Non-Trade Concerns
in a Multifunctional Agriculture
- Implications for Agricultural Policy
and the Multilateral Trading System

Paper prepared by Norway

2 June 1998

ROYAL MINISTRY OF AGRICULTURE
OFFICE: AKERSGATA 59
POSTAL ADDRESS: P.O.BOX 8007 DEP., N-0030 OSLO, NORWAY
PHONE: 47 22 24 92 01  FAX: 47 22 24 95 56
E-MAIL: jostein.lindland@ld.dep.telemax.no

Table of Contents

Abbreviations	iv
Preface	v
Summary	vi
1.	NON-TRADE CONCERNS AND MULTIFUNCTIONAL AGRICULTURE	1
2.	FOOD SECURITY	3
3.	VIABILITY OF RURAL AREAS	5
4.	PROTECTION OF THE ENVIRONMENT	6
4.1.	Agricultural Landscape	6
4.2.	Ecological Issues	7
5.	PREFERENCES FOR NON-TRADE CONCERNS	9
6.	CONCLUSIONS	10

Boxes

Box 1: Norwegian Agriculture	2
Box 2: Agricultural Policy in Norway	4
Box 3: Opinion Polls on Public Goods and Agricultural Support	9

Abbreviations
AoA	=	Agreement on Agriculture
FAO	=	Food and Agriculture Organization of the United Nations
ha	=	hectare
NTCs	=	Non-Trade Concerns		
PSE	=	Producer Subsidy Equivalent
UR	=	Uruguay Round

Preface
Non-trade concerns are referred to in the Agreement on Agriculture. These concerns, including food security, the viability of rural areas and environmental protection, are likely to turn into main issues in the upcoming WTO negotiations on agriculture and should therefore be analysed. A number of issues related to multifunctionality and non-trade concerns require careful scrutiny, inter alia:
•	How widespread are the different non-trade concerns or functions that agriculture has beyond its primary function of supplying food and fibre?
•	How are these non-trade concerns linked to the agricultural production?
•	How can these non-trade concerns in the most efficient way be taken into account in agricultural policy design?
•	What are the implications of the non-trade concerns for the up-coming WTO negotiations in agriculture?
•	To what extent are provisions in intergovernmental agreements, such as the International Covenant on Economic, Social and Cultural Rights, related to non-trade concerns with possible implications for the multilateral trading system?
While it is commonly accepted that agriculture is multifunctional with a number of non-trade concerns, views are diverging on how the concept of multifunctionality should be operationalised and on the implications of this concept for both national agricultural policy design and multilateral trade policy reform. There is a compelling need for more work on the multifunctional role of agriculture as the upcoming WTO negotiations on agriculture are approaching. With respect to Article 20, the OECD Agriculture Ministers recommended in March this year that the long-term objective of substantial reductions should be “in conformity with the conditions of Article 20 of the UR Agreement on Agriculture, and including all the elements contained therein.” One of these elements is the non-trade concerns. 
It is our expectation that all WTO Members would benefit from further analysis in this area in order to prepare the ground for a multilateral trading system which aims at optimal resource allocation and maximum utility and welfare. It should therefore be in the interest of all Members to have non-trade concerns appropriately reflected in national and multilateral policy design and reform without causing unjustified protection and inefficiency.
This paper is a first attempt to examine the non-trade concerns and their implications for agricultural policy and the multilateral trading system. The analysis is preliminary and by no means exhaustive. We are therefore most grateful for any comments on this paper.

