Multilateral Negotiations on Farm-support Levels

In the face of the worst crisis in international agricultural trade since the Great Depression, negotiations are to start shortly, in the course of the Uruguay Round discussions in Geneva, on making domestic farm prices more compatible with a properly functioning system of international trade in agricultural products. If countries select an across-the-board approach to the issue of negotiating on agricultural policies, the producer subsidy equivalent (PSE) has many advantages, including the fact that the PSE can be tailored to exclude "desirable" policies, such as those that de-couple income support from price incentives, and concentrate on those that have an effect on trade. If, however, countries choose negotiations of the more traditional type, with request-and-offer bargaining at the bilateral level and extending the concessions to all member nations of the General Agreement on Tariffs and Trade, then PSEs have a more restricted role.