Agricultural Subsidies in the WTO Green Box
Ensuring Coherence with Sustainable Development Goals
Edited by Ricardo Meléndez-Ortiz
Edited by Christophe Bellmann
Edited by Jonathan Hepburn
Publisher: Cambridge University Press
Print Publication Year: 2009
Online Publication Date:May 2010
Chapter DOI: http://dx.doi.org/10.1017/CBO9780511674587.003
The International Economy
The long-term growth and composition of international trade depends, at the economic level, upon changes in demand and, ultimately, production patterns, and at the political level, on the interaction of conflicts of interest and cooperative efforts among different national states and regions. The General Agreement on Tariffs and Trade (GATT), from its inception after the Second World War, and the World Trade Organization (WTO), from 1994 onwards, are clear examples of the struggle to reign over these conflicts of interest and, at the same time, to adapt multilateral institutions to the changing patterns of the international economy. Agriculture by itself is an ideal field of research to test these changes in demand and the political interaction already referred to.
From an economic point of view, for more than 60 years after the crisis of 1929, farming production was affected by decreasing income elasticity of demand, meaning that its share in total consumption diminished at the same time as income grew. This process, which can be called the autonomous trend of demand, led to changes in world relative prices (terms of trade) between agriculture and manufactured goods.
The adjustment in supply that should have followed as a result of this change was nevertheless not automatic, depending on the commercial policies followed at the national level.