Summary
This paper examines non-trade concerns (NTCs), such as food security, environmental protection and the viability of rural areas, and their implications for agricultural policy and the multilateral trading system. According to Article 20 of the Agreement on Agriculture, the NTCs should be taken into account in the continuation of the multilateral reform process. The NTCs are embodied into the concept of multifunctionality. Agriculture may be defined as multifunctional when it has one or several roles or functions in addition to its primary role of producing food and fibre. NTCs may also be characterised as positive externalities or public goods related to agricultural production.
Food security is a fully legitimate national concern in all countries and requires, inter alia, policies to protect arable land, national production, maintenance of a fairly sizeable farming population and a decentralised production structure. Public spending on such policies would be a function of the population’s risk aversion and capacity and willingness to pay. Food security as a public good may call for substantial support. Moreover, as this public good is a joint product of agricultural production, food security considerations are likely to require policy measures that are coupled to this production.
Agriculture plays a chief role in sustaining the viability of rural areas. The agricultural sector directly and indirectly represents a substantial part of rural employment, and in several cases few alternative employment opportunities exist. In many countries, culture and traditions are deeply rooted in rural life and qualities. Moreover, social and environmental problems often follow in the wake of urbanisation. It is therefore a national objective in most countries to ensure the viability of rural areas. Given the high unit costs that often prevail in rural agriculture, high levels of support are an indispensable element of rural agricultural policy.
Environmental protection as a NTC in agriculture includes the agricultural landscape and various ecological issues. The agricultural landscape is not only a decorative scenery. Its aesthetic and recreational values are closely contingent upon the landscape’s authenticity as a food producer with its own economic life. A high degree of jointness therefore exists between the agricultural landscape and agricultural production. To the extent that agricultural landscape is scarce, measures to ensure its protection, involving both general policies and specific measures, are applied. In many countries, a substantial proportion of the threatened species depends on the agricultural landscape. Conserving the bio-diversity is therefore closely related to the protection of the agricultural landscape. Increased trade in agricultural products also increases the risk of introducing alien species. 
Moreover, increased spreading of pests and diseases is likely to follow in the wake of liberalised trade, even when having recourse to the most efficient control measures available. A cautious approach therefore seems appropriate, especially with respect to live animals, meats and eggs.
The analysis undertaken in this paper indicates that the merits of subsidies can only be evaluated when measured against their corresponding benefits, taking into account all public goods produced in a multifunctional agriculture. The paper finally reaches two tentative conclusions. First, governmental intervention in order to ensure the provision of public goods, such as NTCs, is required with implications for domestic agricultural policy design, as well as for the multilateral trading system. Second, to the extent that these public goods are joint products of the agricultural production, support coupled to the agricultural production seems to be the most efficient way to ensure a sufficient production level of these goods.

1.	NON-TRADE CONCERNS AND MULTIFUNCTIONAL AGRICULTURE
This paper examines the so-called non-trade concerns (NTCs) and their implications for agricultural policy and the multilateral trading system. According to Article 20 of the Agreement on Agriculture (AoA), the NTCs should be taken into account in the continuation of the multilateral reform process. The Preamble of the Agreement defines NTCs as, inter alia, food security and environmental protection. During the Uruguay Round (UR), several countries also stressed the viability of rural areas; including rural employment and the maintenance of human settlement in sparsely populated areas, as important NTCs to be addressed in the reform process.
The NTCs are embodied into the concept of multifunctionality. Agriculture may be defined as multifunctional when it has one or several roles or functions in addition to its primary role of producing food and fibre. The additional functions are often referred to as food security, maintaining the population and ensuring the viability of rural areas and environmental protection, and they roughly correspond to the NTCs mentioned in the AoA. These functions or NTCs are to a large extent specific to agriculture. However, their intensity and appearance depend on the structure and character of each country’s agriculture.
The NTCs are also closely related to the concept of externalities and market failures. All NTCs may be characterised as positive external effects of the agricultural production for which economic theory generally recommends subsidies in order to correct the market failure and restore efficiency. Negative externalities are also frequent in agriculture, for instance air and water pollution, soil erosion and loss of bio-diversity, and such externalities should generally be corrected through taxes and other appropriate measures. The internalisation of both negative and positive external effects should be a central element of agricultural policy. However, there is a fundamental distinction between negative and positive externalities as regards their relationship to the multilateral trading system. The former can be tackled through national measures for which there are no limits or restrictions in multilateral commitments. This is not the case regarding positive externalities such as NTCs. The correction of such market failures commonly requires subsidies, which may, on the contrary, conflict with WTO commitments. Positive externalities such as NTCs and the accommodation within the multilateral trading system of different policies aiming at their internalisation therefore require further analysis and will be the focus of this paper.
In economic theory, a distinction is made between private and public goods. Contrary to private goods, public goods are non-rival in consumption and non-excludable (i.e. as long as the good is produced, nobody can be prevented from consuming it). For these reasons, public goods have no functioning markets, and it is generally accepted that governments ensure the provision of these goods through public intervention.
Sections 2-4 examine more in detail NTCs such as food security, the viability of rural areas and environmental protection. These sections analyse in particular their relationship to agricultural production and to what extent the NTCs are public goods with a bearing on agricultural policy. Section 5 highlights some aspects related to a society’s preferences for public goods, and Section 6 finally reaches some tentative conclusions on the implications of the analysis for agricultural policy design and the multilateral trading system.

