A basic source of distortion in the world market for agricultural commodities and primary products has been the differential level of domestic support that developed and developing countries can give to the production of these commodities. This has tended to reduce the price competitiveness of developing countries. Thus, the WTO provides for a commitment by each developed country to reduce its domestic support measures in favour of agricultural products. However, for developing countries, government measures of assistance, whether direct or indirect, to encourage agricultural and rural development are regarded as an integral part of their development programs. Hence, the WTO provides that investment and agricultural input subsides (e.g. fertilizer) which are generally provided to low-income or resources-poor producers in developing countries shall be exempted from domestic support reduction commitments that would otherwise be applicable to such measures in developed countries. This is contained in Article 6 of the Agreement on Agriculture.
African Development Bank Economic Research Working Paper Series Enhancing Africa’s Trade: From Marginalization to an Export-Led Approach to Development Milton A. Iyoha Professor, Department of Economics & Statistics University of Benin, Nigeria Economic Research Working Paper No 77 (August 2005)
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