also
the U.S., with the U.S. exporting about half of that
increase as beans while Argentina and Brazil export it after
processing into meal and some oil. U.S. meal and oil exports
decline. The Soviet Bloc increases its imports of both beans
and meal whereas the other importing markets increase their
imports of meal. Ending stock levels remain stable except in
the U.S. where there is an appreciable increase in soy bean
holdings. Bean and oil prices rise substantially over the
period but meal prices merely keep pace with inflation.

This baseline forecast seems to be an acceptable
description of the likely trend for world grain and bean
production and trade given the current policies of the major
nations involved. Thus, starting from this baseline it is
now possible to turn to a discussion of the scenario
forecasts and their' deviations from. each other’ and. the

baseline.

166
Scen r O
Assumptions:

- Harvested area of grains held to no higher than 1987
levels in the EC.

- Livestock numbers held to no higher than 1987 levels
in the U.S. and the EC.

- Wheat imports to the EC held from 1987 to 10% of
domestic production or the level predicted by the
model, whichever is the higher.

- Coarse grain imports to the EC held from 1987 to 30%
of domestic production or the level predicted by the
model, whichever is the higher.

In the wheat market the effects of the rules specified

in this scenario are felt. dramatically in 1987 with a
continuing trend in the directions established over the
period to 1995. As the minimum access commitment is imposed
in 1987 the Developed Markets become for that year a net
importer of wheat to the great advantage of the U.S. and
Canada who increase their exports by 9.8 million tons
(29.7%) and 3.3 million tons (16.2%) respectively. Much of
this is met out of increased production which, together with
increased stock holding by the Developed. Markets as a
necessary measure to increase access, has a negative effect
on prices which drop by 7.1%. This makes Australia and
Argentina less competitive on world markets and export
levels for these two decline. In Australia as a result

domestic utilization increases by 22.6%. The lower prices

167
result in only slightly increased imports from other regions
initially.

By 1988 the Developed Markets re-establish themselves
as net wheat exporters but ending stocks continue to remain
51.8% above baseline levels, as minimum access commitments
are met. All other regions and particularly the U.S. draw
down stocks. Production levels in the Developed Markets also
continue to decline as a result of aiming to meet the
restriction of production criteria, while U.S. and Canadian
production increases. All other regions cut back production
except the Soviet Bloc where there is a modest growth of 0.6
million tons.

Prices decline further until 1990 and begin to pick up
again in 1991 but only exceed the 1986 level in 1994 such
that the 1991-95 average jprice is. down $16.70 per' ton
(14.7%). For this period Developed Market exports are down
an annual average of 6.7 million tons (57.1%), but almost as
badly affected are the Australians whose exports are down
4.4 million tons (22.7%). The major export gains are made by
the U.S. and Canada respectively: up an annual average of
16.8 million tons (60.7%) and 5.4 million ‘tons (27.5%)
respectively. Utilization patterns change little in the
Developed Markets, but the U.S. declines as more goes for
export. and. Australian ‘utilization increases. by' 38.4% as
export markets are lost and declines in production do not
fully cover this shortfall. The LDC’s, China and Middle

Income Countries increase their imports in response to the

168
price declines switching their domestic production away from
wheat and into coarse grains.

The minimum access commitment imposed on the Developed
Markets in coarse grains results in a dramatic 8.7 million
ton (38.5%) increase in imports in 1987. The main suppliers
of these increased imports are the U.S. and a relatively new
entrant to the export market, China. Canada and Argentina
also :manage to increase their' exports. The increase in
imports by the Developed Markets is matched by a similar
increase in domestic utilization, thus maintaining the
firmness of market prices which continue to rise over the
entire period. The 1991-95 average price rise is $14.04 per
ton, spurring major production increases in the U.S. (14.5
million tons or 5.4%) and China (14.3 million tons or 22%)
and smaller increases in Canada, Argentina, the LDC’ s and
the Middle Income Countries.

Imports are down as all regions, except the Developed
Markets with their access obligation, switch from coarse
grains to wheat. This is further reflected by declining
utilization except in the Developed Markets and China. This
increased utilization by the Developed Markets explains why
despite major increases in imports, stock holding over the
period actually marginally declines. The U.S. however
experiences a gradual rise in stock levels with a 1991-95
average annual increase of 68.1 million tons (28.1%), which

helps to explain the maintenance of firm market prices.

169

In the soy complex market there is little change in
world trading patterns except that Argentina emerges as an
even stronger exporting force in all three forms,
particularly beans. This is as a result of a switch away
from domestic consumption to exports, as been prices rise by
an average 17.6% over the 1991-95 period. This is a result
of increased stock holding by the U.S. at the same time that
world production remains unchanged. No other discernable

impacts occur for the Developed Markets or the U.S..

Scenario Two
Assumptions:

- The same as scenario 1 except import restrictions for
the EC are phased. in over' eight years in equal
amounts starting in 1987.

Overall the results for Scenario 2 fellow the pattern
established in Scenario 1. Therefore rather than re-state
these trends emphasis will be placed on how this set of
results differs from the results for scenario 1 with these
differences being expressed in terms of deviations from the
baseline.

In the wheat market by the end of the period the
average results for 1991-95 are almost identical to Scenario
1, except for prices which have declined further by an
additional $3.28 per ton. This is a result of prices taking
longer to recover from the initial drop, only exceeding 1987

levels in 1994. While the end results of trading patterns as

170

a whole are mostly unchanged, some differences emerge over
the period. With the access commitment phased in, the
Developed Markets do not become net importers in 1987 as
before. This correspondingly reduces the increase in U.S.
and Canadian exports for that year by 3.6 and 1.6 million
tons respectively. The result for the Developed Markets over
the entire period is that for 1991-95, exports of wheat each
year are reduced on average 0.7 million tons (12%) less than
under Scenario 1.

A very similar pattern emerges for the coarse grains.
The result of phasing in the access requirement for the
Developed Markets is to diminish the overall increase in
imports over the whole period. In 1987 imports are 8.1
million tons below Scenario 1 levels, resulting in lower
exports principally in the U.S.. As the access commitment is
gradually phased in, imports increase until by 1994 they are
equal to Scenario 1 levels, but it means that the average
level each year for the 1991-95 period is down 4.6 million
tons. As export losses these are borne almost entirely by
the U.S., whose exports of feedgrains are now 1.4% below
baseline levels. This compares to 4.6% above the baseline
under Scenario 1. The only other significant change that
occurs in coarse grains is a direct result of this: U.S.
ending stocks of coarse grains are correspondingly higher.
The 1991-95 yearly average for Scenario 2 is 33.3 million
tons higher than Scenario 1, placing ending stocks 41.8%

above the baseline as compared to 28.1% above under Scenario

171
1. There are no significant differences between the two

scenarios with respect to the soy complex markets.

Scenario Three

Assumptions:

- No restrictions on harvested areas or livestock
numbers.

- Wheat and coarse grain imports to the EC held from
1987 to 10% of domestic production plus any
percentage increase in production, or the level
predicted by the model, whichever is the higher.

The global impact of the policy conditions of this
Scenario are much smaller than in either of the two previous
scenarios. In the wheat market the initial shock of the
imposition of access commitments turns the Developed Markets
into a net importer in 1987 of 1.3 million tons. However in
1988 exports turn positive and over the ensuing years the
deviation from the baseline diminishes though exports remain
significantly lower: an average of 5.3 million tons per year
(44.9%) over 1991-95. These changing trade patterns are
almost exclusively taken up by the U.S. and Canada where
exports are up an annual average of 5.8 million tons (20.8%)
and 1.6 million tons (8.3%) respectively for the 1991-95
period.

The only significant production changes occur in North
America where production is up 5.7% in the U.S. and 5.8% in

Canada. Utilization remains stable everywhere except the

172

Developed Markets where it increases 5.7 million tons (7.5%)
as a result of the increased access. Despite increased
utilization there is also a dramatic increase in stock
holding particularly in 1988 (12.7 m.m.t. or 91.4%) and 1989
(11.7 m.m.t. or 80.7%), but this declines to a relatively
stable average increase of 7.6 million tons (50.9%) annually
for ‘the period 1991-95. Other' significant. stock Iholding
changes are declines in Canada (4.7%), the U.S. (5.8%) and
the Soviet Bloc (5.4%). The overall impact on wheat prices
is small with an average decline for the years 1991-95 of
$1.94 per ton.

In the coarse grain market the major impacts are
confined to the Developed Markets where imports actually
decline from 1988 onwards. This decline peaks at 2.6 million
tons (11.6%) in 1989 and then diminishes to an average level
of 1.7 million tons (7.6%) for the period 1991-95. A decline
is possible since imports were already significantly above
the minimum access commitment. Thus imports of coarse grains
are substituted by the required increase in wheat imports.

Early on in the period, U.S. domestic utilization of
coarse grains increases with a resultant decline in ending
stocks. However, by 1990 utilization declines and stocks
begin to build again, despite some declines in production.
Overall for the 1991-95 period the net result is a minimal
change from the baseline. There are no significant impacts
on the production, consumption and trade of the soy complex

products.

173

Scenario 4
Assumptions:

- No restrictions on harvested areas or livestock
numbers.

- Wheat and coarse grain imports to the EC held to 20%
plus the additional percentage by which self-
sufficiency exceeds 100% of domestic production, or
the level predicted by the model, whichever is the
higher.

In contrast to the relatively small changes found in
the previous scenario, the policy changes adopted in
Scenario 4 have some major impacts on world markets. Under
this scenario, despite the eight year phase-in of access
commitments, the initial shock to the Developed Markets is
great: in 1987 and 1988 there are net wheat imports of 11.3
and 4.3 million tons representing changes of 17.8 and 11.8
million tons respectively from the baseline. These increases
in imports are met by the U.S. which increases its exports
by 13.9 and 9.1 million tons in each year and by Canada (4.8
and 2.8 m.m.t.). The Developed Markets become a net exporter
again in 1989 but by 1991 their export position begins to
decline again such that, while still a net exporter, the
1991-95 average annual decline is 10.0 million tons (84.6%).
These losses have been picked up by the U.S. (10.1 m.m.t.)
and Canada (3.2 m.m.t.), who also gain from. diminished

Argentine exports (down 0.2 m.m.t.).

174

Developed Market production remains unchanged as no
restrictions are imposed but U.S. and Canadian production is
up (6.0% and 9%.0) and China and the Middle Income Countries
production is down (2.3% and 2.2%). Together ‘with the
changes in trade outlined, decreased utilization in the U.S.
and China (4.5% and 1.7%) create some differences in stock
holding patterns. There is an immediate and dramatic 17.8
million tons increase in stocks in the Developed Markets in
1987 with further increases in 1988 and 1989. The stock
level then falls back to an average of 27.0 million tons for
1991-95, representing an average increase of 80.4%.

Canadian and U.S. stock holding follows a mirrored
pattern of this, declining at first, then increasing and
finally declining over the latter part of the period to
attain an average annual decline of 2.3 million tons (12.2%)
and 7.7 million tons (10.7%) respectively. The Soviet Bloc
as a result of increased utilization also runs down its
stocks by an average of 1.2 million tons (22.5%) over the
latter part of the period.

There are some dramatic price changes for wheat over
the period suggesting the introduction of an increased
degree of instability in world wheat markets. The price
declines steadily up to 1990, then recovers a little before
dropping 26.6% in 1993 and then almost completely recovering
in 1995. The relative stability of coarse grain prices at
similar levels helps explain the instabilities in trade,

utilization and stock holding as substitution occurs between

175
the two, depending on the price relationship. Despite the
noted wheat price instability the average price decline over
the period 1991-95 of 11.1% is below the comparable declines
for the first two scenarios.

Generally the changes occurring in the coarse grain
markets are smaller and less unstable. Developed Market
imports decline by an annual average of 2.0 million tons
(8.6%) by the latter half of the period and U.S. exports
decline even more (3.5 m.t. or 2.2%) as the other exporting
nations increase their total exports by 1.2 million tons.
Production levels are relatively unchanged with modest
increases in Australia, Argentina and China. China again
emerges as an exporter despite managing to increase domestic,
utilization.

The only other significant change is in U.S. stock
holding where there is a steady increase. Stocks are up 2.3
million tons (1.5%) in 1987 and this. has risen. to an
increase of 44.4 million tons (13.7%) by 1995. The only
significant impact that the policy changes have on the soy
complex are a 7.0% increase in U.S. stock holding of beans
resulting in a 4.2% price decline over the 1991-95 period.

Meal and oil prices are correspondingly somewhat lower.

6.2.4 Overall Analysis of the Results
From the viewpoint of the robustness of the model the

results are very satisfactory. The scenarios placed

176

significant policy shocks on the model, which could possibly
have limited its ability to converge. However in all the
scenarios the model on balance converged as easily as in the
baseline, only exceeding the iteration limit imposed on the
model in three individual years out of all years across all
of the scenarios. Thus, it can be said that the model took
the policy shocks in stride and the results can be regarded
as internally consistent.

The most important and also the most obvious element to
emerge from the analysis is the polarization of impacts
between the Developed Markets and North America. Only in a
few instances are major impacts of the policy changes felt
by other countries. These instances occur for the most part
in Scenarios 1 and 2, somewhat in Scenario 4 but hardly at
all in Scenario 3.

The general pattern is one of the U.S. and Canada
filling the increased level of imports to the Developed
Markets that result as a consequence of policy changes. In
coarse grains China emerges as a major beneficiary of the
policy changes becoming a major exporter over the period,
from an initial position of approximate domestic supply and
demand balance.

In the first two Scenarios, Australia is seen to lose
out in the export markets relative to other exporters
particularly in wheat markets. One interesting result of
Scenario 4 is the lack of effect the policy measures have on

Australia compared to the first two scenarios. This can

177
probably be attributed to a particular sensitivity to price,
where Australia is at the margin of competitiveness relative.
to North and South America.

Further interpretation of the effects of the various
policies on the U.S. and the Developed Markets, with
particular reference to the impacts on domestic farmers,
will be given in the next chapter where the study examines

policy positions taken on the proposals.

CHAPTER SEVEN

APPLIED ANALYSIS OF THE MARKET ACCESS PROPOSALS

7.1 Summary of the Market Access Proposals Analysis

In the previous chapter a number of scenarios concerned
with market access for agricultural products were analyzed
empirically using the MSU Agriculture Model. The results
were presented in terms of annual tonnage changes in
production, consumption, trade and ending stocks. However,
to analyze the proposals from a political economy
perspective it is helpful to have some measure of the
monetary impacts of the proposals, since monetary costs and
benefits are an important part of political calculus.

As has been noted, the major impacts of the policy
options were felt by the U.S. and the EC. Since these two
trading blocs are also the major focus of this research the
monetary impacts of the proposals are only described for the
U.S. and the EC. A summary of the average annual estimated
change in the values of production, trade and ending stocks
under the alternative scenarios for the period 1990-95 is

given below and in Table 7.1.

7.1.1 Scenario 1
Assumptions:
- Harvested area of grains held to no higher than 1987

levels in the EC.

178

179
Table 7.1
Average Annual Changes in the Value of
Production, Trade and Ending Stocks for Four
MSU Model Scenarios, 1990 - 1995

(In millions of dollars)

PRODUCTION EXPORTS ENDING STOCKS
Scenario 1
U.S.
WHEAT -313.11 1159.65 —2660.86
COARSE GRAIN 5358.84 1456.57 10870.38
EC
WHEAT -1961.67 -847.90 361.48
COARSE GRAIN * 1486.92 1539.08 212.53
Scenario 2
U.S.
WHEAT -735.40 948.31 -2733.22
COARSE GRAIN 4965.12 861.64 14110.73
EC
WHEAT -2232.93 -798.92 329.16
COARSE GRAIN X 1350.84 999.22 192.73
Scenario 3
U. S.
WHEAT 309.67 584.09 -608.69
COARSE GRAIN -594.39 -292.16 -370.73
EC
WHEAT ~159.14 -615.96 821.34
COARSE GRAIN # -241.59 -216.69 -35.24
Scenario 4
U.S.
WHEAT -475.92 670.86 -1684.91
COARSE GRAIN -1096.35 -701.46 1799.38
EC
WHEAT -1112.43 -1161.21 1023.99
COARSE GRAIN * -575.93 -296.43 -84.00
* For Coarse Grains in the EC, Export figure is Imports

180

- Livestock numbers held to no higher than 1987 levels
in the U.S. and the EC.

- Wheat imports to the EC held from 1987 to 10% of
domestic production or the level predicted by the
model, whichever is the higher.

- Coarse grain imports to the EC held from 1987 to 30%
of domestic production or the level predicted by the
model, whichever is the higher.

In Scenario 1, despite an average annual $1.6 billion
increase in the value of all grain exports for the U.S., the
average annual value of stocks increases by $8.2 billion,
which can mostly be accounted for by a $5.3 billion rise in
the value of coarse grain production. The value of wheat
production Ihowever' declinesT by $0.3 billion. In. the EC
average annual wheat production and exports are down $2.0
and $0.8 billion respectively while the value of stocks
increases by $0.4 billion. The value of coarse grain
production increases by $1.5 billion which is approximately
equal to the increase in the value of imports. EC stocks
increase in value terms to an annual average of $0.2

billion.

7.1.2 Scenario 2
Assumptions:
- The same as scenario 1 except import restrictions for
the EC are phased in over’ eight years in equal

amounts starting in 1987.

181

Scenario 2 in general slightly lessens the adverse
impacts on the EC and the beneficial impacts on the US of
the first scenario. However, the average annual value of EC
wheat and coarse grain production deteriorates by a further
$0.25 and $0.13 billion respectively. The value of U.S.
wheat production is also adversely affected falling a
further $0.42 billion, which can be attributed to the
greater decline in wheat prices on the world market under

this scenario.

7.1.3 Scenario 3
Assumptions:

- No restrictions on harvested areas or livestock
numbers.

- Wheat and coarse grain imports to the EC are held
from 1987 onwards to 10% of domestic production plus
any percentage increase in production, or the level
predicted by the model, whichever is the higher.

The value impacts of Scenario 3 are the smallest of the
four alternatives but are considerable nonetheless. The
average annual value of production falls in all cases except
for U.S. wheat which rises by $0.31 billion. This occurs as
exports increase in value by an annual average of $0.58
billion and stock values decline by $0.61 billion. While the
value of U.S. coarse grain holdings decline, so also do the
value of exports by $0.29 billion. By contrast, wheat

creates more problems for the EC than coarse grains. The

182
value of wheat production and exports are both down, while
stock values are up $0.82 billion. The modest gain in the
decline in the value of EC coarse grain stocks ($0.03 bn.)
and the substantial decrease in the value of imports ($2.2
bn.) are matched by a decline in the value of domestic

production of an average of $2.4 billion annually.

7.1.4 Scenario 4
Assumptions:

- No restrictions on harvested areas or livestock
numbers.

- Wheat and coarse grain imports to the EC held to 20%
plus the additional percentage by which self-
sufficiency exceeds 100%, of domestic production, or
the level predicted by the model, whichever is the
higher.