Box 1: Norwegian Agriculture
Norway is the northernmost country in Europe. Its mainland extends from 58 to 71 degrees North, a total distance of about 1 750 km, greater than the distance between Oslo and Rome. The country’s population density is only 13 people/km2, the second lowest in Europe (only Iceland has a lower density).
The main productions are dairy and meat products, cereals and temperate fruits and vegetables. About three quarters of farm income is derived from livestock production and one quarter from crop production. The production is almost entirely destined for the national market and plays an important role in ensuring national food security, sustaining the viability of rural areas and safeguarding certain environmental qualities. 
Arable land represents only 3% of the total area in Norway. The average farm size is around 12ha arable land. The average field size is only 1.5 ha, and nearly 20 per cent of the agricultural area have a gradient exceeding 1:5. Dairy farms have an average herd of 12 cows. The arctic and subartic conditions in Norway are characterised by harsh climate, low temperatures and a short growing season, which varies between 100 and 190 days, depending to a large extent on latitude. The indoor period for livestock varies from around 230 to 290 days a year. All the disadvantages stemming from a harsh climate, long distances, a difficult topography, a low population density and a small-scale structure result in very high costs and a very low degree of competitiveness at world market prices.
2.	
FOOD SECURITY
The Food and Agriculture Organization of the United Nations (FAO) has defined food security as the access for all people at all times to enough food for an active, healthy life. To ensure food security, a food system should be characterised by (i) the capacity to produce, store and import sufficient food to meet basic needs for all; (ii) maximum autonomy and self-determination (without implying self-sufficiency), which reduces vulnerability to international market fluctuations and political pressures; (iii) reliability, such that seasonal, cyclical and other variations in access to food are minimal; (iv) sustainability, such that the ecological system is protected and improved over time; and (v) equity, meaning, as a minimum, dependable access to adequate food for all social groups.
The 1996 World Food Summit emphasised that access to sufficient and adequate food is a human right of everyone. Moreover, Commitment Three of the Rome Declaration stressed the importance of food production also in low potential areas:
“We will pursue participatory and sustainable food, agriculture, fisheries, forestry and rural development policies and practices in high and low potential areas, which are essential to adequate and reliable food supplies at the household, national, regional and global levels, and combat pests, drought and desertification, considering the multifunctional character of agriculture”.
Food security is therefore a fully legitimate national concern in all countries. However, the challenges and responses related to food security may differ substantially between the developing and developed world and between individual countries. A predictable and stable trading system is a central element in global and national food security. Due to high national production costs (see Box 1), it would have been most cost-efficient in several countries, under ordinary circumstances, to rely entirely on the world market in order to provide food to its population. However, based on historic experience and due to the uncertainty associated with future international supplies, national production policies have been and will always be a central element in national food security policy. As a difficult supply situation may be long-term, national stocking can only partly compensate for this risk. 
The risk of a rupture in international supplies relates to the possibility of war and different kinds of crises in peacetime, such as ecological crises, diseases on plants and animals, extensive radioactive fallout, or substantial changes in global demand and supply. Even though such a risk may be small, policies to respond to this concern are fully legitimate, considering the very strategic role that food plays in every society. Food security policies could thus be regarded as a risk insurance, and the public costs related to such policies would be a function of the population’s risk aversion and its willingness to pay for the insurance. 
There are several elements in the Norwegian food security policy. First, considering that the land productivity is low (see Box 1) and that arable land per capita amounts to only 0.23ha in Norway (against e.g. 0.73ha in the US, 0.90ha in New Zealand, 0.52ha in developed countries and 0.26ha as the world average), it is a national objective to protect arable land from degradation and alternative use. The second element is national food production, also in an ordinary supply situation. Measured on a calorie basis and given the current consumption pattern, Norwegian self-sufficiency in agricultural products is only around 50% (57% including fish products), which is considered as an absolute minimum from a food security perspective. Third, human resources are needed to ensure a sufficient production in a crisis situation. A fairly sizeable farming population, experienced and well trained, is therefore a prerequisite for food security. Finally, a decentralised production structure makes the production less vulnerable in a crisis situation.
Having acknowledged the need for such policies as necessary components of national food security, also in developed countries, the cost-efficiency of alternative policies of public support and protection remains to be analysed. Such analysis should be twofold. First, the required total levels of support and protection should be examined. FAO has through its World Food Model projected a shift in production as a result of the UR, away from the highly protected countries and towards non-subsidising, low-cost countries. Although more research may be needed, a substantial cut in agricultural support, in countries like Norway with a PSE of 72% of the value of the agricultural production, is likely to result in reduced production and impaired national food security.
