Why had multilateral agricultural trade not been discussed under GATT?

Under the GATT Agreement Article XI, quantitative restrictions on imports are specifically prohibited. However, in the 1950's, the US threatened to leave GATT unless it was granted a waiver from Article XI, so they could remain protecting domestic sugar, dairy and other agroindustries.

For fear that the U.S. would pull out of GATT, GATT grated the U.S. a "non-time-limited waiver" on agricultural products. From this time forth, GATT removed itself from the enforcement of Article XI on other agricultural producers for fear of being accused of having double standards. However, agriculture was brought back into the agreement through the WTO

Why was agriculture brought back into WTO?

By the late eighties, monstrous amounts of money in developed nations were going to support the agricultural sector. The EU was spending close to 80 per cent of the national budget on agriculture. The US was spending US$88 billion on such strategies as Export Enhancement Programs, so they could increase competitiveness and win back net-importing markets from the EU. However, both countries finally realized this kind of competition could not go on, and there was a need for rules of engagement pertaining to multilateral food and commodities trade.

Meanwhile, the high levels of protection not only affected the developed nations like the US and EU, but it equally affected developing countries. Unsubsidized developing countries could no longer compete as the subsidized countries were using their subsidies to capture more than an "equitable share" of world exports in its product category. Market price support combined with import access barriers ensured that domestic production could continue to be sold. These policies had the effect of expanding domestic production of certain agricultural products not only replaced imports completely but resulted in structural surpluses. Export subsidies were increasingly used to dump surpluses onto the world market, thus depressing world market prices.

Both developed and developing countries wanted to level the playing field in the world commodities markets. They were equally seeking to reduce support and protection in the areas of domestic support, export subsidies and market access, while also taking in to account non-trade concerns such as welfare, the environment, food security and sustainable development.

What is the WTO Uruguay Round on Agriculture?

WTO members, in Montevideo, Uruguay, negotiated the Uruguay Round GATT Agreements between 1993-1994. Concerns lead by the U.S. and E.U. about fair trade and competition in agriculture were the fuel behind what lead to negotiations on agriculture. Members from developed countries and developing countries alike saw the need to improve market access and reduce trade-distorting subsidies which are contained in the individual country.

International leaders sat down and discussed their expectations of a fair world commodities market. They drew up one main objective, to secure substantial progressive reductions in the support for and protection of agriculture and to initiate a process of greater liberalization in international agricultural trade. The goal was to create an environment, where producers with the real competitive advantage would be the winners. Resources and production would locate to where costs are lowest, leading to the most efficient use of resources and to lower prices for consumers, in both developed and developing countries. This would then have the combined effect of increasing food security, protecting the environment and increasing economic development. The negotiations ended in April 1994, when WTO members signed the Agreement on Agriculture. The Agreement came in to effect January 1, 1995.