NON-TRADE CONCERNS AND DOMESTIC/INTERNATIONAL POLICY CHOICE

In recent years increased emphasis has been placed on a range of "non-trade" concerns and their implications for the move towards freer trade. We review the basis of several of these concerns, focusing particularly on multifunctionality. The simple view of a fixed proportions relationship between agricultural production and non-commodity outputs, such as landscape amenities, is shown to be untenable. Nevertheless, policies to internalize the effects of multiple externalities and public goods must be selected jointly to account for any interrelationships among them, and/or the market goods from agricultural production. We argue that this requires a shift away from traditional agricultural policies with their commodity orientation, towards a new policy paradigm that has a natural resource focus. We also suggest that this will require a shift in the location of where policy is formed and implemented from the center to the community level. We believe that this change in policy focus would be consistent with the move to freer trade, although some expansion would be needed in the range of policies that are considered permissible under the green box category of the WTO Agreement on Agriculture. We argue that major non-trade concerns can be satisfied in a way that is not inconsistent with freer trade, and that freer trade would not undermine important domestic objectives