In Scenario 4, the effect of a sharp decline in wheat
prices has mixed blessings for the U.S. and is generally
negative for the EC. While, on an average annual basis,
U.S. exports increase in value (by $0.67 bn.) and stock
values decline (by $1.7 bn.), the value of production
declines (by $0.47 bn.). For the EC production and export
values are down (both by $1.1 bn.) to the extent that the
value of stocks held is up by $1.0 billion. A similar
pattern emerges in the U.S. coarse grain market; the value
of production and exports are down by the amount that the

value of stocks is up ($1.8 bn.). However the impact on the

183
EC coarse grain market is more balanced with a decline in
the value of production (of $0.57 bn.) being matched by a
decrease in the value of imports ($0.30 bn.) and stocks

($0.08 bn.).

7.1.5 Synthesis and Supplemental Research

From the above it can be seen that each scenario
affects different groups in different ways. In certain cases
wheat and coarse grain producers gain together while at
other times the two diverge. Sometimes production gains
while stockholding decreases and sometimes the reverse is
true. Different trading patterns emerge in each scenario.
Thus, sometimes farmers and governments gain together both
domestically and internationally but more often there are
trade-offs both between the U.S. and the EC and also
domestically between farmers, consumers and taxpayers. It is
in trying to balance these differing interests that an
understanding of domestic decision processes can aid in the
analysis of the political feasibility of negotiating trade
policy options.

Before proceeding to this part of the analysis, it is
necessary to introduce a further element to the empirical
analysis. It has already been noted that it would be useful
to have some idea of the likely impacts of a move towards
trade liberalization in other commodity areas. Therefore the
results of two other models that contain estimates for the

dairy sector will briefly be reviewed.

184

The Food and Agriculture Model of the International
Institute for Applied Systems Analysis (IIASA) and the world
model of Tyers and Anderson have both produced a number of
different liberalization scenarios. For the purposes of
comparison to the work in this research, their scenarios of
liberalization of policies in OECD markets are the most
relevant. These models have not considered specific GATT
proposals on market access or subsidies per se, but have
modeled the level of protection afforded in developed
countries and then have simulated its removal to produce a
liberalization scenario. This makes comparison illustrative
rather than definitive.

In the IIASA model trade distortions are represented by
the nominal rate of protection which measures the average
difference between the domestic and lowest exporter price in
1980-82. Liberalization is achieved by removing this for the
OECD countries, and the results presented are for the year
2000. The world effects in the dairy market are increases in
prices, production and trade of 31%, 2%, and 13%
respectively. The EC remains a net exporter, although
exports are, down Iby 60%. However' producer' and consumer
prices continue to rise as production declines, the
explanation being that the wholesale removal of resources
from the agricultural sector creates a price result that
would not be predicted by a static partial equilibrium

analysis.

185

The results of the impact on the U.S. have been
criticized: "The liberalization results... appear unusual in
terms of what one would expect following the removal of the
80 percent nominal protection rate: accorded.‘U.S. dairy.
Output declines only 12% upon a producer price decline of
28%. This must be due to the model failing to include
production quotas and other rigidities in its measure of
protection to be removed... " (Sarko, p. 69). Despite only a
small drop in production, imports increase seven-fold.

The results of the Tyers and Anderson analysis show
world dairy prices rising 27% and trade increasing by 95%.
The surprising result, however,. is the large shift in the
patterns of trade. The industrial market economies move from
a position of exporting 94% of world dairy trade to
importing 86% of the total.

While the price effects predicted by the two models are
reasonably similar, the predictions on trade patterns are
not that close. However it is possible to make some overall
inferences on the likely paths of the EC and U.S. dairy
industries. Under this kind of liberalization, it is
unlikely that the EC dairy industry would profit relative to
the U.S. industry. A severe loss of export markets would
occur for both and there would be considerable encroachment
by imports, particularly from Canada and New Zealand, but
also quite probably from a few developing countries.

However, if liberalization was not quite as complete

and followed the structure outlined in the GATT market

186

access proposals, the picture would likely be less bleak for
these two. The major disruptions predicted above resulted
from the price effects of liberalization. If price supports
were maintained in total or in part, but liberalization was
partially achieved through increased market access
opportunities, the research would suggest that EC dairy
products could make inroads to U.S. markets. However it is
unlikely they would be large enough to balance the U.S.
gains in grain markets, since under the Most Favored Nation
principle of the GATT, the EC would be competing against New
Zealand and Canada for the increase in access to the U.S..
It is not possible to infer anything more specific than this
about the impact of new market access proposals in dairy
markets.

One more qualifying consideration needs to be added
before proceeding. The analysis of Chapter Six applied only
to market access, while the above analysis was for across
the board liberalization. In any GATT talks in the new round
attention will be focused as much on subsidy questions as
market access. Thus the analysis that follows is limited by
its ceteris paribus nature, in that subsidy impacts will be
a part of the negotiating calculus. These can. only' be
alluded to, since they have not been quantified in this
analysis. With this in mind, it is now possible to turn to a

consideration of the political dimensions of the proposals.

187

7.2 Policy Positions Toward the Market Access Proposals

The results of the modeling outlined above were shared
with some of the interviewees currently involved in the
policy process. The positions described below are based on a
combination of the responses received and speculations
derived from the predictive capabilities of the political
economy analysis of the preceding chapters. Inclusion of a
position indicates a corroboration between what might have
been expected from the preceding analysis and the actual

corroborated responses from the interviews.

7.2.1 The U.S. Position

Looking specifically at the market access proposals,
many (of the nuances predicted in general policy attitudes
are naturally reflected on this specific issue. Reagan
Administration general philosophy would dictate that a
rather more dramatic approach be taken towards the market
access question than is outlined in the scenarios given. As
part of an attempt to bring agriculture more fully into the
GATT, the ultimate aim would be to remove the special
treatment afforded agriculture with respect to market access
and subsidies.

However within the administration there appear to be
opposing pressures and elements of pragmatism. Therefore the
different approaches to the market access question become of
interest and relevance. From the perspective of FAS these

proposals represent a middle ground between the perceived

188

"U.S." and "EC" positions. Under ideal circumstances FAS
contends a desire to move towards overall agricultural trade
liberalization. However, under the reality of an adversary
in the form of the EC that. would still desire ‘market
sharing, this middle ground may become perhaps a suitable
area in whidh to negotiate. It further obviates the chance
of FAS coming into conflict with commodity specific interest
groups, as would inevitably occur if all import restrictions
were put up for abolition. Within USDA as a whole, the
rhetoric may be for Section 22 quotas to be considered
negotiable, but there is an acceptance of the possibility
that the EC will not want to go as far as this would imply
on market access, thus making the "middle ground" the likely
area of negotiation.

At this stage, Treasury with its free trade orientation
would also prefer not to consider such apparent compromises,
but is aware that they may necessarily become the essence of
the negotiations. State however, always having been more
amenabLe to compromise in agriculture would be more
receptive to an immediate recognition of the approach laid
out in the CTA proposals, particularly as it concerns market
access.

As would be expected from past performance, USTR will
hold out longer than others in admitting to the middle
ground. At present there is a desire to push beyond the CTA
proposals for more sweeping reform of world agricultural

trade. Philosophically the market access proposals are seen

189
presently as too much of an acceptance of the status quo in
domestic policies. Given the present lack of a particular
agricultural expertise within the White House and the
particular interest in agriculture of Clayton Yeutter, this
position can be considered representative of the
administration.

If the middle ground that these proposals represent is
admitted to, the question then becomes that of choosing
between the alternatives. There are two aspects to this: one
economic and the other political. In economic terms, there
is a clear split between wheat and coarse grain farmers,
with wheat producers gaining under Scenario 3, and coarse
grain producers gaining under Scenarios 1 and 2. No one
benefits under Scenario 4, which creates higher 'valued
ending stocks for the government. However government
exposure is reduced in terms of stock holding under Scenario
3, but the size of the reduction is small in quantitative
terms relative to the absolute increases in stocks in
Scenarios 1 and 2. With such mixed results, the political
dimensions could be expected to play a large role in forming
negotiating perspectives.

All the scenarios reflect an admission of agriculture
maintaining exceptional status under Article XI of the GATT.
However, the manner and degree of protection afforded
differs among them, each suiting different political
philosophies. Scenarios 1 and 2 recognize the present

emphasis under GATT for only allowing import restrictions

190
where domestic programs aim to curb domestic production.
This moves away from the free trade ideal and is thus not
consistent with present administration policy. However this
is preferable to the withdrawal of this requirement under
Scenarios 3 and 4. Philosophically or strictly politically,
within the U.S. there is little reason to distinguish
between the different criteria for measuring the minimum

access commitment under each scenario.

7.2.2 The EC Position

As was the case in previous sections, much of the EC
analysis relies on input from U.S. interviewees as well as
the Europeans interviewed. The views of those U.S.
participants most familiar with the EC were obviously
considered more directly than those of less involved
participants. Thus what follows is a combination of
corroborated interview material and speculation based on the
political economy framework.

The market access proposals come closer to the general
orientation of EC approaches to potential GATT outcomes than
to those of the U.S. . However they are not what would be
expected as EC preferences. There is still within the
Commission a commitment to the principles of market sharing
and commodity agreements as a method of liberalizing
agricultural trade. This position is certainly evident

within DG VI and seems sure to be pursued by DC I.

191

The budgetary considerations of the current CAP make it
likely that the Commission would not be as inflexible in
negotiations as they were in the Tokyo Round and would
therefore more easily consider minimum access commitment
proposals. The Agricultural Council of Ministers however is
likely to be less willing, although it is thought
differences in approach exist among members, with the U.K.
at the forefront of initiatives for reform based on
budgetary considerations.

The interest groups, individually and through COPA, are
concerned. with_ protecting' the sanctity' of the. CAP, and
therefore want as uncompromising a negotiating position as
was evident in the Tokyo Round. This would involve not
admitting to the possibility of minimum access commitments.
This view has been directly expressed by the Economic and
Social Committee, which stated that in defence of the CAP
and in order 'to reduce, export subsidies "the Community
should avoid any major changes in its import arrangements.
It is not possible to accept a liberalization of imports
without exacerbating the surplus problem" (Economic and
Social Committee, p. 3).

In economic terms implementation of any of the market
access proposals would have a negative effect on Community
farmers and the EC budget overall. However EC coarse grain
farmers would benefit under Scenarios 1 and 2, but the gain
would be less than the loss to wheat farmers. Given the

efforts within the Community to end the open-ended nature of

192
supports through the introduction of milk quotas and cereal
coresponsibility levies, Scenarios 1 and 2 would be
politically most acceptable because of the explicit
necessity to limit production. In choosing between Scenarios
3 and 4, the latter would seem the least acceptable since it
has the worst economic impacts as well as appearing to be

designed specifically to penalize the EC.

7.3 Observations on the Political Feasibility of the Harket
Access Proposals

It. has been. asserted. above ‘that, the :market access
proposals are far from representing what either the U.S. or
the EC would desire as a way to approach liberalization in
the next round. Yet these proposals are emerging from the
GATT CTA, which has to a considerable extent been dominated
by the U.S. and the EC. The negotiators that have been
involved in the committee's work have not been isolated from
the political climate of their respective countries. One
possible inference from this would be that for all the
rhetoric that is being made domestically, these proposals
are likely to be a central part of the negotiations.

This being the case, what can be said about the
differences between the proposals? The differences take the
form of whether efforts are made to control domestic
production, whether ‘there is a jphase-in. period and the
method by which the minimum access commitment is calculated.

Scenarios 1 and 2 are only distinguishable by the phase-in

193
period. With no phase-in the gains to the U.S. and the
losses to the EC are greater. However while the U.S. gains
more under Scenario 1, it is likely there would be
acceptance of the need to phase-in the scheme, which
undoubtedly would be the EC position.

The largest problem associated with Scenarios 1 and 2,
would be reaching agreement on the proportion of imports to
domestic production that would have existed in the absence
of restrictions. In modeling the scenarios a method was
introduced by assumption, but in negotiations reaching a
final decision on such a measure would be difficult. The
temptation to manipulate the measure in order to change the
final result would create problems of confidence in the
negotiations. However the work being conducted currently by
the OECD to develop a universally acceptable measure of
levels of protection could contribute to avoiding this
problem. Under the OECD Trade Mandate Study, levels of
protection in individual countries are calculated in
Producer and Consumer Subsidy Equivalents (PSE's and CSE’s).
If such a measure were to be accepted by the GATT
contracting parties, bearing in mind all of the objections
to the economic concepts of consumer and producer surpluses,
then this sort of approach might prove to be possible.

Scenario 3 appears to be a more pragmatic approach in
that individual countries are left sovereign over any
attempts to regulate production, with an arbitrarily fixed

form of penalty where such attempts are not made or are not

194
effective. This relieves negotiators of the responsibility
of agreeing to a particular logic or methodology that could
be subject to :marginal negotiation. The fact 'that this
scenario has the least dramatic impacts of the four suggests
that it would receive high consideration.

While appearing to penalize the most blatant "wrong-
doers" on international markets, Scenario 4 is less
appealing than might have been expected. The proposal
contains the kind of rhetoric that has been leveled at the
EC by many countries including the U.S.. However as past
negotiations have shown, aggressive negotiating strategies
seldom if ever work. Little was achieved in the Tokyo Round
while the U.S. and EC were so diametrically opposed on
approaches. It was only after there was some compromise that
progress towards agreements could be made. On this basis,
the antagonistic approach outlined in Scenario 4 would seem
destined to fail. Furthermore, the impact of Scenario 4 on
world markets is the most disruptive of all the proposals,
at considerable expense to the U.S. as well as the EC; both
U.S. wheat and coarse grain farmers loose under this
scenario.

In choosing between these options it is considered that
a phase-in period would be essential, controls on production
would be preferable and the method of calculating minimum
access commitments be as arbitrary as possible. In this way
the chances for international and domestic political

differences to obstruct progress would be minimized. Thus

19S
Scenarios 2 or 3 or some hybrid would appear to be the most
likely choices, when viewed in isolation.

Whether any of these proposals becomes the core of an
agreement reached in the new round will depend also on the
approaches taken over the subsidies issue. This is likely to
be an even harder topic with which the negotiators must come
to grips. Whatever might be agreed on subsidies will
undoubtedly have an economic impact on the specific outcomes
of market access proposals. It would appear that discussion
of subsidies and the consequent linkages between domestic
policies and international trade is likely to progress in
the new round. Recent domestic decisions both in the U.S.
and the EC, and international discussions suggest this is
the case, if only for domestic budgetary reasons. There is
some reason to believe that even the agricultural interest

groups are beginning to accept this as an eventuality.

CHAPTER EIGHT

CORGI-US IONS

8.1 Policy Positions Toward the New Round

Having studied the likely positions of the U.S. and the
EC toward the market access proposals, indications of the
more general attitudes of the two countries toward
agriculture in the new round can now be outlined. This will
be done both from the perspective of what the analysis of
the decision process would predict, the views of the process
participants interviewed and what is presently known from
the public record.

It appears from the foregoing analysis that some
reforms of domestic and international agricultural policy
are more likely than they have been in any previous round of
negotiations. This statement in one form or another was made
at the outset of each of the previous two rounds that
attempted seriously to deal with nontariff trade barriers,
and yet little substantive progress was made. What makes the
situation any different today?

It has been suggested here that it is changes in the
policy process itself that may make the difference. The
changes that have been identified are not so much changes in
the institutions involved, although some such changes have
been noted. Rather it is changes in the perceptions of
policy participants that will likely make the difference.

What is perceived to be a politically feasible outcome of

196

197
the policy process today is considerably different from
perceived outcomes at the time of the Tokyo Round. Although
the agricultural interest groups maintain a strong position
within the policy process, their ability to maintain the
status quo is changing both in the U.S. and the EC.

The need to integrate domestic and international
policies is becoming more apparent within the policy process
and. as that. happens the likelihood of such integration
increases. This perception has been created by the effect of
changes in long term economic forces, as predicted by the
model. In a world economy of increasing interdependence,
recent domestic and trade legislation in the U.S. and the EC
reflects the realization that the subsidized economics of
agriculture is now not only too expensive, in light of U.S.
and EC budget deficits, but counterproductive to both
domestic and world development.

While this study of the policy processes of the U.S.
and the EC does not allow any definitive predictions of
outcomes for the new round, some predictive insights can be
gained. In discussing the positions of the U.S. and EC, the
analysis relies on the product of this research, which was
completed at the end of 1986. However, the discussion of
overall prospects for the new round, in addition to relying
on the foregoing analysis, also presumes a knowledge of the
activities of the subsequent six months. These activities

included the OECD Ministerial meeting, the Venice Economic

198
Summit, and the tabling in the GATT of the opening U .8.

position on agriculture in the new round.

8.1.1 The U.S. Position

The analysis of Chapter Four provides some insights
into the manner in which the U.S. is approaching the new
round of negotiations. The existence of the budget deficit
and the high cost of farm programs are acknowledged as major
influences on the perceptions of policy participants. The
Treasury and OMB are concerned about the cost of domestic
programs and are therefore looking to the international
trading environment and U.S. comparative advantage as
opportunities to change the direction of domestic policy in
line with liberalization objectives of the GATT. USDA is
similarly disposed in a general sense, though there remains
a reticence within FAS to move on market access if the
negotiations fail to be all-encompassing. The greater
benefits are perceived to exist by tackling the subsidy
question, while deferring to the traditional protectionist
instincts of such interests as the dairy lobby over market
access.

These positions are consistent with Reagan
Administration ideology within the executive branch. USTR is
inclined towards major liberalization efforts in
agriculture. The State Department would again seem to be
closest to EC hearts with some inclination toward commodity

agreements.

199

Given continued financial stress in the agricultural
sector, the interest groups and Congress would be expected
to have a somewhat different perspective. Traditionally more
subject to the pressures of particular constituents, these
actors are more likely to be pushing for protectionist
responses to the perceived shortcomings of present programs.

Are these positions consistent with the events of the
recent past? The evidence of the 1985 Farm Bill suggests a
movement towards a more market oriented approach to
agriculture in the U.S., which was led by Reagan
Administration philosophy. However as this legislation
initially came to be perceived as having failed to alleviate
many of the income problems of the farm community, there was
a drift in policy discussions towards more market
interventionist, if not protectionist policies, both inside
and outside of the administration. Certainly the positions
of the interest groups and the Congress have moved toward
protectionism under the pressure of recent events. There
have been and continue to be calls for higher protection for
agricultural producers even to the extent of taking U.S.
agriculture out of the world market, in as much as this
would occur under some of the high internal price support,
mandatory production control schemes that have been
suggested for major commodities.

The administration response has been to place increased
emphasis on the potential of trade negotiations in

combination with the 1985 Farm Bill to achieve results

200

through increased trade performance and liberalization. The
spiralling costs of the domestic programs combined with the
pressures created by the federal deficit have helped the
administration. down-play such. protectionist. possibilities
because of their high costs; most observers believe a move
to more protectionist policies would likely increase
government costs which are already higher now than ever
before. At the same time, the farm economy is beginning to
pick up with land prices and net farm income firming (albeit
with a large government contribution). Therefore the
interest groups are beginning to lobby to leave the farm
bill alone, feeling that it is perhaps beginning to work.