A second issue relates to the composition of the support. As food security is a joint product of the agricultural production, and due to the very high unit production costs in Norway, a substantial proportion of production-coupled support seems to be the most efficient way of ensuring the production of this public good (see Box 2). A limited reduction in coupled support could be absorbed through structural adjustment, and the current level of production could thus be maintained. However, such adjustment would likely result in a downsizing of the farming population, a more centralised production structure, and degradation of marginal arable land.
Box 2: Agricultural Policy in Norway
The multifunctionality of Norwegian agriculture is ensured through a combination of economic, legislative and administrative measures, as well as through training and extension. In 1997, total transfers associated with agricultural policies amounted to US $3 billion. Net budgetary outlays amounted to US $1.7 billion and, thus, accounted for 57% of the transfers, while transfers from consumers through border protection accounted for 43%. Blue Box measures (primarily acreage and livestock support) represent approximately 60% of budgetary outlays, while Green Box measures amount to around one third. AMS policies, basically, account for the remaining budgetary support. 
Important parts of the agricultural policy is laid down in the Agricultural Agreement, negotiated between the farmers’ organisations and the Government and approved by the Parliament. Support and protection measures in the agricultural sector are not primarily based on income considerations, but aim first and foremost at ensuring a sufficient level of public goods, such as food security, viability of rural areas and environmental protection, demanded by the Norwegian society.
3.	
VIABILITY OF RURAL AREAS
In many countries, culture and traditions are deeply rooted in rural life and qualities. Moreover, social and environmental problems often follow in the wake of urbanisation. It is therefore a national objective in most countries to ensure the viability of rural areas. High production costs and low population densities often threaten the viability of the rural economy. Agricultural production relies on harvesting of natural resources and is therefore, unlike most other sectors, a localised and site-specific activity of particular importance to rural development and policies. Agriculture is therefore the backbone in many rural economies. 
In Norway, the agricultural sector consists of 79 400 farms which directly employ around 5% of the total working population (1996). Including upstream and downstream activities, at least 10% of the total working population depend on the agricultural sector. In one of four Norwegian municipalities, agriculture directly or indirectly represents more than half of the employment. In many rural areas few employment opportunities other than agriculture exist. Two-thirds of the agricultural production, mainly livestock production, is located in such areas.
At present, out-migration poses a serious threat to many rural communities, and it should be noted that a minimum population level of a community is required, below which infrastructure and service institutions cannot be maintained, leaving entire communities at risk. Several countries are therefore currently intensifying the efforts to ensure the viability of rural areas, and in this context, agriculture plays a chief role. Also, FAO and OECD pay much attention to rural concerns, and to agriculture as an employment generator and contributor to socio-economic development. The Communiqué adopted by OECD Agriculture Ministers at their March meeting of the Committee for Agriculture states that “governments should provide the appropriate framework to ensure that the agro-food sector … contributes to the socio-economic development of rural areas including the generation of employment opportunities through its multifunctional role, the policies for which must be transparent.”
As remote rural areas often have production costs above average, rural agriculture frequently requires substantial support, partly coupled to production. Two additional aspects of the Norwegian agricultural policy are important from a rural perspective and deserve particular attention. First, the budgetary support is heavily modulated in order to allocate higher support per area or livestock unit to smaller farms. This modulation basically affects Blue Box policies such as livestock and acreage support and dairy farm support. Second, the budgetary support is differentiated according to the region’s suitability for agricultural production, and such differentiation favours rural areas. Acreage support, dairy farm support and budgetary price support are subject to such differentiation.
4.	
PROTECTION OF THE ENVIRONMENT
This section focuses on the interface between agriculture and the environment. Agriculture is intrinsically embedded into the natural environment through its harvesting of natural resources and its close relationship to the soil, water and habitats. Agriculture may have both positive and negative effects on the environment. While the environmental benefits contributed by agriculture must be recognised and developed, the environmentally harmful impact of the sector should be reduced to a minimum. In this section, which focuses on the safeguarding of positive environmental effects related to agriculture, agro-environmental interlinkages, such as agricultural landscape, bio-diversity and spreading of pest and diseases, are examined.

