However, low value-added, price instability and sustainability in these commodity sectors means they should be used only temporarily and as stepping stones in the path to economic development.
Anderson et al. (1999) estimate annual welfare losses of $19.8 billion for developing countries from agricultural tariffs – even after Uruguay Round reforms.
The largest beneficiaries of agricultural liberalization would be OECD countries themselves: welfare losses of $62.9bn a year are estimated as resulting from the distortionary policies (Binswanger and Ernst 1999:5).
Second, barriers to trade resulting from domestic and external producer support, primarily in the form of subsidies, but also including, for example, export credits.
However, for the least developed countries, the principal problem is not market access, but lack of production capacity to achieve new trading opportunities.
This is recognised by paragraph 42 of the Doha Development Agenda: We recognize that the integration of the LDCs into the multilateral trading system requires meaningful market access, support for the diversification of their production and export base, and trade-related technical assistance and capacity building.So while the further development of middle-income countries, and in particular the tackling of rural poverty in these countries, can be achieved most importantly through increased market access in agriculture, lower-income countries need additional help, not only to take advantage of new opportunities, but to be able to adapt to changing conditions due to the loss of preferences.
Cases such as Haiti’s post-1986 liberalization show that the opportunities thereby created will not be taken advantage of if macroeconomic policies, institutions, and the investment climate are not favorable.
Sufficient credit at competitive conditions is important for private sector investment in storage, transportation and marketing of agricultural products.
The introduction of the (investment-related) Singapore issues together with a lack of sufficient concessions to developing countries' interests has put the success of the negotiations in doubt.