These events have contributed to providing the right
environment for the administration to try to place
‘agriculture on a "fast track" in the GATT negotiations. This
is a position pushed by USTR and supported in the White
House and USDA, with only measured acceptance from State
because of the logistical considerations of an accelerated
time-frame. On the one hand it is feared by policy observers
and participants that the agricultural community will not
believe that anything negotiated under a fast track will
help in the short run and will therefore maintain
protectionist pressures on the domestic policy scene. On the
other hand many believe that improvements in the U.S. farm
sector will allow the directions of lower target prices and

loan rates and increased overseas competition established in

201
the 1985 Farm Bill to be developed as an initiative in the

new round of trade negotiations.

8.1.2 The EC Position

Several factors appear to be the primary determinants
of current policy attitudes within the Community. Budget
pressures continue to increase and therefore are affecting
perspectives on policy responses. The Commission would
clearly be in favor of measures that would limit the
expenditures of the CAP. Different member states, in the
degree to which they benefit from the CAP relative to its
costs, would be expected to have conflicting viewpoints.
Thus there likely would be a lack of unanimity within the
Agricultural Council of Ministers as well as, to a lesser
degree, in the Council of Finance Ministers.

This situation has been reflected in recent policy
decisions. Over the last few years the Commission has been
proposing cuts in real support levels for most commodities,
backed up in large part by the British, the Dutch and, until
recently, the Germans. Thus, in 1984 the community
introduced quotas for dairy production and in 1986
introduced a co-responsibility levy on cereal production. In
real terms, support prices for the major commodities have
declined in each of the last four years.

However, in the most recent price negotiations,
elections in West Germany resulted in that country

withholding support for curtailing the CAP. This has lead to

202

one development that was not predicted by the analysis of
Chapter Five. This has been the introduction of
"renationalization of the CAP" as a policy option. Because
of the perceived policy differences amongst member states,
there is pressure to allow individual member states to take
an increasing share of the cost burden of maintaining
support levels. This would alleviate the political pressures
to reach unanimous decisions at the Community level and
avoid the corresponding costs of not reaching decisions.
Member' states would. be freer' to support agriculture at
differing levels. It is hypothesized, and confirmed by EC
representatives interviewed, that this element of the policy
environment had some influence on the decision not to
prepare an "overall approach" for the new round of
negotiations. Under the present. circumstances individual
countries will have greater flexibility to consider their
national trade-offs within the EC/GATT context.

The response of the interest groups to these
developments has been to acknowledge more explicitly the
costs associated with the support programs, and therefore to
accept the possibilities of trade-offs amongst commodities
and between sectors. Their hope is that anything lost by
negotiation at the community level can be regained through
renationalized elements of support policies for which they
are well prepared to lobby.

Thus, as the Community begins to reach a maturity in

some of the policy areas that will be subject to negotiation

203
in the new round, it appears for the first time there will
be less of a determined effort to present a unified position
for the sake of political cohesion. Almost thirty years
after its inception, the Community is finally at the point
where it appears inherently strong enough for national
priorities to openly surface on an international agenda,
without the risk of damaging overall cohesion. This could

well have a major impact on the outcomes of the new round.

8.2 Prospects for the New Round

Knowledge of the U.S. and EC positions gained in this
study may help in predicting outcomes for the round overall,
given the influence these two players have. However, since
the major part of this research was concluded, a number of
important events have occurred. These events bear out some
of the preceding analysis, while pointing towards overall
prospects for the round.

At the OECD Ministerial meeting in Paris in April 1987,
member countries gave the strongest commitment to reform of
both domestic and international agricultural policies that
has ever been witnessed. The U.S. was seen as the major
driving fOrce behind this effort, applying great pressure,
particularly on the EC, to get a strong commitment for
reform.

In order to achieve such forcefulness, the U.S.
demonstrated a comprehensive solidarity on approach between

its own agencies by sending the Secretaries of Agriculture

204

and State and the U.S. Trade Representative in addition to
the Secretary of the Treasury, the usual representative at
such meetings. One of the agenda items was official
publication of the OECD Trade Mandate Study’ which had
calculated overall measures of protection in all member
countries, using' the Producer’ and. Consumer' Subsidy
Equivalent concept. The U.S. team, using this agenda item,
had given advance notice to other participants that
agriculture was a top priority for the meeting.

Given the budgetary pressures of the CAP, and the known
desires of at least the British and the Dutch for major
reform of agricultural policy, certain pressures existed in
the EC to be more open to reform at the OECD meeting. This
was particularly true since at this time the British, whose
political power within the community had been rising because
of their successful negotiations on budget questions, held
the EC Presidency. Mrs. Thatcher, the British Prime
Minister, exerted pressure to get the EC to lean towards the
wide-reaching proposals of the U.S.. Indeed, the final OECD
communique reflected greater U.S. influence than that of the
EC.

The communique that came out of the meeting held forth
the potential for the new round to go far beyond the kinds
of proposals put forward by the GATT CTA, both in terms of
market access and subsidies. The text stated reform will be
based, among others, on the following principles:

The long-term objective is to allow market signals
to influence by way of a progressive and concerted

205

reduction of agricultural support, as well as by

all other appropriate means, the orientation of

agricultural production...

It is necessary on the supply side to implement

measures which, by reducing guaranteed prices and

other types of production incentives, by imposing
quantitative production restrictions, or by other
means, will prevent an increase in excess supply.

Rather than being provided through price

guarantees or other measures linked to production

or factors of production, farm income support

should, as appropriate, be sought through direct

income support (OECD, 1987).

This new commitment, which represented a substantial
fleshing out of the earlier commitments given at the
previous year’s Tokyo Summit, set the stage for the Venice
Summit two months later. Here the U.S. tried to further
strengthen commitment to wholesale and all encompassing
reform, with President Reagan expressing the wish to see the
elimination by the year 2000 of all forms of interference in
agriculture that affect trade, both domestic and
international. Only those government supports that do not
influence production levels or trade would be allowed. While
the other participants did not fully endorse this approach,
which was very generalized with little reference to
specifics such as grades and standards or domestic or
international food. assistance, there ‘was a :renewed
commitment to the principals laid down at the OECD
Ministerial meeting. This was an important enough
achievement, since it illustrated that there was no

intention to backslide on the part of the EC or the

Japanese.

206

The broad principals embodied in President Reagan’s
Venice address were further developed when the U.S. tabled
its formal proposal for agricultural reform before the GATT
Uruguay Round Agriculture Committee in Geneva on July 6th,
1987. The proposal calls for the elimination of all direct
and indirect subsidies to agriculture that affect trade, the
elimination of all market access barriers and the improved
cooperation in applying health and phytosanitary
regulations. All of this is to be achieved over a ten year
phase in, starting retroactively from the Punta del Este
GATT Ministerial meeting.

This U.S. position is quite different in approach from
either the market access or subsidy proposals that were
being discussed in the GATT CTA, the former being very broad
based and the latter very detail oriented. The analysis in
this research would indicate that such a move had become
possible because of the continuing shift in perceptions of
policy participants both in the U.S. and elsewhere. Most
participants interviewed agree that, while protectionism was
rife in uys. politics in general, in agriculture there had
been a subtle shift towards a more general acceptance of the
move towards market orientation that the 1985 Farm Bill had
originated.

This change contributed to the reinforcement of a
coherent position among government agencies as well as with
the interest groups. At the June 1987 meeting of the

Agricultural Political Advisory Committee between Secretary

207
Lyng and Ambassador Yeutter and the member interest groups,
the administration received an overall endorsement for its
approach. Observers and this research indicate that such an
outcome would have been less likely at the start of the
Tokyo Round.

In addition to the general change in perceptions noted,
personalities seem to have played a large part in enabling
such a radical U.S. position. A striking likeness of mind
appears to have developed between Secretary Lyng and
Ambassador Yeutter, and also with Ambassador Amstutz who has
played as large a role as the two cabinet members up to this
time. All three are highly regarded by the agricultural
community, both in government and the private sector, which
has allowed them to pursue such a sweeping approach.

One other, less positive factor has contributed to the
early smooth passage of the U.S. approach, namely cynicism.
It is possible that many players, particularly the interest
groups, have gone along with the proposal simply because it
is so drastic a change that they do not believe that it
could ever happen. History suggests that most changes occur
marginally and the changes being contemplated here are far
from marginal.

Within the administration it is possible that
previously reticent players such as State view the proposal
as simply a good starting point for negotiation. For the
interest groups, support has been prefaced by the condition

that the round successfully dismantle many elements of the

208

EC’s CAP. It is possible that these groups believe this will
never happen and therefore feel safe in supporting a U.S.
position likely to diminish their level of government
support. The extent to which this kind of cynicism has
influenced player's positions is difficult to ascertain, but
it certainly is one important element according to some of
the participants interviewed.

The reaction of the EC to the U.S. position was
initially very non-committal, stressing the practical
difficulties of achieving such radical changes. A negative
position could have been expected, given the Community’s
past approach towards agriculture in the GATT. That the
statements made were not more negative can probably be
attributed to two factors. First, it would be difficult for
anyone to dispute the high ground taken by the U.S. with
such a free market approach, except on second best grounds
which admit the downside of not achieving all the goals set
out; the position represents perhaps the most widely held
view of an ideal for the agricultural sector. Second, and
perhaps more important, is the shift that has been
identified as occurring within the EC towards greater fiscal
accountability in the agriculture programs. Major reform of
the CAP appears increasingly inevitable, and as this occurs
it becomes ever easier to link domestic reform to the
imperatives for international reform.

With these unpredictable beginnings, the prospects for

the new round become increasingly difficult to outline.

209
Economic theory has more often been used in more marginal
kinds of analysis. While political science has been applied
to more drastic discreet situations, such as Allison’s
analysis of the Cuban missile crisis, this has usually been
in ex post situations. In spite of this, the foregoing
analysis has at least put these prospects into some degree

of perspective.

8.3 Observations on the Research Approach and Concluding
Remarks

This research has achieved a number of objectives, some
more modest than others. First, in chapters three, four and
five the events of the Tokyo Round have been described from
the U.S. and EC perspectives more completely than they have
apparently been recorded elsewhere. The methodology employed
has imparted to this description a cohesiveness that might
have been lacking, if the events had merely been described
chronologically. Only by understanding the particular
constraints that faced each organization or each individual
involved in the negotiations, is it possible to appreciate
the course of events and their final outcomes.

An understanding of the policy process has been
combined with empirical analysis to draw inferences
concerning political feasibility of policy options. This has
been somewhat successful, although it is considered that the
degree of detail that can be inferred from a study of the

policy process does not match the degree of detail generated

210

by the empirical analysis. In choosing between the modeled
scenarios concerning market access, knowledge of the policy
process helped to a degree that did not match the level of
complexity of the empirical analysis. However it should also
be remembered that the empirical analysis was itself full of
assumptions and. thus should. be interpreted. broadly, not
literally. While the analysis is ridh in complex elements,
the accuracy of each individual detail is open to
considerable question.

In responding to the empirical analysis of the CTA
options, policy participants interviewed were more
interested in the overall philosophical and economic
orientation of the alternatives than the actual empirical
predictions of outcomes. This could have a number of
implications. One, is that for this type of research the
detail of numerical analysis can be kept to a minimum.
Another implication is that the value to policy makers of
empirical analysis can sometimes perhaps be over-rated.
While it is acknowledged that the empirical analysis of this
research was wrought with assumptions making it of
indicative value only, this is felt by many policy makers,
and was expressed by nearly all participants interviewed, to
be the case of most empirical analysis.

The hypotheses of the framework have largely been borne
out by the research. It was indicated that incompatibilities
potentially existed between the hypotheses; the research

‘would suggest that the hypotheses are of a temporal nature.

211

Where it was suggested hypotheses might be incompatible it
has been found that particular hypotheses apply at different
points in time. For example, it is evident today that there
is more interaction between domestic and international
policies, such that in the new round there is a greater
chance that they may be negotiable together than at the time
of the Tokyo round.

When comparing the analysis of the U.S. and the EC
sides of the Tokyo round, the data requirements of the
research become evident. A greater understanding of the U.S.
decision process was gained by virtue of being able to apply
the Governmental Politics model of analysis. However the
flexibility offered by having a number of different
approaches illustrates the strength of this research
approach. Furthermore, the level of analysis achieved is
made explicit by the choice of model.

Upon reviewing the research it is possible to add one
further hypothesis that has been implicitly acknowledged but
deserves to be explicitly stated, since it will certainly
have a major impact on the new round. In studying the events
of the Tokyo round it was acknowledged that by the end of
1975 it was clear no real progress would be made until after
the U.S. presidential election. The implication is that
where a series of negotiations are known to be likely to
last for a period of time that approaches or exceeds the
length of the political election cycle, that cycle will have

a major impact on the timing of the substantive parts of the

212
overall negotiations and therefore possibly the outcomes.
Already within the U.S. and EC, policy makers are
speculating on the outcome of the 1988 elections in the U.S.
and its likely impact on the outcomes of the new round.

This mortal aspect of the life of an administration or
a government may have a great deal to do with the "fast
track" or "early harvest" approach being pursued by the U.S.
for agriculture. This may be true for two reasons. First,
key members of the Reagan Administration perhaps believe
that whoever succeeds them may have neither the political
inclination or 'will or' both to follow’ the same course
through to a conclusion. Thus it becomes necessary to
complete the task before a new President is inaugurated. A
supplemental argument to this is that the momentum generated
by a "fast track" creates a greater possibility for a
successful negotiation. The second possible reason is more
personal and relates to individual ambition: the desire to
be recognized as the ones that got the job done, from start
to finish.

Even if the major components of an agricultural
agreement could be concluded within the lifetime of the
present U.S. administration, which. most interviewed
participants both inside the U.S. administration and
elsewhere agree is unlikely, much negotiation on its
implementation would continue beyond 1988. Thus, the detail
and description of the Reagan Administration outlined in

this research will help in predicting the initial course of

213
the negotiations, but it is acknowledged that the final
outcome could follow a very different direction.

Explicitly stated as such it becomes clear that in
considering the political feasibility of options for the
Uruguay Round, questions that need to be answered fifist are
who will win the various national elections between now and
the end of 1988. The outcomes of these elections may have as
large an impact on final outcomes to the round, as anything
that is negotiated by present administrations and
governments over the next two years. However the stability
and knowledge base of the bureaucracy that remains unchanged
between administrations may diminish the election effects.

Such acknowledgements in no way diminish the
achievements of this research approach. It is in studying
the policy process in such a manner that implicit
assumptions can be made explicit and brought into an
analytical calculus to aid decision makers. If this research
has made it possible for’ decision :makers to ‘view :more
clearly the possibleoptions in front of them, a major goal
will have been. achieved. Future :research.'will. hopefully
further clarify the process.

Obviously one area in which future research is needed
is at the descriptive level. In the context of this research
it would be useful to extend the analysis of the EC decision
making process as it relates to GATT negotiations. More
detailed analysis of the Tokyo Round decisions would aid

this. In general there is a need to expand the number of

214
case studies of how major policy decisions are arrived at
both in domestic and international environments.

On the analytic level, there continues to be a need to
further embody within the research fundamental economic
principles. While it is felt that the research adequately
adopted the principles of the conceptual framework, it may
be possible in future research to make the linkages more
explicit. This calls perhaps for a greater coordination of
research effort between analysts pursuing the type of
research contained in this study and economic modelers who
are aiming to endogenize government behavior. It also calls
for more multidisciplinary work between economists and
political scientists.

As with any pursuit for knowledge, analysis of
increasing levels of detail can require increasingly diverse
analytical tools. But, as was illustrated by the interviewed
policy participants' lack of concern for the empirical
detail of the analysis of the CTA options developed using a
complex econometric model, use of such tools does not
necessarily imply greater understanding of the questions
raised by the research: in this case the greater
contributions of the research came from the analysis of the
policy process itself. Thus, the challenge for extending
this kind of analysis lies in balancing the two approaches,
political economy analysis and empirical economic analysis,
and, in so doing, developing a successively more useful mix

of analytical tools.

APPENDICES

APPENDIX 1

Article XI of the GATT
General Elimination of Quantitative Restrictions

1. No prohibitions or restrictions other than duties,
taxes or other charges, whether made effective through
quotas, import or export licenses or other measures, shall
be instituted or maintained by any contracting party on the
importation of any product of the territory of any other
contracting party or on the exportation or sale for export
of any product destined for the territory of any other
contracting party.

2. The Provisions of paragraph 1 of this Article shall
not extend to the following:

(a) Export prohibitions or restrictions temporarily applied
to prevent or relieve critical shortages of foodstuffs
or other products essential to the exporting
contracting party;

(b) Import and export prohibitions or restrictions
necessary to the application of standards or
regulations for the classification, grading or
marketing of commodities in international trade;

(c) Import restrictions on any agricultural or fisheries
product, imported in any form, necessary to the
enforcement of governmental measures which operate:

(i) to restrict the quantities of the like domestic
product permitted to be marketed or produced,
or, if there is no substantial domestic
production of the like product, of a domestic
product for which the imported product can be
directly substituted; or

(ii) to remove a temporary surplus of the like
domestic product, or, if there is no substantial
domestic production of the like product, of a
domestic product for which the imported product
can be directly substituted, by making the
surplus available to certain groups of domestic
consumers free of charge or at prices below the
current market level; or

(iii) to restrict the quantities permitted to be
produced of any animal product the production of
which is entirely dependent, wholly or mainly,
on the imported commodity, if the domestic

215

216

production of that commodity is relatively
negligible.

Any contracting' party applying restrictions on. the
importation of any product pursuant to sub-paragraph (c) of
this paragraph shall give public notice of the total
quantity or value of the product permitted to be imported
during a specified future period and of any change in such
quantity or value. Moreover, any restrictions applied under
(i) above shall not be such as reduce the total of imports
relative to the total of domestic production, as compared
with the proportion which might reasonably be expected to
rule between the two in the absence of restrictions. In
determining this proportion, the contracting party shall pay
due regard to the proportion prevailing during a previous
representative period and to any special factors* which may
have affected or may be affecting the trade in the product
concerned.

Ad Article XI
Paragraph 2(c)

The term "in any form" in this paragraph covers the
same products when in an early stage of processing and still
perishable, which compete directly with the fresh product
and if freely imported would tend to make the restriction on
the fresh product ineffective.

Paragraph 2, last sub-paragraph

The term "special factors" includes changes in relative
productive efficiency as between domestic and foreign
producers, or as between different foreign producers, but
not changes artificially brought about by means not
permitted under the Agreement.

APPENDIX B

List of Interviewees

Current positions are listed with Tokyo round agencies given

in parentheses where applicable.

William Barreda, U.S. Treasury Department (Treasury)
Anthony Cruit, USDA, Foreign Agricultural Service (FAS)
Lynn Daft, Abel, Daft and Early (White House)

Sir Roy Denman, EC Mission to the United States (EC
Brussels)

Hazen Gale, U.S. Treasury Department (Treasury)
Dale Hathaway, Consultants International (USDA)
John Hudson, USDA, Foreign Agricultural Service (FAS)

Bruno Julien, EC Mission to the United States (French
Ministry of Agriculture)

Julius Katz, Consultants International (State)
Ernest Koenig, USDA, Foreign Agricultural Service (FAS)
Jean Lucq, Agriculture Section, GATT Secretariat (GATT)

Eugene Moos, U.S. House of Representatives Agriculture
Committee (House of Representatives)

Daniel Morrow, The World Bank (USDA)

Donald Nelson, Philip Morris Inc. (FAS, USTR)

Frank Padavano, USDA, Foreign Agricultural Service (FAS)
Gardner Patterson (GATT)

Derwent Renshaw, EC Mission to the United States (EC
Brussels)

George E. Rossmiller, National Center for Food and
Agricultural Policy, Resources for the Future (FAS)

217

218

Thomas Saylor, Comsort Inc. (Senate Agriculture Committee,
FAS)

G. Edward Schuh, The World Bank (CEA, USDA)
Vernon L. Sorenson, Michigan State Unversity (FAS)

James Starkey, Universal Leaf Corporation (FAS, USTR, USDA)

APPENDIX C
Results of the Empirical Analysis
of the Market Access Proposals under Four Scenarios

Using the MSU Agriculture Model

219

220

Baseline Projections of World Wheat Market
Balance Sheet, 1987-1995

UNEAT DASELINE

us £19091 waxes, slat

NET EXPORTS
CANADA
AUSTRALIA
ARGENTINA
DEVELOPED NARKETS
U.S.