4.1.	Agricultural Landscape
The agricultural landscape is generally defined as landscape created or modified by agricultural activity. While it is the result of thousands of years of farming, the agricultural landscape may vary between countries, depending on natural conditions and farming practices. The society’s valuing of agricultural landscape relates to (i) its contribution to human health and welfare (the recreational value); (ii) its aesthetic, cultural and historic qualities; and (iii) its biological and ecological characteristics (covered in more detail in the next sub-section).
The agricultural landscape generally includes elements such as farmland, meadows, pastures, stone fences, farm roads, waterways, animals and farm buildings. However, the concept of agricultural landscape is comprehensive and holistic and goes beyond the sum of the single elements. More importantly, the value of the agricultural landscape is related to its genuine farming origin. As much as natural wilderness cannot be manmade, but finds its value in being native and untouched by man, the agricultural landscape is by definition closely related to agriculture’s primary function of producing food and fibre, from which it cannot be detached. Therefore, the agricultural landscape is not only a decorative scenery, but its aesthetic and recreational values are closely contingent upon the landscape’s authenticity as a food producer with its own life. Thus, this public good is a joint product of the agricultural production.
Around 80% of the Norwegian population take part in outdoor activities. Based on ancient traditions and regulated by law, every citizen has, under certain conditions, free access to natural and agricultural land, no matter whether this land is private or public. In addition to practical problems and limited usefulness, fencing off pieces of agricultural land in order to commercialise agricultural landscape as private goods would therefore be illegal and incompatible with Norwegian culture and traditions.
In Norway, the total arable land represents approximately 1 million ha, amounting to only 3% of the total land area (against e.g. 27% in the EU, 21% in the US and 12% in New Zealand). Productive forests cover around 22 per cent of the land area, and the remaining 75 per cent consist of mountains, lakes and human infrastructure. The scarcity of agricultural landscape has therefore called for extensive measures to ensure its protection. 
Apart from general policies (see Box 2), a number of policy measures are designed to ensure environmental objectives, including the protection of the agricultural landscape. The Acreage and Agricultural Landscape Scheme, which represents roughly 28% of budgetary outlays, is specifically designed to protect the agricultural landscape. In addition, it imposes several environmental conditions on farming:
•	maintenance of open waterways;
•	protection of field fringes, including a ban on pesticide use; 
•	maintenance of stone fences and cairns; 
•	ban on land grading; and 
•	maintenance of paths. 
If these rules are violated, payments may be cut for a period of three years. Other policy measures include the Specific Agricultural Landscape Support Scheme; support for amended soil management, along with soil protection and reduction of erosion; and support for mountain farming during the summer period (transhumance).
The Ministry of Agriculture and the Ministry of Environment have developed a monitoring programme in order to provide accurate information on the state and trends of the agricultural landscape. The programme will provide information on specific issues of interests such as ecosystems, cultural heritage, accessibility for the general public and infringement by urban development.