NET IIPORTS
SOVIET SLOC
LDC’S
CHINA
RIDDLE INCONES

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET ILOC
DEVELOPED IARNETS
LDC'S
CHINA
RIDDLE INCOIES

DOIESTIC UTILIlATION
CANADA
AUSTRALIA
ARSENTINA
"0 SI
SOVIET ILOC
DEVELOPED IARKETS
LDC'S
CNINA
RIDDLE INCONES

EIDINS STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET 6LOC
DEVELOPED RARRETS
LDC'S
CNINA
RIDDLE INCOIES

29.1
17.5
12.6
57.3
142.6
.77.6
94.6
74.4
12.9

6.2
36‘
540
32.9
162.6
72.0
115.6
66.0
36.1

17.3
3.6
0.9

“03
3.2

13.1

26.0
0.0
4.4

(In million metric tons)

1966

103.61

20.0
15.3
7.6
7.5
31.7

21.4
23.0
13.5
24.3

26.6
16.6
12.7
66.6
146.1
60.7
99.3
75.2
13.0

6.3
3.1
4.9
34.3
166.9
72.3
120. 3
66.6
37.1

17.6
4.1
0.9

57.0
3.6

13.9

30.0
.00
4.7

1969

101.12

19.3
"6 6
7.7
6.6
29.9

”6‘
21.2
13.9
25.1

26.1
20.0
12.7
67.9
147.3
62.4
104.3
76.2
13.4

6.4
3.1
5.0
“6‘
169.5
73.0
123.2
”I,
36.4

16.3
4.5
0.9

”65
3.6

14.5

32.3
0.0
4.6

1990

”C“

19.3
17.6
7.5
9.6
29.6

26.0
21.0
12.5
69.0
146.5
63.6
109.6
77.3
13.4

6.5
3.2
5.0
36.5
171.4
73.6
127.4
91.4
39.5

16.5
4.6
0.9

62.5
3.7

14.7

34.7
000
4.9

1991

104.92

19.5
16.4

7.1
10.4
29.9

23.6
19.4
14.7
27.3

26.1
21.6
12.2
69.7
149.6
65.0
115.0
76.9
13.4

6.6
3.2
5.1
37.3
172.9
74.6
132.0
93.4
40.6

16.6
5.0
0.9

65.0
4.2

14.7

37.1
0.0
5.0

1992

19.6
19.0

7.0
11.1
30.0

24.6
16.6
15.0
26.4

26.4
22.4
12.1
70.4
150.5
66.5
120.4
61.2
13.4

6.7
3.2
5.1
36.0
174.7
7503
136.9
96.1
41.7

16.6
5.1
0.9

70.4
5.2

14.9

41.9
0.0
5.3

1993

114.49

19.7

13.5

6.6
3.3
5.1
36.6
176.4
75.9
141.5
99.0
42.6

16.6
5.3
0.9

70.4
5.2

14.9

41.9
0.0
5.3

1994

117.60

19.6
19.9

7.7
12.5
29.3

26.5
16.9
15.5
30.4

27.1
23.4
12.9
72.0
152.0
69.3
132.1
66.5
13.7

7.0
3.3
5.2
36.9
176.2
76.5
146.3
102.0
43.9

19.2
5.4
1.0

74.1
5.4

15.1

44.5
0.0
5.5

1995
122.12

20.0
20.3

6.2
13.3
29.4

27.6
16.2
15.9
31.5

27.2
23.6
13.5
71.9
152. 7
90.7
136.1
69.1
13.6

5.3
39.2
179.9
77.2
151.7
105.0
45.1

19.3
5.5
1.0

77.4
5.6

15.3

47.2
0.0
5.6

91-95 AVERAGE

113.64

19.7
19.4

7.5
11.6
27.7

26.7
22.9
12.6
71.1
151.2
67.6
126.3
63.9
13.6

6.6
3.3
5.2
36.4
176.4
75.9
141.7
99.1
42.6

16.9
5.3
0.9

71.5
5.2

15.0

42.5
0.0
5.4

221

Baseline Projections of World Coarse Grain Market
Balance Sheet, 1987-1995

FEED IASELIK

N EWT PRICE, SINT

ET EIPIRTS
CANADA
MISTRALIA
USENTINA
CNINA
"6 Se

KT [WIS
SOVIET DLOC
EVELIN’ED IIARNETS
LDC'S
RIDDLE Isms

PRODINITIN
CANADA
AUSTRALIA
m INA
U.S.
SOVIET [It
DEVELNED NARKETS
LDC’S
CNINA
NIDDLE 1m

MSTIC UTILIIATIN
CANADA
AUSTRALIA
RENT INA
U.S.
SOVIET [M
KVELDED NARKETS
LIC'S
CHINA
NIDME 1m

ENDIE SIMS
CANADA
AUSTRALIA
DSENT INA
U.S.
SOVIET [1N1
DEVELOPED NARNETS
LIC'S
CNINA
NIDlE IMS

1N7

94.55

4.7
5.4
12.9
2.2
3.6

8:98
-6..."

3???

383§§

.
-“NNOOOON

19.5
302
7.9

167.5
200.1
126.9
127.2
71.0
61.3

5.6
0.3
0.6
150.6
7.5
15.0
11.7
0.0
2.9

(In million metric tons)

1‘6

67.93

4.6
5.9
13.9
'0,
60.1

3§§§§¥§93

170.0

62.03
129.7
71.3
63.6

5.7
6.4
0.6
171.5
7.6
15.2
12.2
6.0
3.2

“.21

4.6
6.5
14.4
1.6
62.4

24.2
10.0
23.0
252.6
162.6
106.0
119.6
71.6
39.0

19.6
,6:
6.5

174.1
211.9
130.0
131.7
70.0
65.3

5.5
0.4
0.9
167.6
7.6
15.6
12.3
0.0
2.9

1990

31.0
22.1
12.4
27.6

24.0
10.6
23.5
255.6
167.5
110.2
121.2
70.1
39.6

N. 14

4.7
7.7
15.1

19.5
3.6
6.9

179.7
224.9
133.7
135.7
67.5
66.6

5.1
0.3
0.9
212.4
6.4
16.2
12.0
0.0
3.0

1992

92.62

19.6
3.6
9.1

176.6
231.6
135.4
137.6

70.4

5.2
0.2
0.9
226.0
6.7
16.5
11.6
0.0
2.9

1993

94.15

4.5
.6.
15.6
0.7
76.3

sass
40-06..

24.3
12.2
24.6
266.5
202.6
114.6
125.6
65.4
39.5

19.6
3.5
’02

175.6
236.9
137.1
139.6
64.7
72.3

19.6
3.5
9.3

176.0
246.1
136.6
141.9
62.7
74.2

5.4
0.0
0.9
257.9
9.3
16.
11.3
0.0
3.0

1995

103.22

4.2
9.6
16.1

24.2
13.2
25.5
277.3
213.6
117.0
129.0
61.3
40.2

19.9
3.5
9.4

176.2
253.4
140.5
144.1
61.1
76.4

-
0 O

N
~16
nonmthQOM

91-95 AVERAGE

N.“

4.5
6.6
15.6
0e,
76.4

sass
0-4.-

24.2
12.2
24.6
266.4
202.9
114.5
125.6
65.1
39.6

19.7
3.5
9.2

177.7
239.0
137.1
139.9
64.5
72.4

5.3
0.1
0.9
242.2
9.0
16.7
11.6
0.0
3.0

222

Projections of World Wheat Market under Scenario One
Balance Sheet, 1987-1995

NHEAT: SCENARIO 1

us EXPORT PRICE, s/nt

NET EIPORTS
CANADA
AUSTRALIA
ARGENTINA
DEVELOPED RARKETS
U.S.

KT IRORTS
SOVIET DLOC
LDC'S
CHINA
RIDDLE INCORES

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE INCORES

DDRESTIC UTILIIATION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE INCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC’S
CHINA
RIDDLE INCORES

21.3

14.4
24.3

30.1
16.1
11.7
66.5
143.4
'75.3
93.7
7302
12.5

6.1
3.6
4.6
31.3
163.1
72.0
115.7
67.6
36.2

13.3
3.4
0.9

44.5
2.7

16.9

0.0
4.2

(In million metric tons)

23.0
12.6
7.4
1.6
41.2

21.4
25.0
14.5
25.0

29.5
16.9
11.9
1‘.
146.7
76.6
97.6
74.1
12.5

6.2
:0,
4.5
32.0
167.4
72.7
120.9
66.6
37.3

13.6
3.6
0.9

42.6
3.4

21.1

29.6
0.0
4.4

170.3

123.7
90.3
36.6

14.3
3.6
0.9

45.7
362

21.7

31.6
0.0
4.5

1990

6.4

172.5

127.6
91.6
39.7

14.5
3.9
0.9

49.4
30°

21.6

33.6
0.0
4.5

90.49

23.9
14.3
1.3
4.4
41.9

6.5
4.3
4.6

174.2
76.2
131.9
”0‘
40.6

14.3
4.1
0.9

520‘
3.3

21.3

35.6
0.0
4.6

1992

93.65

24.5
14.7
7.4
4.7
43.0

24.6
23.0
16.7
29.9

300°
19.2
12.0
79.0
151.6
61.5
115.3
79.5
12.1

6.6
4.4
4.6
33.7
176.1
77.0
136.3
96.2
42.0

14.0
4.2
0.9

54.9
30‘

21.1

37.6
0.0
4.6

1993

25.0
15.0
7.5
4.9
44.1

25.5
22.5
17.4
31.2

31.7
19.
12.1
79.6
152.6
62.7
120.0
61.7
12.0

6.6
4.5
4.6
33.6
176.0
77.6
140.5
99.0
43.2

1994

100. 94

25.6
15.4
6.6
5.4
45.9

seas

”
rear

.
oououNu—n

—
one
s

4.7
4.6
33.7
179.6
76.4
145.4
101.6
44.4

13.3
4.4
1.0

56.0
4.3

21.3

41.6
0.0
4.6

1995

104.26

26.5
15.7
6.7
5.9
47.3

33.2
20.6
11.4
62.3
154.5
65.0
129.4
66.6
12.0

4.6
‘C’

161.7
79.0
149.7
104.9
45.7

13.1
4.6
1.0

59.6
4.6

21.5

43.6
0.0
4.9

91°95 AVERAGE

223

Differences from the Baseline under Scenario One
for the World Wheat Market, 1987-1995

(In million metric tons)

“RT: mm 1 (DIP) 1957 I” I” 1990 1991 1992 1993 1994 1995 91'95 AVERASE
15 [11’0" PRICE, DIRT “7.39 “7.25 “9.47 “11.54 “14.43 “15.43 “10.14 “15.55 “17.65 “15.70
‘T REPORTS
MUN 3.3 3.0 3.5 4.0 4.4 4.9 5.3 5.0 5.5 5.4
MIMDA -De' -2e5 .362 .30, "e6 4e: 4a: .005 4.6 .0
“NTINA “0.4 “0.4 “0.3 “0.1 0.2 0.4 0.2 “0.9 “1.5 “0.3
[KW NETS “6.5 “5.9 “5.5 “5.5 “5.0 “5.4 “5.6 “7.1 “7.4 “5.
U.S. 9.5 9.5 10.1 11.2 12.0 13.0 24.4 15.5 17.9 15.6
‘T IWTS
SOVIET 61.“ “0.2 0.0 “0.1 0.0 0.0 0.0 0.0 0.0 “0.1 .0
LDC'S 0.6 2.0 2.5 3.2 3.7 4.2 4.5 5.6 5.1 4.9
CHINA 0.9 1.0 1.2 1.5 1.5 1.7 2.3 2.1 2.4 2.0
RIM 1m5 0.5 0.7 0.9 1.1 1.3 1.5 1.6 2.1 2.3 1.5
MW“ '
MON 1.0 2.7 3.7 3.9 4.2 4.4 4.9 5.1 5.0 4.9
AUSTRALIA “1.4 “1.9 “2.4 “2.6 “3.1 “3.2 “3.2 “3.3 “3.2 “3.2
“SENTINA “0.9 “0.6 “0.6 “0.5 “0.3 “0.1 “0.3 “1.4 “2.1 “0.0
11.5. 11.2 4.9 7.4 6.5 6.6 6.5 6.5 6.7 10.4 9.0
SOVIET 61m 0.5 0.5 0.6 0.9 1.1 1.3 1.5 1.6 1.6 1.5
“VELWED “NETS .“2.5 “4.1 “4.5 “4.5 “4.7 “5.0 “5.0 “5.4 “5.7 “5.2
LIC'S “1.1 “1.7 “2.4 “3.3 “4.2 “5.1 “5.1 “7.5 “6.7 *.3
CHINA “1.2 “1.1 “1.0 “1.1 “1.4 “1.7 “2.1 “2.5 “2.5 “2.0
RIDDLE 1m “0.4 “0.5 “0.7 “1.0 “1.2 “1.3 “1.5 “1.6 “1.6 “1.5
“5110 1111111611“
WM “0.1 “0.1 “0.1 “0.1 “0.1 “0.1 0.0 “0.1 “0.1 “0.1
“1516“.“ 0.7 0.0 0.9 0.9 1.1 1.2 1.2 1.4 1.4 1.3
“NTINA “0.4 “0.4 “0.5 “0.4 “0.5 “0.5 “0.5 “0.5 “0.5 “0.5
11.5. “1.5 “2.3 “2.9 “3.5 “3.9 “4.3 “4.5 “5.2 “5.7 “4.6
W157 m 0.5 0.5 0.6 1.1 1.3 1.4 1.5 1.5 1.6 1.5
“VELW IIARKEIS 0.0 0.4 0.9 1.3 1.5 1.7 1.9 1.9 1.6 1.6
LDC'S 0.1 0.5 0.5 0.4 “0.1 “0.5 “1.0 “0.9 “2.0 “0.9
CHINA “0.4 0.0 0.4 0.4 0.4 0.1 0.0 “0.4 “0.1 0.0
RIM IMO 0.1 0.2 0.2 0.2 0.2 0.3 0.4 0.5 0.5 0.4
m1” STWS
MUN “4.0 “4.2 “4.0 “4.0 “4.3 “4.5 “4.9 “5.9 “5.2 “5.2
MISTRRLIA “0.4 “0.5 “0.7 “0.9 “0.9 “0.9 “1.0 “1.0 “0.9 “0.9
MINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
U.S. “11.6 “14.2 “13.0 “13.1 “12.4 “15.5 “13.5 “15.1 “17.6 “15.1
”9151 m “0.5 “0.4 “0.5 “0.7 “0.9 “1.5 “1.3 “1.1 “1.2 “1.2
“LIVED was 5.6 7.2 7.2 5.9 5.5 5.2 5.2 5.2 5.2 5.3
“0'5 “0.2 “0.4 “0.7 “1.1 “1.5 “4.3 “2.3 “2.9 “3.5 “2.9
CHINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
N10” MINES “0.2 “0.3 “0.3 “0.4 “0.4 “0.7 “0.5 “0.7 “0.9 “0.7

Differences from the Baseline under Scenario One
for the World Wheat Market, 1987-1995

HEAT: RENARIO 1 (lCHANGE) 1N7

as mm mm, cm

NET EIPORTS
CANADA
AUSTRALIA
ARGENTINA
DEVELOPED RARKETS
U.S.

KT TRINITS
SOVIET DLOC
LDC'S
CHINA
RIDDLE IMS

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE INDORDS

DONESTIC UTILIZATION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE INCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED NARKETS
LDC'S
CHINA
RIDDLE INCORES

-701

16.2
“12.9
“5.3
“132.3
29.7

“0.9
3.5
6.7
2.1

3.4
“6.0
“7.1
19.5

0.4

.“3.2
“1.2
“De‘
“3.1

“1.6
22.6
“6.0
“4.9
0.3
0.0
0.1
*0:
0.3

.2305
“10.5
0.0
-2100
“15.6
44.3
“0.7
0.0
“4.5

1966

“7.0

15.0
“16.3
“5.1
“76. 7
30.0

0.0
6.7
7.4
2.9

7.4
0.4
“5.1
“1.7
'10:
“3.6

“1.6
a0.
“6.2
“6.7
6.3
6.6
0.5
0.0
0.5

-52e2

51.6
“1.3

0.0
“6.4

224

(Percent change)

1969

16.1
“19.3
“3.9
“62.5
33.6

“0.5
12.3

14.2
“12.0
“6.3
10.9
0.5
“5.6
“2.3
“1.3
“5.2

“1.6
29.0
“10.0
“6.2
.0:
1.2
0.4
0.4
0.5

“21.9
“15.5
0.0
“23.2
“15.6
49.7
“2.2
0.0
“5.2

1990

“11.5

20.7
“21.0
“1.3
“57.3
37.6

0.0
15.6
10.6

4.2

15.0
13.3
“4.6
12.3

6.6
“5.4
“3.0
“1.4
“7.5

“1.5
2.06
“6.0
“9.6
.e‘
1.6
as:
0.4
0.5

“21.5
“16.6
0.0
-2100
“16.9
45.9
-3e2
0.0
“0.2

1991

“13.5

22.6
“22.3
2.6
“57.7
40.1

0.0
19.1
10.9

4.6

16.1
“14.2
“2.5
12.6
0.7
“5.5
“3.7
“1.6
“9.0

“1.5
34.4
“9.6
“10.5
0.6
2.1
“0.1
0.4
0.5

-2305
“16.0
0.0
.5505
“21.4
44.9
“4.0
0.0
“6.0

1992

“14.9

25.0
-2205

“57.7
43.3

0.0
22.3
11.3

5.3

16.7
“14.3
“0.6
12.2
0.9
“5.6
“4.2
“2.1
“9.7

“1.5
37.5
“9.6
-1603
0.6
2.3
“0.4
0.1
0.7

“24.7
“17.6
0.0
“22.0
“30.6
41.6
“10.3
0.0
“13.2

26.9
“23.1
2.7
“56.1
123.9

0.0
25.7
15.2

6.1

9.0 3
“14.0
“2.4
11.9
1.0
“5.7
“4.6
“2.5
“11.1

0..
36.4
40.

“12.4

0.9

2.5
“0.7

0.0

0.9

“26.1
“16.9
0.0
-5502
“25.0
41.5
“5.5
0.0
“11.3

1994

“14.2

13.5
6.9

16.6
“14.1
“10.9

12.1

1.2

-5e7
-205
“13.1

“1.4
42.4
“11.5
“13.4
0.9
2.5
“0.6
“0.4
1.1

“30.7
“16.5
0.0
“21.7
“20.4
41.1
“6.5
0.0
“12.7

-D‘e‘

32.5
“22.7
“16.3
“55.6

60.9

“0.4
37.7
15.1

7.3

“32.1
“16.4
0.0
“23.0
“20.7
40.5
“7.6
0.0
“15.5

91“95 RNENAOE
-5967

27.5

16.4
“14.0
“6.7
12.7
1.0
“5.9
“5.0
“2.4
“11.2

“27.4
“17.9

-2101
“23.5
41.9
“5.9
0.0
“12.3

225

Projections of World Coarse Grain Market under Scenario One
Balance Sheet, 1987-1995

FEED: SCENARIO 1

65 mm met, um

KT EXPORTS
CANADA
AUSTRALIA
HGENTINA
CHINA
U. 5.

ET IRPNTS
SOVIET DLOC
KVELOPED RARKETS
LDC'S
RIDDLE [ms

PRODUCTIN
CANADA
AUSTRALIA
RGENTINA
U.S.
UVIET [m
EVELNED RARKETS
LDC'S
CHINA
RIDDLE xms

IKSTIC UTILIZATIM
CANADA
AUSTRALIA
ARGENTINA
U.S.
mvm lOC
KVELUED RARKETS
LDC'S
CHINA
RIDDLE INCORES

mm STWKS
CANADA
AUSTRALIA
RGENTINA
U.S.
SOVIET DUN:
EVELNED RARKETS
LDC'S
CHINA
RIDDLE Ims

25.7
31.3
11.2
23.0

24.6
6.1
21.6
243.1
173.7
104.2
117.1
76.3
36.0

19.9
3.3
7.7

166.4
199.1
135.5
126.0
73.4
61.2

5.9
0.6
0.6
163.3
7.6
15.
12.0
0.0
3.0

(In million metric tons)

was

177.5

119.7
77.6
41.1

1:09

1990

96.23

5.3
6.1
16.4
2.9
70.0

29.6
32.6
12.2
26.1

25.5
9.6
25.0
265.6
13.6
109.3
123.1
77.6
42.6

20.3
3.7
6.5

174.1
216.3
141.6
1302
74.9
66.3

5.7
0.7
0.9
233.6
6.2
15.6
12.7
0.0
3.7

1991

100.59

5.4
6.5
17.0

73.0

25.7
10.3
25.7
271.2
191.6
110.7
124.9

42.6

aaSEES-8
“NHOOUNN-

5.6
0.6
0.9
256.5
6.5
16.0
12.7
0.0
3.6

1992

103.43

5.5
6.9
17.5
2.9
76.4

33.1
33.6
13.1
29.4

26.0
10.7
26.4
277.3
1%.6
112.0
126.7
76.6
42.7

20.5
3.6
6.9

174.6
229.4
145.4
139.6
75.6
72.1

. Esau

...—e
Coauocfioou

1993

110.41

26.3
10.9
27.0
262.3
201.6
113.4
126.4
79.1
42.4

20.7
36.
9.0

175.5
23.0
147.2
142.2
76.1
73.7

5.4
0.6
0.9
”9.7
9.2
16.5
12.5
0.0
3.7

1994

5.9
7.6
16.5
3.0
63.5

3.6
34.4
14.2
33.2

26.6
11.4
27.7
269.4
206.9
114.7
130.4
”.2
41.6

20.9
3.6
’63

177.3
243.2
146.9
144.6
77.2
75.1

5.4
06'
0.9
336.3
9.5
16.7
12.5
0.0
3.6

1995
120.23

5.9

16.9
3.2
“.9

36.1
34.6
14.6
35.0

27.2
11.6
26.3
294.1
212.4
116.0
132.2
60.9
41.6

91 “95 AVERAGE

109.69

5.7
7.2
16.0
3.0
79.9

26.4
11.0
27.0
262.9
201.9
113.4
126.5
79.4
42.2

20.7
3.6
9.1

176.6
236.3
147.1
142.2

76.4

73.6

5.5
0.6
0.9
310.3
9.2
16.5
12.5

3.7

226

Differences from the Baseline under Scenario One
for the World Coarse Grain Market, 1987-1995

(In million metric tons)

PEED: SCENARIO 1 (011') 1967 1966 1969 1990 1991 1992 1993 1994 1995 91“95 AVERAGE
US EIPINIT PRICE, "NT 5.74 6.15 10.04 10.14 10.45 10.61 16.26 15.67 17.01 14.04
(T EXPNTS
CANADA 0.4 0.4 0.5 0.6 0.7 0.9 1.2 1.6 1.7 1.2
AUSTRALIA “0.5 “0.5 “0.6 “1.0 “1.2 “1.4 “1.6 “1.7 “2.0 “1.6
MGENTINA 1.0 1.2 1.4 1.6 1.9 2.1 2.3 2.7 2.6 2.4
CHINA 0.7 0.9 1.3 1.4 1.7 1.9 2.4 2.6 3.0 2.3
U.S. 5.6 5.0 5.3 4.9 4.7 4.3 3.3 2.9 2.3 3.5
[T IWTS
SOVIET DLOC “0.6 “0.6 “1.1 “1.2 “1.4 “1.4 “2.0 “1.6 “2.0 “1.7
DEVELIPED RARKETS 6.7 6.9 10.0 10.7 11.0 11.1 11.2 11.2 11.1 11.1
LDC'S “0.3 “0.2 “0.2 “0.2 “0.2 “0.2 “0.1 “0.1 0.0 “0.1
RIDDLE IEORES -0.4 “0.9 “1.2 “1.5 “1.6 “1.7 “1.7 “1.5 “1.4 “1.6
PRODUCTION
CANADA 0.6 0.9 1.2 1.5 1.6 1.7 2.0 2.5 3.0 2 2
AUSTRALIA “0.5 “0.3 “0.6 “0.6 “0.9 “1.0 “1.3 “1.3 “1.6 “1.2
MGENTINA 0.6 1.0 1.2 1.5 1.7 1.9 2.2 2.6 2.6 2.2
U.S. 3.3 5.9 7.9 10.2 11.5 12.6 13.6 17.4 16.6 14.5
SOVIET DUE “0.3 “0.4 “0.5 “0.7 “0.9 “1.0 “1.0 “1.3 “1.2 “1.1
KVELIN’ED RARKETS . 0.0 0.0 “0.1 “0.9 “1.1 “1.1 “1.2 “1.1 “1.0 “1.1
LDC'S 0.9 1.2 1.5 1.9 2.1 2.4 2.6 3.1 3.2 2.7
CHINA 3.2 4.5 5.9 7.7 9.6 11.6 13.7 17.0 19.6 14.3
RIDDLE ICIRIES 0.1 1.3 2.0 2.6 3.2 3.4 2.9 2.2 1.4 2.6
“STIC UTILIZATIN
CANADA 0.4 0.4 0.6 0.6 0.9 0.9 0.9 1.1 1.3 1.0
MISTRALIA 0.1 0.1 0.0 0.2 0.1 0.2 0.3 0.3 0.3 0.2
ARGENTINA “0.2 “0. 2 “0. 2 “0.3 “0.2 “0.2 “0.2 0.0 0.0 “0.1
U.S. “1.1 “4.5 “3.7 “3.7 “4.2 “4.0 “0.3 1.3 2.6 “0.9
SOVIET DUN: “1.0 “1.2 “1.7 “2.0 “2.3 “2.4 “2.9 “2.9 “3.3 ‘ “2.6
mom MRKETS 6.6 6.9 9.9 9.9 9.9 10.0 10.1 10.1 10.1 10.0
LDC'S 0.6 1.0 1.3 1.5 1.6 2.0 2.4 2.7 3.0 2.4
CHINA 2.4 3.5 4.7 6.2 7.7 9.5 11.4 14.5 16.6 11.9
RIDDLE times “0.1 0.2 0.6 1.0 1.5 1.7 1.4 0.9 0.3 1.2
ENDIE STEKS
CANADA 0.1 0.2 0.3 0.5 0.5 0.3 0.1 0.0 0.0 0.2
AUSTRALIA 0.3 0.3 0.3 0.4 0.5 0.6 0.6 0.9 1.1 0.6
MGENTINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
U.S. 12.5 16.0 24.3 33.2 44.1 56.6 67.2 “.4 92.1 66.1
SOVIET DLOC 0.1 0.1 0.2 0.1 0.1 0.1 0.2 0.2 0.2 0.2
KVELNED RARKETS 0.0 0.0 “0.1 “0.1 “0.2 “0.2 “0.2 “0.2 “0.2 “0.2
LDC'S 0.3 0.3 0.3 0.5 0.7 0.6 0.9 1.2 1.3 1.0
CHINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
RIDDLE wars 0.1 0.3 0.5 0.6 0.6 0.9 0.7 0.6 0.5 0.7

Differences from the Baseline under Scenario One

for the World Coarse Grain Market, 1987-1995

FEED: SCENARIO 1 (ICHANGE)

e um mes, m1

NET EXPORTS
CANADA
AUSTRALIA
ARGENTINA
CHINA
U.S.

NET IRPORTS
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
RIDDLE INCORES

PRODUCTIN
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC’S
CHINA
RIDDLE INCORES

DORESTIC UTILIZATION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE INCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE INCORES

83 . Audi» value 1: mo

1967

6.1

6.5
“9.3
7.6
31.6
9.9

“2.3
36.5
“2.6
“1.7

2.5
“5.6
3.6
1.4
“0.2

0.6
4.4
0.3

A
. MUN
e eOOOe
NOOOuNu~—-

.6 .3 e: g» 4.14.

3.4

2.0
2.9
“2.4
“2.6
“0.6
6.9
0.6
4.9
0.3

3.5
75.0
0.0
10.5
1.3
0.0
2.5
0.0
9.4

0.0
12.9
2.6
“0.6
2.4
0.0
17.2

M.
C e

N

none-e‘lé
“oan—-N—

(Percent change)

1991

“0.5
“1.0
2.1
20.9
7.3

4.5
6.6
“2.2
“0.2
“1.2
7.4
1.7
17.6
1.9

1.9

0.0
27.7
2.2
“1.2
7.6
0.0
23.3

..B...~..'.oo....
~n¢uNQ°am

:z-Z

w
"NF‘O
.

—
39°
ooaNNNo

1995
16.5

40.5
“20.4
17.4
1500.0
2.7

“5.0
46.6

0.0
“3.6

12.4
“12.1
11.0
6.1
“0.6
“0.9
2.5
32.0
3.5

6.5
6.6
0.0
. 1.6
“1.3
7.2

27.2
00‘

91“95 AVERAGE

14.7

27.4
“16.0
15.1
322.2
4.6

“4.6
46.6
“0.9

6.9
“10.0
9.0

228

Projections of World Wheat Market under Scenario Two
Balance Sheet, 1987-1995

NHEAT: SCENARIO 2

as am PRICE, cm

NET EIPORTS
CANADA
AUSTRALIA
ARGENTINA
DEVELOPED RARKETS
U.S.

KT IIPORTS
SOVIET DLOC
100' S
CHINA
RIDDLE IRCORES

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE INCORES

DORESTIC UTILIlATION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE INCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IMS

1967

30.1
16.1
11.7
66.5
143.4
.75.3
93.7
73.2
12.5

6.1
3.6
4.3
31.3
163.1
72.0
115.7
67.3
36.2

14.9
3.4
0.9

49.0
20‘

12.9

27.9
0.0
4.2

(In million metric tons)

1966

96.45

22.6
12.6
7.4
301
39.2

21.5
24.5
14.3
24.9

26.7
16.9
12.0
69.6
146.5
76.6
97.6
74.1
12.5

6.2
3.9
4.5
32.1
167.3
71.7
120.5
66.4
37.3

14.6
3.6
0.9

47.5
3.3

14.6

29.6
0.0
4.4

1969

92.20

26.7
17.6
12.0
72.7
146.0
77.6
102.3
75.2
12.6

6.3
4.0
4.5
32.5
170.2
72.0
123.5
90.1
36.6

14.7
3.6
0.9

46.6
3.2

16.7

31.7
0.0
4.5

1990

67.77

22.6
13.9
7.5
4.6
39.7

29.2
16.2
12.0
75.2
149.3
79.1
106.9
76.2
12.6

6.4
4.2
4.5
32.9
172.4
72.7
127.5
91.7
39.6

14.7
4.0
0.9

51.4
2.9

16.5

33.9
0.0
4.6

1991

66.46

23.4
14.3
7.4
5.2
40.6

29.9
16.6
12.0
76.6
150.6
60.3
111.5
77.5
12.4

14.6
4.1
0.9

54.3
3.0

19.6

36.0
0.0
4.6

1992

90.06

24.1
14.7
7.4
5.6
41.9

24.7
22.4
16.7
29.9

30.6
19.3
12.0
77.4
151.7
61.5
116.1
79.3
12.2

6.7
4.4
‘0‘
33.2
176.2
74.6
136.4
96.0
42.0

1993

92.51

24.6
15.1
7.5
5.7
43.4

25.6
22.3
17.4
31.2

31.3
19.7
12.1
76.2
152.6
62.7
120.7
61.3
12.1

6.6
4.5
4.6
33.1
176.2
76.0
141.0
96.6
43.2

14.1
4.3
0.9

56.3
3.5

21.9

40.1
0.0
4.7

1994
97.30

25.7
15.4
6.6
5.6
45.7

22.5
17.9
32

31.6
20.1
11.4
79.1
153.9
63.9
125.3
63.5
11.9

42.0
0.0
4.6

1995
100.94

26.2
15.7
6.6
6.6
46.9

27.5
22.3
16.5
33.9

33.0
20.6
11.3

154.7
65.0
130.0
66.0
11.9

7.0

4.6
. 4.7
32.6
161.9
76.2
150.3
104.5
45.7

13.1
4.6
1.0

60.2
4.3

22.9

44.0
0.0
4.9

91“95 AVERAGE

93.66

24.6
15.0
7.1
5.6
43.7

22.

Gel-

31.3
19.7
11.6
76.4
152.7
62.7
120.7
61.5
12.1

6.6
4.
4.6
33.0
176.1
76.0
141.1
96.6
43.2

13.9
4.3
0.9

57.6
3.6

21.7

40.0
0.0
4.7

229

Differences from the Baseline under Scenario Two
for the World Wheat Market, 1987-1995

(In million metric tons)

HEAT: SCENARIO 2 (011’) 1’7 use 1'9 1990 1991 1992 1993 1994 1995 91“95 AVERAGE
15 EWT PRICE, DIRT “7.95 “7.36 “6.92 “12.19 “16.44 “20.00 “21.96 “20.30 “21.16 “19.”
[T EXPNTS
CMADA 1.7 2.6 3.2 3.5 3.9 4.5 5.1 5.9 6.2 5.1
AUSTRALIA “1.6 “2.5 “3.2 “3.7 “4.1 “4.3 “4.4 “4.5 “4.6 “4.4
RGENTINA “0.4 “0.4 “0.2 0.0 6.3 0.4 0.2 “0.9 “1.6 “0.3
KVELUED RARKETS “2.7 “4.4 “5.1 “5.0 “5.2 “5.5 “6.0 “6.7 “6.5 “6.0
U.S. 5.2 7.5 9.1 10.1 10.7 11.9 23.7 16.4 17.5 16.0
[T IWTS
SOVIET DUN: 0.0 0 1 0.0 0.0 .0 0.1 0.1 0.0 “0.1 .0
LDC'S 0.6 1.5 2.1 2.5 3.2 3.6 4.4 5.6 6.1 4.6
CHINA 0.6 0.6 1.0 1.3 1.4 1.7 2.3 2.4 2.6 2.1
RIDDLE times 0.4 0.6 0.6 1.0 1.2 1.5 1.6 2.2 2.4 1.6
PMUCTIN
CANADA 1.0 1.9 2.6 3.2 3.6 4.2 4.5 4.7 5.6 4.6
AUSTRALIA “1.4 “1.9 “2.4 “2.6 “3.0 “3.1 “3. 2 “3. 3 “3. 2 “3. 2
HGENTINA “0.9 “0.7 “0.7 “0.5 “0.2 “0.1 “0.3 “1.5 “2.2 “0.9
U.S. . 11.2 3.2 4.6 6.2 6.9 7.0 6.9 7.1 9.0 7.4
SOVIET DLIN: 0.6 0.4 0.7 0.6 1.0 1.2 1.5 1.9 2.0 1.5
EVELDED MRKETS .“2.5 “4.1 “4.6 “4.5 “4.7 “5.0 “5.0 “5.4 “5.7 “5.2
LDC’S “1.1 “1.5 “2.0 “2.7 “3.5 “4.3 “5.4 “6.6 “6.1 “5.6
CHINA “1.2 “1.1 “1.0 “1.1 “1.4 “1.9 “2.5 “3.0 “3.1 “2.4
RIDDLE IMS “0.4 “0.5 “0.6 “0.6 “1.0 “1.2 “1.4 “1.6 “1.9 “1.5
“STIC UT ILIZATIM
CANADA “0.1 “0.1 “0.1 “0.1 “0.1 0.0 0.0 “0.1 “0.1 “0.1
AUSTRALIA 0.7 0.6 0.9 1.0 1.1 1.2 1.2 1.4 1.4 1.3
MGENTINA “0.7 “0.4 “0.5 “0.5 “0.5 “0.5 “0.5 “0.6 “0.6 “0.5
U.S. “1.6 “2.2 “2.9 “3.6 “4.2 “4.6 “5.5 “6.0 “6.6 “5.4
SOVIET m 0.5 0.4 0.7 1.0 1.4 1.5 1.6 1.6 2.0 1.7
KVELNED RARKETS 0.0 “0.6 “1.0 “1.1 “0.9 “0.5 6.1 0.6 1.0 0.1
LDC'S 0.1 0.2 0.3 0.1 “0.1 “0.5 “0.5 “0.4 “1.4 “0.6
CHINA “0.7 “0.2 0.2 0.3 0.2 “0.1 “0.4 “0.6 “0.5 “0.3
RIDDLE 1m 0.1 0.2 0.2 0.3 0.3 0.3 0.4 0.5 0.6 0.4
EDIE ST“
CANADA “2.4 “3.0 “3.6 “3.6 “4.0 “4.2 “4.7 “5.9 “6.2 “5.0
AUSTRALIA “0.4 “0.5 “0.7 “0.6 “0.9 “0.9 “1.0 “1.0 “0.9 “0.9
HGENTINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
U.S. “7.3 “9.5 “10.7 “11.1 “10.7 “13.6 “12.1 “15.3 “17.2 “13.6
UVIET DLN “0.6 “0.5 “0.6 “0.6 “1.2 “1.9 “1.7 “1.4 “1.5 “1.5
mm MRKETS “0.2 0.7 2.2 3.6 5.1 6.0 7.0 7.6 7.6 6.7
LDC'S “0.1 “0.4 “0.6 “0.6 “1.1 “3.9 “1.6 “2.5 “3.2 “2.5
CHINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
RIDDLE [ms “0.2 “0.3 “0.3 “0.3 “0.4 “0.6 “0.6 “0.7 “0.9 “0.6

 

 

230

Differences from the Baseline under Scenario Two
for the World Wheat Market, 1987-1995