4.2.	Ecological Issues
Environmental protection in the agricultural sector also raises important issues concerning biological diversity, which includes both diversity in ecosystems and habitats, species diversity and genetic diversity. The 1992 Rio Convention on Biological Diversity aims at the conservation of biological diversity. In Norway, around 50% of the threatened species depend on the agricultural landscape. Conserving the bio-diversity is therefore closely related to the protection of the agricultural landscape.
Two processes related to structural adjustment in the agricultural sector may have an adverse effect on bio-diversity. The first relates to more intensive use of the arable land, often involving large-scale farming. The second process consists of land abandonment, often in marginal and less-favoured areas. Both processes have a negative impact on the agricultural landscape and, thereby, on the bio-diversity. Therefore, it appears that bio-diversity would in most cases be favoured by policy measures aiming at structural stability and status quo regarding the state of the agricultural landscape. A certain degree of extensification may in some cases favour the bio-diversity, provided that more extensive land use does not result in land abandonment.
Increased trade in agricultural products also increases the risk of introducing alien species. According to Article 8(h) of the Convention, “each Contracting Party shall, as far as possible and as appropriate … prevent the introduction of, control or eradicate those alien species which threaten ecosystems, habitats or species”. According to the Norwegian Directorate for Nature Management, around 10 alien insect species are each year introduced to Norway. Around 1% of these introductions represents an ecological threat with potentially far-reaching implications.
A related ecological and health issue involves the increased risk of spreading pests and diseases. Much more needs to be done on the implications of increased animal and food trade for the transmission of microbes and infectious animal, plant and human diseases. Under considerably increased agricultural trade, control measures will be very costly and are unlikely to fully offset the increased risks related to the introduction of contagious substances and diseases, even when having recourse to the most modern and efficient measures available. A cautious approach therefore seems appropriate, especially with respect to live animals, meats and eggs.
5.	
PREFERENCES FOR NON-TRADE CONCERNS
NTCs such as food security, the viability of rural areas and environmental protection are non-marketable public goods and may therefore require public intervention. A number of valuation techniques exist in order to quantify in monetary terms the willingness to pay for public goods. However, these techniques are time-consuming and costly, and more importantly, it is questioned whether the society’s preferences for non-marketable public goods can ever be assessed appropriately in monetary terms. 
However, an alternative and more operational way of valuing the society’s preferences is commonly used and embedded in the decision-making process. In an open democracy, the society undertakes an overall assessment according to its preferences through the lengthy political processes leading to a parliamentary decision. Therefore, public support to agriculture voted in Parliament may indicate the society’s willingness to pay for public goods. The Norwegian society has during the last decades liberalised its industrial sector and eliminated most industrial support, despite partly severe effects on certain industries. Regarding the agricultural sector, Parliament on the contrary continues to favour high levels of support to and protection of the agricultural sector. These decisions do not primarily echo lobbying and political pressure from minority groups, but reflect the society’s overall preferences for the public goods that the agricultural sector produces. 
Box 3: Opinion Polls on Public Goods and Agricultural Support
Results of opinion polls could indicate people’s preferences for public goods. In this respect, a recent Norwegian opinion poll undertaken by the respected Markeds- og Mediainstituttet in February this year on attitudes to Norwegian agriculture reveals the following results (nationally representative sample of 982 interviewed): 
•	83% of the interviewed were in favour of “maintaining an agriculture at the current level, at least”, 8% were against;
•	59% of the interviewed were in favour of “the budgetary public support to agriculture”, 16% were against;
•	83% of the interviewed agreed that “Agriculture is a necessary part of our food security”, 4% disagreed;
•	86% of the interviewed agreed that “Agriculture is necessary to maintain the employment and settlement of rural Norway”, 6% disagreed; 
This poll has been repeated regularly since 1979. The results have been stable and constantly revealed that a vast majority of the interviewed favours the maintenance of domestic agriculture through public support. Different public goods related to agriculture is the reason why people favour such support.
6.	
CONCLUSIONS
Subsidies, per se, are neither good, nor bad. Their merits can only be evaluated when measured against their corresponding benefits. Thus, it is impossible to compare the level of support between different countries without taking into account the overall benefits that result from such support. Measuring the level of support pr. unit output therefore requires a multifunctional definition of output, including not only the agricultural production but also the public goods that agriculture produces. Moreover, willingness to pay for different public goods may also differ substantially between countries.
Based on the previous analysis, two major conclusions seem to emerge. First, the NTCs such as food security, the viability of rural areas and environmental protection are public goods for which a functioning market does not exist. Governmental intervention in order to ensure the provision of these goods may thus be required and may have far-reaching implications for both domestic agricultural policy design, as well as the multilateral trading system.
Second, whereas decoupled support is generally an appropriate means to achieve pure income objectives, support coupled to the agricultural production seems to be the most efficient way of ensuring a sufficient production level of public goods, to the extent that these public goods are joint products of the agricultural production. This intrinsic jointness between the public goods and their corresponding agricultural production is a major issue that requires further analysis.
In this context, it should be noted that the Norwegian agricultural policy is not primarily based on income considerations, but aims at ensuring a sufficient level of public goods, such as food security, rural viability and environmental protection, demanded by the Norwegian society.
Several countries have in recent years decoupled their support to agriculture to a larger or lesser extent. Norway has undertaken a rather substantial decoupling, and more than half of the total transfers to agriculture is at present decoupled. Based on this experience, further decoupling of Norwegian agricultural policies may possibly lead to suboptimal production adaptations. It may also have serious implications for farmers’ identity as food producers and harm the future recruitment to the sector. This issue also seems to call for further analysis.
In ensuring the society’s welfare, public goods are as important as private goods. NTCs must therefore be fully reflected in national and multilateral policy design. Only then can the multilateral trading system ensure optimal resource allocation and maximum utility and welfare, and thereby secure sustainable development and world prosperity and stability.