(Percent change)

HEAT: SCENARIO 2 (RCIIANGE) 1967 1ND 1969 1990 1991 1992 1993 1994 1995 91“95 AVERAGE

US EIPORT PRICE, AIRT “7.6 “7.1 “6.6 “12.2 “15.7 “16.2 “19.2 “17.3 “17.3 “17.6
[T EXPORTS
CANADA 6.3 13.0 16.6 16.1 20.0 23.0 25.9 29.6 31.0 26.0
AUSTRALIA “12.9 “16.3 “19.3 “21.0 “22.3 “22.6 “22.6 “22.6 “22.7 “22.6
MGENTINA . “5. 3 “5.1 “2.6 0.0 4.2 5.7 2.7 “11.7 “19.5 “4.3
mom RARKETS “41.5 “56.7 “56.0 “52.1 “50.0 “49.5 “51.3 “53.6 “46.9 “50.7
U.S. 15.6 23.7 30.4 34.1 35.6 39.7 120.3 56.0 59.5 3.0
[T IVORTS
SOVIET DUI 0.0 0.5 0.0 0.0 0.0 0.4 6.4 0.0 “0.4 0.1
LDC'S 3.5 6.5 9.9 12.3 16.5 19.1 24.6 33.1 37.7 25.7
CHINA 4.4 5.9 7.2 9.2 9.5 11.3 15.2 15.5 16.4 13.6
RIDDLE IMS 1.7 2.5 3.2 3.6 4.4 5.3 6.1 7.2 7.6 6.2
PRODIITIN
CANADA 3.4 7.1 10.0 12.3 14.6 15.9 16.6 17.3 21.3 17.2
AUSTRALIA “6.0 “10.1 “12.0 “13.3 “13.6 “13.6 “14.0 “14.1 “13.4 “13.6
HENTINA “7.1 “5.5 “5.5 “4.0 “1.6 “0.6 “2.4 “11.6 “16.3 “6.6
U.S. 19.5 4.6 7.1 9.0 9.9 9.9 9.7 9.9 12.5 10.4
SOVIET DLOC 0.4 0.3 0.5 0.5 0.7 0.6 1.0 1.3 1.3 1.0
KVELPED MRKETS -“3.2 “5.1 “5.6 “5.4 “5.5 “5.6 “5.7 “6.0 “6.3 “5.9
LDC’S “1.2 “1.5 “1.9 “2.5 “3.0 “3.6 “4.3 “5.1 “5.9 “4.4
CHINA “1.6 “1.5 “1.3 “1.4 “1.6 “2.3 “3.0 “3.5 “3.5 “2.6
RIDDLE IMS “3.1 “3.6 “4.5 “6.0 “7.5 “9.0 “10.4 “13.1 “13.6 “10.6
INESTIC UTILIlATIII
CANADA “1.6 “1.6 “1.6 “1.5 “1.5 0.0 0.0 “1.4 “1.4 “0.9
AUSTRALIA 22.6 25.6 29.0 31.3 34.4 37.5 3.4 42.4 41.2 3.4
HGENTINA “14.0 “6.2 “10.0 “10.0 “9.6 “9.6 “9.6 “11.5 “11.3 “10.5
U.S. “4.9 “6.4 “6.2 “9.9 “11.3 “12.6 “14.2 “15.4 - -“16.6 “14.1
SOVIET DLW 0.3 0.2 0.4 0.6 0.6 0.9 1.0 1.0 1.1 1.0
KVELIN’ED RARKETS 6.0 “0.6 “1.4 “1.5 “1.2 “0.7 6.1 0.6 1.3 0.1
LDC’S 0.1 0.2 0.2 0.1 “0.1 “0.4 “0.4 “0.3 “0.9 “0.4
CHINA “0.6 “0.2 0.2 0.3 0.2 “0.1 “0.4 “0.6 “0.5 “0.3
RIDDLE :m 0.3 0.5 0.5 0.6 0.7 0.7 0.9 1.1 1.3 1.0
“1% STmKS
CANADA “13.9 “16.9 “19.7 “20.5 “21.5 “22.6 “25.0 “30.7 “32.1 “26.5
AUSTRALIA “10.5 “12.2 “15.6 “16.7 “16.0 “17.6 “16.9 “16.5 “16.4 “17.9
“NTINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
U.S. “13.0 “16.7 “16.0 “17.6 “16.5 “19.6 “17.2 “20.6 “22.2 “19.3
SOVIET m “16.6 “13.2 “15.6 “21.6 “26.6 “3.5 “32.7 “25.9 “25.9 “29.6
KVELUED RARKETS “1.5 5.0 15.2 25.9 34.7 40.3 47.0 51.7 49.7 44.7
LDC'S “0.4 “1.3 “1.9 “2.3 “3.0 “9.3 “4.3 “5.6 “6.6 “5.9
CHINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 0

RIDDLE 1m5 «e: *e‘ "02 ‘06 40° ’5603 “11.3 -5201 ”6505 -660,

231

Projections of World Coarse Grain Market under Scenario Two
Balance Sheet, 1987-1995

FEED: SCENARIO 2

us £19031 PRICE, slut

ET EXPNTS
CANADA
AUSTRALIA
RGENT INA
CHINA
U.S.

KT IIR’ORTS
SOVIET DLINI
EVELNED RARKETS
LDC’S
RIDDLE 1m

PRODUCTIN
CANADA
AUSTRALIA
HENTINA
U.S.
SOVIET DLINI
EVELIPED RARKETS
LDC'S
CHINA
RIDDLE 1m

MSTIC UTILIlATIII
CANADA
AUSTRALIA
MENTINA
U.S.
INIET DLIN.‘
KVELIR’ED RARKETS
LDC’S
CHINA
RIDDLE I”

SHIN STINIKS
CANADA
AUSTRALIA
HGENTINA
U.S.
SOVIET DLM
KVELU’ED RARKETS
LK'S
CHINA
RIDDLE 1m:

1967

”.90

5.0
4.6
13.9
207
57.0

24.6
6.1
21.6
243.1
173.7
104.2
117.1
76.3
3.0

a.
6‘
.

p3..."
F38~§8$~5u
uuQMuONI-Doo

(In million metric tons)

1988

93.59

50'
5.3
15.0
2.7
56.0

27.2
23.7
11.5
23.7

25.1
6.9
23.0
254.9
177.6
105.7
119.4
77.0
40.5

20.1
3.5
6.0

166.4
204.7
129.2
130.5
74.4
63.6

6.0
0.6
0.6
200.7
7.7
15.2
12.5
6.0
3.4

was

5.0
50‘
15.7
2.6
59.9

26.6
23.2
11.6
25.1

25.0
’6‘
24.0
259.0
162.2
107.9
121.0
76.6
40.5

20.1
3.5

170.9
210.6
130.6
132.7
74.0
“.7

open
0"...

226.9
7.9
15.5
12.6
0.0
3.3

1990

94.10

5.0
5.9
16.2
2.6
61.6

16.9
109.3
122.7
76.5
41.9

1991

97.65

5.1
6.4
16.6
2.6
64.0

31.5
23.0
12.6
"00

25.1
10.2
25.5
269.6
191.7
110.7
124.6
76.6
42.3

”02
3.7
6.7

176.7

133.4
137.2
74.0
70.1

5.6
0.7

264.9
6.5
16.0
12.6
0.0
3.7

1992

102.10

5.2
6.6
17.4
2.9
66.4

25.5
10.6
26.3
275.6
18.7
112.0
126.5
77.3
42.5

20.3
3.6
6.9

176.3
229.3
137.
139.6

74.4

72.0

1993

109.16

5.5
7.2
16.0
3.1
75.2

34.5
29.6
13.6
31.2

25.9
11.1
27.0
262.1
201.7
113.
126.4
76.1
42.6

NS
3.0
to

INJ

142.9
142.0
75.1
73.7

5.4
0.6
0.9
345.6
9.2
16.5
12.4
0.0
3.7

1994

113.92

179.4
242.6
146.9
144.5
76.6
75.2

5.4
0.6
0.9
373.0
9.5
16.7
12.4
0.0
3.6

1995

119.40

36.0
“6’
14.7
34.9

27.1
11.6
26.5
295.0
212.2
116.0
132.3
61.0
41.9

21.1
36,
9.5

~163.7
249.6
150.6
147.1
77.7
76.6

5.5
0.6
0.9
”.4
9.9
16.9
12.3
0.0
3.7

91“95 AVERAGE

1“.”

5.5
7.2
16.0
3.0
75.3

34.7
29.4
13.6
31.4

 

 

232

Differences from the Baseline under Scenario Two
for the World Coarse Grain Market, 1987-1995

(In million metric tons)

FEED: SCENARIO 2 (DIP) 1967 me 1969 1990 1991 1992 1993 1994 1995 91“95 AVERAGE
US EIMT PRICE, DIRT 2.35 5.66 7.” 6.01 7.71 9.46 15.01 15.79 16.16 12.63
[T EXPNTS
CANADA 0.3 0.3 0.2 0.3 0.4 0.6 1.0 1.5 1.7 1.0
AUSTRALIA “0.6 “0.6 “0.9 “1.2 “1.3 “1.5 “1.6 “1.6 “1.6 “1.6
ARGENTINA 1.0 1.1 1.3 1.4 1.7 2.0 2.4 2.6 3.0 2.4
CHINA 0.5 0.6 1.0 1.3 1.5 1.9 2.4 2.7 3.1 2.3
U.S. “1.6 “2.1 “2.5 “3.5 “4.3 “3.7 “1.1 2.2 1.4 “1.1
[T IRPORTS
SOVIET DLOC “0.5 “0.7 “0.6 “1.1 “1.2 “1.5 “2.0 “1. “2.1 “1.
DEVELIPED RARKETS 0.6 0.9 0.6 0.9 0.6 2.7 7.0 11.2 11.1 6.6
LDC'S “0.3 “0.2 “0.2 “0.2 “0.2 “0.2 “0.2 “0.2 “0.1 “0.2
RIDDLE 1.20165 “0.3 “0.5 “0.9 “1.2 “1.3 “1.5 “1.7 “1.6 “1.5 “1.5
PRODUCTION
CANADA 0.6 0.6 0.6 0.9 1.0 1.2 1.6 2.3 2.9 1.6
NISTRALIA “0.5 “0.4 “0.9 “1.0 “1.0 “1.1 “1.1 “1.1 “1.4 “1.1
MGENTINA 0.6 0.6 1.0 1.2 1.5 1.6 2.2 2.6 3.0 2.3
U.S. 3.3 4.1 6.2 7.9 9.9 11.3 13.6 17.5 17.7 14.0
SOVIET III: “0.3 “0.3 “0.4 “0.6 “0.6 “0.9 “1.1 “1.4 “1.4 “1.1
KVELWED RARKETS . 0.0 0.0 “0.1 “0.9 “1.1 “1.1 “1.2 “1.1 “1.0 “1.1
LDC'S 0.9 0.9 1.2 1.5 1.6 2.2 2.6 3.1 3.3 2.6
CHINA 3.2 3.9 5.0 6.4 6.2 10.1 12.7 16.5 19.7 13.4
RIDDLE 1m 0.1 0.7 1.5 2.1 2.9 3.2 3.1 2.4 1.7 2.7
HSTIC UTILIZATIN
CANADA 0.4 0.4 0.5 0.6 0.7 0.7 0.7 1.0 1.2 0.9
AUSTRALIA 0.1 0.1 0.0 0.1 0.1 0.2 0.3 0.4 0.4 0.3
ARKNTINA “0.2 “0.3 “0. 2 “0.3 “0. 2 “0.2 “0.2 0.0 0.1 “0.1
U.S. “0.7 “3.6 “3.2 “2.6 “3.0 “2.5 1.3 3.4 . 5.5 0.9
SOVIET In? “0.6 “1.0 “1.3 “1.6 “2.0 “2.5 “3.1 “3.3 “3.6 “2.9
KVELOPED RARKETS 6.6 0.9 0.6 0.2 “0.3 1.6 5.6 10.1 10.1 5.5
LDC'S 0.7 0.6 1.0 1.2 1.5 1.6 2.2 2.6 3.0 2.2
CHINA 2.5 3.1 4.0 5.0 6.5 6.1 10.4 13.9 16.6 11.1
RIDDLE IMS 0.0 0.0 0.4 0.7 1.3 1.6 1.4 1.0 0.4 1.1
EUIE STINIKS
CANADA 0.3 0.3 0.4 0.5 0.5 0.3 0.1 0.0 0.0 0.2
AUSTRALIA 0.3 0.2 0.2 0.4 0.4 0.6 0.6 0.9 1.1 0.6
RENTINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
U.S. 19.5 29.2 41.1 55.3 72.5 69.9 103.1 115.1 126.1 101.3
SOVIET DUN: 0.0 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2
KVELNED RARKETS 0.0 0.0 “0.1 “0.1 “0.2 “0.2 “0.2 “0.2 “0.2 “0.2
LE'S 0.4 0.3 0.3 0.4 0.6 0.6 0.6 1.1 1.2 0.9
CHINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
RIDDLE IMS 0.2 0.2 0.4 0.5 0 7 0.6 0.7 0.6 0.6 0.7

233

Differences from the Baseline under Scenario Two

for the World Coarse Grain Market, 1987-1995

FEED: SCENARIO 2 (ICHANGE)

65 mm mca, um

NET EIPORTS
CANADA
AUSTRALIA
ARGENTINA
CHINA
“6 Se

NET IRPORTS
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
RIDDLE IRCORES

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

DORESTIC UTILIZATION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC’S
CHINA
RIDDLE IRCORES

83 . Daselino value is zero

1967

“1.9

2.7
“2.6
“1.3

2.5
-560
3.6
1.4
“0.2
' 0.0
0.5
4.4
0.3

2.1
3.1
“2.5
“0.4
“0.4
0.5
0.6
3.5
0.0

5.2
100.0
0.0
12.9
0.0
0.0
3.4
0.0
6.9

1966

6.4

5.2
“10.2
7.9
42.1
-305

“2.5

3.9
“1.7
“2.1

2.4
“4.3
3.6
1.6
“0.2
0.0
0.6
5.3
5.8

2.0

“3.5
-2e6
“0.5

0.6
4.3
0.0

5.3
50.0
0.0
17.0
1.3
0.0
2.5
0.0
6.2

(Percent change)

1969

5.7

7.3
50.0
0.0
21.9
5.3
“0.6
2.4
0.0
13.6

1990

6.4
16.9
9.5
66.7
“5.4

5.3

3.1
2.9
“3.4
“1.6
“0.6
0.2
0.9
7.3
1.0

9.6
133.3
0.0
27.6
1.2
“0.6
3.3
0.0
16.1

1991

6.5
“16.9
11.3
115.4
“6.3

“3.7

30‘
“1.6
“4.4

‘05
“6.9
6.3
30'
“0.4
“1.0
1.5
12.0
7.4

3.6
20.
“2.2
“1.7
4.,
“0.2
1.1

1.9

1992

10.2

13.0
“16.1
13.0
190.0
“5.1

“4.3
12.0
“1.5
“4.6

‘0,
"e‘
7.3
‘03
“0.5
“1.0

15.0
6.1

1993

15.9

22.2
“16.2
15.4
342.9
“1.4

“5.5
30.7
“1.4
“5.2

6.6
“9.0
.0,
5.1
“0.5
“1.0
2.1
19.4
7.6

3.5
6.5
“2.2
0.7
“1.3
4.2
1.5
15.1
1.9

0.0
42.5
2.2
“1.2
6.9
0.0
23.3

-De‘
“4.5

9.5
“6.7
11.2

6.4
“0.7
“0.9

2.4

1995

15.7

40.5
“16.4
16.6
1550.0
1.7

“5.2
46.6
“0.7
“4.1

12.0
-DOe‘
11.6
5.4
“0.7
“0.9
2.5
32.1
4.2

5.0
11.4
1.1

~ 3.1
“1.4
7.2
2.1
27.2
065

0.0

0.0
46.3
2.1
“1.2
10.6
0.0
19.4

91-95 AVERAGE

13.4

23.3
“17.6
15.3

“1.4

6.7

234

Projections of World Wheat Market under Scenario Three
Balance Sheet, 1987-1995

“EAT: SCENARIO 3

US EXPORT PRICE, DIRT

NET EXPORTS
CANADA
AUSTRALIA
ARGENTINA
DEVELOPED RARKETS
U.S.

NET IRPORTS
SOVIET DLOC
LDC'S
CHINA
RIDDLE IRCORES

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC’S
CHINA
RIDDLE IRCORES

DORESTIC UTILTIATTON
CANADA
AUSTRAL TA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

1967

106.06

22.6
13.6

7.4
“1.3
39.9

21.4
23.3
13.9
23.6

26.9
17.4
12.5
67.3
143.0
v77.6
94.6
74.5
12.6

6.2
3.2
50‘
33.0
162.6
72.1
116.1
66.5
36.1

14.6
.07
0.9

46.9
3.3

20.6

27.9
6.0
4.4

(In million metric tons)

1966

24.4

26.2
16.6
12.6
69.5
146.3
60.7
96.6
75.3
12.9

6.2
3.1
5.0

167.0
73.7
120.7
69.0
37.1

14.6
‘05
0.9

46.5
‘00

26.6

”0‘
.00
4.6

99.30

20.3
16.3
7.4
6.5
33.2

22.0
22.2
14.2
25.3

26.6
19.6
12.4

147.5
62.4
103.6
76.3
.13.2

6.3
3.2
5.0

169.6
76.3
123.5
90.4
36.4

16.7
4.4
0.9

51.6
3.7

26.2

32.0
0.0
4.6

1990
97.71

20.
7

6
3
7.0
7.1
”0‘
22.9
21.2

14.3
26.4

26.1
20.6
12.0
75.0
146.7
66.6
106.6
77.1
13.2

6.5
3.2
5.0
36.5
171.7
76.5
127.4
91.4
39.5

17.7
4.7
0.9

57.4
3.6

24.2

34.4
0.0
4.6

1991

102.27

21.1
16.2
6.7
6.3
”62

173.0

131.3
93.3
40.7

17.9
4.9
0.9

61.7
4.0

23.0

36.7

1992

107.25

21.2
19.0
6.9
6.0
33.5

24.7
16.6
14.6
26.5

26.0
22.4
12.0
74.6
150.4
66.5
119.6
60.9
13.4

6.6
3.2
5.1
36.4
174.6
60.9
150 ’
95.6
41.6

17.9
5.1
0.9

64.6
4.4

22.6

39.2
0.0
5.1

1993

112.67

21.3
19.6
7.4
6.4
3362

25.6
17.7
15.1
29.5

26.3
23.0
12.5
74.9
151.3
67.6
125.6
63.5
13.5

6.9
3.3
5.1
36.9
176.3
61.7
140.6
96.5
42.9

1994

116.60

21.5
20.1
.60
6.5
33.4

26.5
23.5
13.2
75.3
151.9
69.3
131.6

13.7

1995

120.51

21.7
20.4
.0‘
7.3
”0.

27.6
16.4
16.1
31.6

26.7
23.9
13.6
75.6
152.7
90.7
137.6
66.9
13.6

7.1
3.4
5.3

- 39.3
179.9
63.2
151.4
105.0
45.2

“V
O
s

Noowufiou—

91“95 AVERAGE

111.90

21.4
19.5
7.5
6.5
33.4

176.4
61.6
141.0
96.6
42.9

16.0
5.2
0.9

67.3
4.9

22.6

41.6

235

Differences from the Baseline under Scenario Three

NEAT: SCENARIO 3 (011')

US EXPORT PRICE, DIRT

ET EXPORTS
CANADA
AUSTRALIA
ARENTI NA
DEVELIN’ED RARKETS
U. S.

[T IRPORTS
SOVIET DLN
LDC’S
CHINA
RIDDLE TIMES

PRODUCTIM
CANADA
AUSTRALIA
“NTINA
U.S.
SOVIET SUN:
KVELNED RARKETS
LDC'S
CHINA
RIDlE TUNES

MSTTC UTILIIATIN
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET 10C
EVELIR’ED RARKETS
LDC'S
CHINA
RIDDLE WIRES

EDIE STINIKS
CANADA
AUSTRALIA
MINA
U.S.
SOVIET SLR
EVELNED RARKETS
LDC'S
CHINA
RIDDLE IMS

for the World Wheat Market, 1987-1995

1967

1.36

0.0

“0.2
.005
.005
10.0
0.2

. 0.0
“0.2
005
“0.1

0.0

(In million metric tons)

1966

“0.1

“0.1
0.0
0.1

0.1
1.4
0.4
0.4
0.0

“3.0
0.0
0.0

“10.5
0.2

12.7

“0.2
0.0

“0.1

“0.2

“0.1
005
000

“0.1
0.3
3.3
0.3
0.5
0.0

“1.5
“0.1

“7.9
401
11.7
“0.3
0.0
0.0

“0.2

00°
0.0
0.0
0.0
0.3
4.7
0.0

.—
.00

“0.6
“0.1
0.0
“5.1
“0.1
9.5
“0.3
0.0
“0.1

“0.1

“0.7
“0.1

0.0
“3.3
“0.2

“0.4
0.0
0.0

0.1
“0.2
“0.2

0.1

1.6
0.0
“0.1
4.4
.00!
00°
.00‘
“0.3
0.0

“0.7
0.0
0.0

“5.6

7.7
“2.7
0.0
“0.2

1993

“1.62

1.6
.00
0.1
“5.3
13.5

0.1
“0.2
0.0
.05

1.5
00‘
OeD
3.6
0.0
0.1
“0.5
“0.3
0.0

0.1
0.0
0.0

“0.1
5.6
“0.7
“0.5
006

“0.7
0.0
0.0

-300

“0.2
7.3

“0.2
0.0
0.0

0.0
0.0
6.3
0.0
5.9
“0.5
“0.3
0.1

“1.1
0.0
0.0

“4.0

“0.1
7.4

“0.2
0.0
0.0

1995

-5061

1.7
0.1
.02
“6.0
4.4

301
0.0
000
“0.5
“0.2
0.0

0.0
0.0
0.0
0.1
0.0
6.0
“0.3
.00
0.1

“1.2
0.0
0.0

“4.6

“0.1
7.4

“0.2
0.0

“0.1

91“95 AVERAGE

-De,9

1.6
.0
0°

“5.3

5.6

0.1
.0
.0

0.1

1.6
0°
.0

4.1
.0

“0.6
“0.3
.0

0.1

“0.9
.0
0.0
“4.2
“0.3
7.6
“0.7
0.0
“0.1

236

Differences from the Baseline under Scenario Three

for the World Wheat Market, 1987-1995

UHEAT: SCENARIO 3 (SCHANGE) 1967

as am: met, cm

NET EXPORTS
CANADA
AUSTRALIA
ARGENTINA
DEVELOPED RARKETS
U.S.

ET IRPORTS
SOVIET DLOC
LDC'S
CHINA
RIDDLE IRCORES

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

DORESTIC UTILIZATION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

1.3

11.6
“0.7
“2.6
“120.0
20.9

“0.7
“0.6
“0.6
17.5
0.1
. 0.0
“0.2
0.1
“0.6

0.0
3.2
20°
0.3
0.0
0.1
0.4
0.6
0.0

“15.6
-200
0.0
“13.1

56.6
“0.4
.00
0.0

9.0
“1.3
“2.6

“64.0
16.9

“0.6

“1.6
0.0
2.0
0.0
0.1
1.9
0.3
0.5
0.0

“16.9
0.0
0.0
“16.4
5.3
91.4
“0.7

.00
“2.1

5.2
“1.6
“3.9

“26.1
11.0

9.5
“1.0
“2.4

6.2

°eD

0.0
“0.7

0.1
“1.5

-100
3.2
0.0

“0.3
0.2
4.5
0.2
0.5
0.0

“6.7
“2.2
0.0
“13.3
-2e‘
60.7
“0.9
0.0
0.0

6.7
“1.7
“6.7

“26.0
10.1

0.0
4.4
0.7
0.6

6.1
“1.0
“4.0

6.7

0.1

0.0
“0.9
“0.3
“1.5

0.0
0.0
0.0
0.0
0.2
6.4
0.0
0.0
0.0

“4.3
“2.1

0.0
“6.2
“2.7

“0.9
0.0
-200

1991

0.0
0.0
“2.0
0.6
0.1
101
“0.5
401
0.2

“3.6
“2.0
00°
“5.1
“4.6
56.5
-DeD
0.0
0.0

(Percent change)

6.2
0.0
“1.4
“45.9
11.7

“0.4

g . . o o 0 o
no es sa-Ouun on Q’ C: en

GD 4‘ AL :‘ G, O. 13 0’ -

“15.4
51.7
“6.4

00°
“3.6

1993

“1.4

6.1
0.5
1.4
“45.3
66.5

0.4
.DeD
0.0
0.3

Se‘
0.4
0.6
5.0
0.0
0.1
“0.4
“0.4
0.0

1.5
0.0
000
0.6
“0.1
7.6
“0.5
“0.5
0.2

“3.7
0.0
0.0

“4.3

“3.6

49.0

“0.5
0.0
0.0

1994

000
0.0
0.0
0.6
0.0
7.7
“0.3
“0.3
0.2

“5.7
0.0
0.0

“5.4

“1.9

49.0

“0.4
.00
0.0

“0.2
0.0

91“95 AVERAGE

“1.7

6.3
0.2

“0.3

0.6
0.0
“0.4
0.7

7.5
“0.5
“0.3

0.2

“4.7
“0.4

0.0
“5.6
“5.4
50.9
“1.7

0.0
“1.1

237

Projections of World Coarse Grain Market under Scenario Three
Balance Sheet, 1987-1995

FEED: SCENARIO 3

US EXPORT PRICE, DIRT

NET EXPORTS
CANADA
AUSTRALIA
ARGENTINA
CHINA
U.S.

NET IRPORTS
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
RIDDLE IRCORES

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

DORESTIC UTILIZATION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

1967

99.07

4.6
5.5
13.0
2.4
57.2

26.0
22.7
11.4
23.0

24.4
6.6
20.9
241.7
173.6
104.2
116.5
73.6
36.4

19.6
3.1
7.9

173.9
199.6
126.9
127.4

71.3

61.2

5.9
0.3
0.7
136.9
7.6
15.0
11.6
6.0
3.0

(In million metric tons)

92.72

4.9
6.0

19.9
3.3
6.3

177.4
205.4
126.7
129.9
72.2
63.9

5.9
00‘
0.6
157.5
7.7
15.2
12.2
0.0
3.3

19.9
3.5
'0‘

161.6
211.4
127.4
132.1
71.4
65.5

5.7
0.4
0.9
173.6

15.6
12.4
0.0
3.1

1990

4.6
7.2
15.0
1.6
61.6

31.0
19.7
12.3
27.4

24.3
10.7
23.9
256.7
167.3
110.2
121.6
72.3
40.1

19.6
3.6
.0,

177.7
216.1
129.5
134.1
70.6
67.4

192.6
6.0
15.9
12.5
6.0
3.2

1991

65.46

‘07
7.6
15.2
‘03
66.4

32.9
20.1
12.6
29.6

24.1
11.3
24.2
260.1
192.4
111.6
123.0
70.2
36.7

‘90‘
30‘
9.0

175.0

131.7
136.0
66.9
“0‘

5.2
0.3
0.9
211.5
6.3
16.2
12.2
6.0
2.9

1992

66.67

4.5
6.4
15.3
‘00
70.9

34.6
20.7
13.3
31.5

2‘05
11.6
24.4
263.3
197.6
113.1
124.2
67.6
36.7

19.6
3.6
9.1

174.9
”50,
133.6
137.6
66.9
70.2

5.2
0.2
0.9
229.1
6.6
16.5
12.0
0.0
2.6

91.67

4.3
.0,
15.5
0.6
75.3

36.5
21.1
13.6
”05

24.0
12.3
24.7
267.7
202.9
114.6
125.7
65.4
39.2

9.2
175.1

135.5
139.6
64.6
1202

5.3
0.0
6.9
246.4
6.9
16.7
11.7
6.0
2.9

1994

97.41

4.1

15.7
0.4
79.4

36.2
21.7
14.3
34.7

24.0
12.7
25.0
271.7
206.3
115.6
127.2
62.9
39.6

19.7
3.5

176.5
”‘02
137.3
141.9
62.4
74.3

5.4
0.0
0.9
260.3
9.3
16.9
11.4
0.0
3.0

1995

104.50

4.0
9.9
16.1
0.3
62.6

39.9
22.1
14.6
36.3

24.0
13.2

277.6
213.6
117.0
129.0
61.1
40.4

19.6
3.5
9.4

~163.9
253.2
136.9
144.1
60.7
76.5

5.5
0.0
0.9
271.3
9.7
17.1
11.1
0.0
3.1

91-95 AVERAGE

93.54

4.3
6.9
15.6
0.7
75.0

36.4
21.1
13.6
33.0

24.0
12.3
24.6
266.1
203.0
114.5
125.6
65.5
39.3

19.7
3.6

177.5
239.1
135.4
139.9
64.7
72.4

Ne—owyoou
. e

e
acqwoflonu

238

Differences from the Baseline under Scenario Three

for the World Coarse Grain Market, 1987-1995

PEED: SCENARIO 3 (DIP)

us errant PRICE, DIRT

NET EXPORTS
CANADA
AUSTRALIA
ARGENTINA
CHINA
U.S.

RET IRPORTS
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
RIDDLE WINES

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

DORESTIC UTILIZATION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

“0.4

0.2
6.0
0.1
1.9
“0.2
“ 0.0
0.3
0.7
0.5

0.1
“0.1
6.0
6.4
“0.5
6.0
0.2
0.3
“0.1

0.1
0.0
“0.1
-DDe’
0.1
0.0
“0.1
0.0
005

(In million metric tons)

m:
A;
m:
L4

402
to
64
Id
L1

0.2
401
6.0
7.4

“1.6
.02
0.9
0.1

002
.00
0.0
“14.0
0.1
0.0
0.0
6.0
0.1

0.4
0.0
0.4
3.1
“0.1
0.0
0.6
‘0.
0.6

0.3
0.0
0.1
7.5
“0.5
“2.6
0.4
1.4
0.2

0.2
0.0
0.0
“14.2
0.1
0.0
.05
0.0
0.2

0.1
6.1
6.2
0.1
“3.3

0.0
“2.4
“0.1
“0.2

0.3
0.1
0.4
3.1
“0.2
0.0
0.6
2.2
0.3

0.3
0.1
0.1
“0.1

“2.4
0.4
1.9
0.1

0.3
0.0
0.0
“7.6
“0.1
6.0
0.3
6.0
0.1

1991

“4.66

0.0
0.1
0.1
6.0
“1.9

16 - e: «a 35 an 1. 1» cs
“Que—‘N-o

0.1
0.0
0.0
“0.9
401
0.0
0.2
0.0
“0.1

“0.2
0.1
“0.1
“1.2
0.0
0.0
“0.1
0.6
“0.6

0.0
0.0
0.0
“3.9
0.1
'De.
0.0
0.5
“0.2

0.0
0.0
0.0
3.1
“0.1
0.0
0.2
0.0
“0.1

0.2

“0.3
6.1

“6.6
0.1
0.0

“0.1
6.0

“0.3

“0.2
0.1
0.0

“0.7
0.2

“1.6
0.0
0.1

“0.1

&°.°.&u°°°
on 0’ en G) an N. (D " <0

1994

“0.72

“0.2
6.1
“0.1
6.0
“1.2

“0.3
6.0
“0.1
“0.3
0.1
0.0
“0.1
“0.3
0.0

“0.1
0.0
0.0
2.5

“1.5
0.0
“0.3
0.1

0.0
0.0
0.0
2.4
0.0
0.0
0.1
0.0
0.0

1995

“0.2
0.1
6.0
0.1

“1.6

“0.2
“1.6

6.0
“0.1

“0.2
6.0
0.0
0.5
0.0
0.0
0.0

“0.2
0.2

91-95 AVERAGE

-zu

“0.1

239

Differences from the Baseline under Scenario Three

for the World Coarse Grain Market, 1987-1995

FEED: SCENARIO 3 (XCHANGE)

s new mes. om

NET EXPORTS
CANADA
AUSTRALIA
ARGENTINA
CHINA
U.S.

NET IRPORTS
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
RIDDLE IRCORES

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC’S
CHINA
RIDDLE IRCORES

DORESTIC UTILIZATION
CANADA
AUSTRALIA

U.S.

SOVIET DLOC
DEVELOPED RARKETS
LDC'S

CHINA

RIDDLE IRCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

n . Dateline value is zero

1967

4.6

2.1
1.9
0e.
9.1
“2.4

“1.1

0.4
“0.9
“1.7

0.6
0.0
0.5
0.6
“0.1
- 0.0
0.3
1.0
1.3

0.5
“3.1
0.0
3..
“0.2
0.0
0.2
6.4
“0.2

1.7
0.0
“12.5
“7.9
1.3
0.0
“0.9
0.0
3.4

1.2
1.1
1.4
1.0
.00‘
6.0
0.3
1.6
1.6

1.0
“2.9
0.0
4.4
“0.1
“1.2
.02
1.3
0.2

3.5
00°
0.0
‘02
1.3
0.0
6.0
0.0
3.1

(Percent change)

1969

1.5
0.0
1.2

“0.2
“2.0
0.3
2.0
0.3

3.6
0.0
0.0
“7.6
1.3
6.0
0.6
0.0
6.9

0.0
“10.9
“0.6
“0.7

a. so 00 we
0 . 0

es as es fa J.

0 0
on U. Q. I. 0‘ I] ‘0 a. $0 “ 0. ea

éérvr

00 (D
0 e
ID to

5.6
0.0
0.0
“3.9
-602
0.0
2.5
0.0
3.2

0.0
6.9
0e.
0.2
“0.1
6.0
0.2
2.3
“1.6

0.5
0.0
1.1
'2e0

-505
0.2
2.1

“0.3

2.0
0.0
0.0
“0.4
“1.2
0.0
1.7
0.0
“3.3

1992

“0.6
0.9
“0.4
“0.5
0.0
6.0
“0.1
0.9
“1.5

0.0
0.0
0.0
“2.2

“1.3
0.0
0.9

“0.3

0.0
0.0
0.0
De‘
-DeD
0.0
1.7
0.0
“3.4

“1.2

0.6
“0.4
“0.3

“0.6

-602

“0.1

1.1.1
0. G, .0 " ‘0

9.3-
G) GD 0’ CD

“1.2

0.0
“0.4
“0.1

6.0
“0.1
“0.5

0.0

“0.5
0.0
0.0
1.4

“1.1
0.0
“0.5
0.1

0.0

0.0
6.9
0.0
0.0
0.9
0.0
0.0

1995

1.2

as 45 ...-5.55 en ea c: g»
h. “ c) I. h. .9 C, " ‘.

0.0
SD
0.0
“0.4
0.0
0.0
0.0
0.0
0.0

“0.3
0.6
0.2

“0.1

“1.2
.0
0.4
“0.1

0.4
0.0
0.0
0.6
“0.7
0.0
1.0
0.0
“2.0

240

Projections of World Wheat Market under Scenario Four
Balance Sheet, 1987-1995

NHEAT: SCENARIO 4

us EXPORT mcz, mn

NET ETPORTS
CANADA
AUSTRALIA
ARGENTINA
DEVELOPED RARKETS
U.S.

NET IRPORTS
SOVIET DLOC
LDC'S
CHINA
RIDDLE IRCORES

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

DORESTIC UTILIZATION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

1967

102.02

25.2
13.9
7.6
“11.3
46.1

6.2

162.6

115.5
67.9
36.1

12.6
3.6
0.9

43.3
3.0

30.9

26.1
0.0
4.4

(In million metric tons)

1966
94.90

22.6
15.3
7.7

40.6

21.5
23.0
13.4
24.4

30.0
16.6
12.7
72.1
146.1
60.7
99.3
74.9
13.0

6.2
3.1
4.9
33.7
167.5
75.4
120.1
66.3
”03

13.5
4.1
0.9

3.1
40.5
30.2

0.0

4.6

66.62

21.2
16.6
7.6
2.6
34.7

30.9
20.1
12.5
77.1
147.5
62.4
104.3
75.4
13.3

6.4
3.1
5.0
34.4
170.1
60.0
123.1
69.2
36.6

16.6
4.5
0.9

49.0
2.7

40.2

32.7
0.0
4.7

29.7
21.1
12.3
77.9
146.6
63.6
109.5
76.0
13.2

‘0‘
3.1
5.0
35.3
171.6
63.6
127.4

39.7

16.9
4.6

59.3
2.6
34.1
35.1
6.0
.4.6

1991

96.33

21.6
16.6
7.0
5.1
33.5

24.0
19.3
14.6
27.7

26.0
22.0
12.1
75.5
149.9
65.0
114.9
77.5
13.2

6.7
3.2
5.0
36.2
173.0
65.9
131.9
92.2
40.7

16.7
5.0
0.9

65.1
3.6

26.0

37.3
0.0
4.9

1992

107.65

22.3
19.2
7.0
2.0
36.2

24.6
16.3
15.0
26.6

27.5
22.6
12.1
73.3
150.7
66.5
120.5
60.2
13.3

6.6
3.2
5.1
36.7
174.6
66.6
13.6
95.0
41.7

17.2
5.2
0.9

65.5
4.5

26.0

39.6
0.0
5.1

1993

64.00

22.6
19.7
7.2
0.6
36.0

25.6
17.3
15.7
29.9

26.6
23.2
12.5
73.7
151.3
67.7
126.4
63.3
13.5

Pg? 999?

. en
9 F
"9“”-“0‘9’-

42.7
°so
5.1

1994

91.45

23.9
20.1
7.2
6.5
40.9

26.9
16.1
16.5
31.2

29.9
23.5
12.6
75.0
153.1
69.3
131.6
63.3
13.2

15.2
5.4
1.0

3.2
26.7
45.2

0.0

5.4

1995
124.41

24.1
20.4
7.6
0.7
40.3

7.1
3.4
5.2
36.1
176.6

152.7
101.5
45.0

15.7
5.5
1.0

63.5
‘05

26.7

47.1
0.0
5.6

91“95 AVERAGE

101.17

241

Differences from the Baseline under Scenario Four

UHEAT: SCENARIO 4 (DIET

US EIPORT PRICE, DIRT

NET ETPORTS
CANADA
AUSTRALIA
ARGENTINA
DEVELOPED RARKETS
U.S.

ET IRPORTS
SOVIET DLOC
LDC'S
CHINA
RIDDLE IRCORES

PRODUCTION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

DORESTIC UTILIZATION
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC'S
CHINA
RIDDLE IRCORES

ENDING STOCKS
CANADA
AUSTRALIA
ARGENTINA
U.S.
SOVIET DLOC
DEVELOPED RARKETS
LDC’S
CHINA
RIDDLE IRCORES

for the World Wheat Market, 1987-1995

4.6
0.0
0.0
“17.6
13.1

0.0
“0.1
0.0
0.0

0.0
6.0
0.0
6.0
0.2
6.0
“0.1
“0.1
0.0

“4.7
0.0
0.0

“13.0

“0.2

17.6
0.1
0.0
0.0

(In million metric tons)

“6.91

2.6
0.0
“0.1
“11.6
9.1

3.2
6.0
0.0
5.5
0.0
0.0
0.0
“6.3
0.0

“0.1
6.0
0.0

“0.6
0.6
3.1

“0.2

“0.3
0.2

“4.3
0.0
0.0

“16.1

“0.7

26.6
0.2
6.0

“0.1 '

1969

-52050

“0.6
“0.1

0.0
6.0
0.0
“1.0
6.6
7.0
“0.1
“0.7
0.2

“1.5
0.0
0.0

“10.5

“1.1

25.7
0.4
0.0

“0.1

0.1

0.0
“1.2
0.4
10.0
0.0
“1.2
0.2

0.4
0.0
0.0
“3.2
“0.9
19.4
0.4
6.0
“0.1

1991

“6.59

2.1
0.2
“0.1
“5.3
3.6

1.9
6.2
“0.1
5.6
0.3
6.0
“0.1
“1.4
“0.2

0.1
6.0
“0.1
“1.1
0.1
11.3
“0.1
“1.2
0.1

_ 0.1

0.0
0.0
6.1
“0.6
13.3
0.2
6.0
“0.1

1992

“2.43

0.2

“1.0
“0.1

0.1
0.0
0.0
“1.3
“0.1
11.3
“0.3
“1.1
0.0

“1.4
0.1
0.0

“4.9

“0.7

11.1

“2.3
0.0

“0.2

1993

“30.49

3.1
0.2
“6.1
“10.9
16.3

0.1
“0.6
0.6
0.5

'0.
6.3
0.1
2.4
0.0
6.0
003
“6.5
0.0

0.1
0.0
6.2
'De3
2.4
11.3

“6.5
“2.6
10.6
0.6
0.0
“0.2

1994

“26.15

“99%

D
‘3 00 a. C. a.
I e

0
ea 00 :3 as he 0. an 0’ u-

“4.0
6.0
0.0

“13.2

“2.2

11.6
0.7
0.0

“0.1

1995

2.29

4.1

“3.7
“0.7

0.0
0.0
“0.1
“3.1
“1.1
10.6
1.0
“3.5
“0.1

“3.6
0.0
0.0

“13.9
0.3

13.4

405
0.0

“0.2

91-95 AVERAGE

“12.67

“2.3

0.0
“7.7
“1.2
12.0
“0.1

“0.2

242

Differences from the Baseline under Scenario Four

NHEAT: SCENARIO 4 (ICHANGE)

US EXPORT PRICE, DIRT

NET EXPORTS

CANADA

AUSTRALIA
ARGENTINA
DEVELOPED RARKETS
U.S.

IT IRPORTS

SOVIET DLOC
LDC’S

CHINA

RIDDLE IRCORES

PRODUCle

CANADA

AUSTRALIA
ARGENTINA

U.S.

SOVIET DLOC
DEVELOPED RARKETS
LDC’S

CHINA

RIDDLE IRCORES

DORESTIC UTILIlATTON
CANADA

AUSTRALIA
ARGENTINA

U.S.

SOVIET DLOC
DEVELOPED RARKETS
LDC'S

CHINA

RIDDLE IRCORES

ENDING STOCKS
CANADA

AUSTRALIA
ARGENTINA

U.S.

SOVIET DLOC
DEVELOPED RARKETS
LDC'S

CHINA

RIDDLE IRCORES

1967

D
N
o
'9

.5
3F???
“.00"

°°§°
00-0

000000.006

°°9°°°
°-°u°°°°

9&4

“27.2
0.0
0.0

“23.1

“6.3

135.9
0.4
0.0
0.0

“0.4 “1.0 “1.7 “1.6

(Percent change)

1966 1969 1990 1991 1992

.806 -6204 -5100 ‘03 -202

14.0 9.6 6.6 10.6 13.6
0.0 0.0 0.6 1.1 1.1
“1.3 “1.3 “2.7 “1.4 0.0
“157.3 “70.5 “37.5 “51.0 “62.0
26.7 16.1 9.1 12.0 20.7
0.5 0.5 0.9 0.6 0.6
0.0 0.0 0.0 “0.5 “2.7
“0.7 0.7 1.4 0.7 0 0
0.4 1.2 1.1 1.5 0 7

11.9 16.4 14.2 7.3
0.0 0.5 0.5 0.9
0.0 “1.6 “1.6 “0.6
6. 13.5 12.9 6.3
0.0 0.1 0.2 0.2
0.0 0.0 0.0 0.0
0.0 0.0 “0.1 “0.1

6
«S»:- 0: <0 sD'O'SD e: a.
.
NED—Outflow”

0.0 “0.7 “1.5 “1.5

“1.6 0.0 1.5 1.5 1.5
0.0 0.0 “3.1 0.0 0.0
0.0 0.0 0.0 “2.0 0.0

“1.7 “2.6 “3.3 “2.9 “3.4
0.4 0.4 0.2 0.1 “0.1
4.3 9.6 13.6 15.1 15.0

“0.2 “0.1 0.0 “0.1 “0.2

“0.3 “0.6 “1.3 “1.3 “1.1
0.5 0.5 0 5 0.2 0.0

-2902 "02 202 005 -705

0.0 0.0 0.0 0.0 2.0
0.0 0.0 0.0 0.0 0.0

“26.2 -570‘ -SeD 002 -100
“16.4 “26.9 -2903 -6903 -6305
191.4 177.2 132.0 90.5 74.5

007 502 502 005 -505
0.0 0.0 0.0 0.0 0.0
1 “2.0 “2.0 “3.6

for the World Wheat Market, 1987-1995

1.5
0.0
3.9
“3.4
1.4
14.9

1.2

p
O
0 o
D II.
o '0

00°“
0..

e .0.

ONNONNN-U
fl

0 0 0.0

“NMOOONON

is

eDueDveS 0: es an .5 c:

u

—

é-‘s

on
0 e

D
e: :0 ca-fi-e:

NuNQN'D‘O‘

.9

NO
I e

DOOOVOOOO

--sé

“

91“95 AVERAGE

“11.1

e
930°?
“’9...“

“ND-O
O. O
‘09—‘40

D
.-
C

e
o.

I

N 000‘
00. 0 0
”00.0.0uqo

6
N

“12.2
0.4
0.0

“10.7

“22.5

“0.3
0.0
“3.0

243

Projections of World Coarse Grain Market under Scenario Four
Balance Sheet, 1987-1995

FEED: SCENARIO 4

I: won mu, sm

ET EIMTS
CMADA
AUSTRALIA
“TINA
CHINA
U.S.

KT IWTS
SOVIET DLIR:
KVELIR’ED RARKETS
LDC'S
RIDDLE {MS

MT!"
CANADA
AUSTRALIA
mm
U.S.
SOVIET DUN:
KVELWED RARKETS
LDC'S
CHINA
RIDDLE 1m

MSTIC UTILIIATIN
CANADA
AUSTRALIA
HGENTINA
U.S.
flVIET DLOC
KVELNED MRNETS
LDC’S
CHINA
RIDIE 1m

Elli STMS
CANADA
AUSTRALIA
WTIRA
U.S.
SOVIET IN
KVELUED RARKETS
LDC'S
CHINA
RIDDLE 1MB

1987

93.25

4.7
5.4
12.9
2.2
58.5

24.2
8.6
20.8
239.7
174.0
104.2
116.2
73.1
37.8

‘9':
3.2
7.9

166.3
200.0
126.9
127.2

61.3

15.0
11.8
0.0
2.9

(In million metric tons)

4.8
5.,
13.9
2.0
56.1

27.7
19.0
11.6
24.3

24.5
’0‘
22.3
250.8
177.9
105.7
118.5
73.2
39.9

19.7
3.4
8.3

168.9
205.5
124.6
129.6
71.2
63.9

5.8
0.4
0.8
178.9
7.6
15.2
12.3
0.0
3.2

1989

81.25

4.7
‘05
14.6
1.9
“82

29.1
16.8
11.9
26.1

24.2
10.1
13.3
253.5
182.5
IN.0
52000
72.0
39.2

19.7
3.5
8.6

174.1
211.5
124.4
131.7
70.2
65.5

5.6
0.4
0.9
202.1
7.7
15.6
12.5
0.0
3.0

1990

“.43

4.6
7.2
15.1
1.7
‘38'

30.9
16.7
12.2
27.7

24.0
10.8

257.2
187.3
110.2
121.6
70.9
40.0

19.6
3.6
8.9

178.4
217.9
126.5
133.8
69.3
67.6

5.4
08‘
0.9
222.0
8.0
15.9
12.4
.00
3.2

1991

4.6
7.9
15.4
1.3
63.8

32.8
18.1
12.6
29.6

23.9
11.4
24.4
260.8
192.3
111.8
123.0
69.5
39.2

19.6
3.6
9.0

180.5

129.6
135.8
68.2
69.0

5.2
0.3
0.9

8.3
16.2
12.2

0.0

3.0

1992

88.34

4.4
8.5
15.5
0.9
69.6

34.7
19.6
13.2
31.5

24.0
11.9
24.6
264.5
197.6
113.1
124.3
67.6
38.8

19.6
3.6
’0‘

179.7
231.9
132.5
137.7
66.7
70.5

5.2
0.2
0.9
253.7
8.6
5‘85
11.9
0.0
2.9

89.61

4.3
9.0
15.5
'85
71.8

35.0
20.4
13.8
33.0

24.0
12.4
24.7
267.8
”28’
114.6
125.6
65.1
38.9

’02
177.5
237.6
‘30.
139.6

71.9

5.3
0.0
0.9
272.2
8.9
16.7
11.6
0.0
2..

1994

93. 02

4.5
9.7
16.8
1.4
76.4

37.3
23.1
14.0
34.4

24.6
‘38!
26.3
279.2
207.4
115.8
128.3
66.2
40.8

20.0
3.6
9.5

178.6
244.4
13.7
142.2

74.7

5.4
0.0
0.,
2*.3
9.2
16.9
11.7
0.0
3.3

97.58

4.5
10.3
17.2

82.7

40.9
23.4
14.4
8.4

24. 8
13.8
27.0
”385
212.9
117.0
130. 2
66.3
41.1

20.2
3.6
9.7

180.5
253.5
140.
144.7

66.1

77.4

5.5

0.9
316.7
9.5
17.1
11.6
0.0
3.4

91“95 AVERAGE

”.62

24.3
12.5
25.4
271.2
202.6
114.5
126.3
66.9
39.8

19.8
3.6
9.3

179.4
238.4
135.
140.0

65.9

72.7

0.9
275.5
8.9
16.7
11.8
0.0
3.1

 

244

Differences from the Baseline under Scenario Four
for the World Coarse Grain Market, 1987-1995

FEED: SCENARIO 4 (011')

as txroat PRICE, DIRT

KT EIPINITS
CANADA
AUSTRALIA
MSENTINA
CHINA
U. S.

‘T IRPORTS
SOVIET DLOC
KVELUED RARKETS
LDC'S
RIDDLE INCINIES

PRODUCTIM
CANADA
AUSTRALIA
HGENTIRA
U.S.
SOVIET DLN
KVELIPED RARKETS
LDC’S
CHINA
RIDDLE IMS

MSTIC UTILIlATIN
CANADA
NISTRALIA
MGENTINA
U.S.
SOVIET DLOC
IVELWED RARKETS
LDC'S
CHINA
RIDDLE [ms

SUM STINZRS
CANADA
HISTRALIA
MSERT INA
U.S.
SOVIET DUI
KVELWED RARKETS
LDC'S
CHINA
RIDDLE IMS

1987

0.0
8.0
.8.
“0.1
0.0
“ 8.0
0.0
0.0
“0.1

0.0
0.0
8.0
“1.2
“0.1
8.0
0.0
“0.1
0.0

0.0
0.0
0.0
2.3
0.0
8.0
0.1
0.0
0.0

(In million metric tons)

was

0.0
0.0
0.0
“1.1
“0.2
“3.7
“0.1
“0.1
0.1

0.1
8.0
0.0
7.4
8.0
8.0
8.1
8.0
0.0

“9.7
8.7
“0.1
0.0
8.2
0.4
0.2

oooéé
.9 .0 GD 'N...¢, u. G? u.

0.0
0.0
14.3
“0.1
0.0
0.2
0.0
0.1

1990

'50“

“0.1
0.1

8.2
-503

“0.1
“5.4
“8.2

8.1

0.0
8.2
0.4
1.6
“0.2
0.0
0.4
0.8
0.2

1991

0.1
0.0
0.1
8.8
“0.1
“4.1
0.1
8.7
0.2

0.1
8.0
0.0
3.1
“0.1
0.0
0.2
8.0
0.0

1992

0.2
“2.9
“0.1

0.4

“0.3
0.2
0.1
0.0
0.0
0.0
0.0
0.4

“0.5

0.0
0. 0
0.0
8.9
0.1
“2.9
“0.1
0.4
0.1

0.0
0.0
0.0
27.7
“0.1
0.0
0.1
0.0
0.0

1993
“4.54

“0.2
0.2
“0.1
0.8
“4.5

“1.5
“2.4
0.0
0.1

“0.3
8.2
“0.1
“0.7

0.1

8.0
.082
“8.3
“8.6

“0.2
0.1
0.0

“1.3
‘20:
“0.2
-500
“0.8

0.0
0.0
0.0
29.7
“0.1
0.0
0.0
0.0
“0.2

0.2
0.1
0.2
2.6
“1.7
“0.1
0.3
2.1
0.5

0.0
080
0.0
3.4
“0.1
0.0
0.4
0.0
0.3

1995

0.0
0.0
0.0
44.4
“0.2
0.0
0.5
8.0
0.3

91-95 AVERAGE

15 I‘ 1’ 431§6.ao c, (3
ha II...¢, to CD on on CD

pone—9°00

°°°°§§99

245

Differences from the Baseline under Scenario Four
for the World Coarse Grain Market, 1987-1995

(Percent change)

FEED: SCENARIO 4 (W) 1987 1908 was 1990 1991 1992 1993 1994 1995 91-95 AVERAGE

16 EIPNT PRICE, DIRT - “1.4 “4.3 “5.8 “6.6 “6.2 “4.6 “4.8 “5.2 “5.5 “5.3
[I EIPNTS
CANADA 0.0 0.0 “2.1 “2.1 “2.1 “4.3 “4.4 4.7 7.1 0.0
AUSTRALIA 0.0 0.0 0.0 1.4 2.6 2.4 2.3 4.3 5.1 3.4
RENTINA 0.0 0.0 1.4 2.0 _ 2.0 0.6 “0.6 6.3 6.8 3.1
CHINA 0.0 5.3 18.7 13.3 0.0 “10.0 114.3 250.0 50.0 50.0
U.S. “0.2 “6.7 “9.9 “2.0 “6.6 “3.5 “5.9 “5.2 “2.2 “4.6
ET IWTS
SOVIET DLOC “0.4 “0.7 “1.0 “0.3 0.3 0.6 “4.1 “2.4 2.0 “0.7
KVELOPED RARKETS 0.0 “16.7 “25.0 “24.4 “18.5 “12.9 “10.5 “0.4 “1.3 “8.6
LDC'S 0.0 “0.9 “0.8 “1.6 “1.6 “0.8 0.0 “2.1 “2.7 “1.4
RIDDLE mm 0.0 0.4 0.4 8.4 1.0 1.3 0.3 “0.9 0.0 0.3
PRODUCTIN
CANADA 0.0 0.0 0.0 0.0 “0.8 “1.2 “1.2 1.2 2.5 0.1
AUSTRALIA 0.0 1.1 1.0 1.9 1.8 1.7 1.6 3.1 4.5 2 6
“ITINA 0.0 0.5 “42.2 1.7 1.7 0.4 “0.4 4.8 5.9 2.5
U.S. .0 0.0 0.3 0.6 8.4 0.0 “0.3 2.6 2.2 1.0
SOVIET DLIRI 0.0 0.0 “0.1 “0.1 “0.1 0.0 .0 “0.4 “0.3 “0.2
KVELUED RARKETS “ 0.0 0.0 0.0 0.0 8.0 0.0 0.0 0.0 0.0 0.0
LDC'S 0.0 0.0 0.2 0.3 0.2 0.0 “0.2 0.8 0.9 0.3
CHINA 0.0 0.1 0.6 1.1 1.3 8.6 “0.5 4.7 8.2 2.8
RIDDLE 1w “0.3 0.3 0.5 0.5 “0.5 “1.3 “1.5 3.0 2.2 0.4
MSTIC UTILIlATIM
CANADA 0.0 0.0 0.5 0.5 0.5 0.0 “1.0 1.0 1.5 0.4
AUSTRALIA 0.0 0.0 0.0 2.9 0.0 0.0 2.9 2.9 2.9 1.7
RSENTINA 0.0 0.0 1.2 1.1 1.1 0.0 0.0 2.2 3.2 1.3
U.S. “0.7 “0.6 0.0 0.3 8.4 0.5 1.0 1.5 1.3 0.9
DVIET DLW .0 “0.1 “0.2 “0.2 .0 .0 “0.5 “0.7 .0 “0.2
IVELIPED RARKETS 0.0 “2.9 “4.3 “0.1 “3.1 “2.1 “1.7 “0.1 “0.2 “1.4
LDC’S 0.0 “0.1 0.0 0.1 0.1 “0.1 “0.1 0.2 0.4 0.1
CHINA “0.1 “0.1 0.3 8.9 1.0 0.6 “1.5 3.3 8.2 2.2
RIDDLE 1m 0.0 0.2 0.3 0.4 0.3 0.1 “0.6 0.7 1.3 0.4
EDIE STOCKS
CMADA 0.0 1.8 1.8 3.8 2.0 0.0 0.0 0.0 0.0 0.4
AUSTRALIA 0.0 0.0 0.0 33.3 0.0 0.0 83 81 88 0.0
RGERTINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
U.S. 1.5 4.3 7.6 10.7 12.3 12.3 12.2 14.9 16.3 13.7
INIET DLIR: 0.0 0.0 “1.3 “1.2 “1.2 “1.1 “1.1 “1.1 “2.1 “1.3
EVELWED RARKETS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
LDC'S 0.9 0.8 1.6 1.6 1.7 0.8 0.0 3.5 4.5 2.1
CHINA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
RIDDLE 1m 0.0 0.0 3.4 3.2 0.0 0.0 “6.7 ‘10.0 9.7 2.7

u t Ducliu value Is zero

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