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Wto agreement agriculture-maria.perez-esteve

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  • Agricultural trade is less than 10% of total world trade 80% of agricultural trade is food products.
  • Prior to WTO – the original GATT did apply to agricultural trade but it contained loopholes. For example it allowed countries to use some non-tariff measures such as import quotas and to subsidize. Agricultural trade became highly distorted especially with the use of export subsidies which would not normally have been allowed for industrial products: conditions were that agricultural export subsidies should not be used to capture more than an "equitable share" of world exports of the product concerned proliferation of impediments to agricultural trade: import bans, quotas setting the maximum level of imports, variable import levies, minimum import prices and non-tariff measures maintained by state trading enterprises. WWII – lots of countries maintained market supports for farmers – farm prices were administratively raised In a number of cases, expanding domestic production of certain agricultural products not only replaced imports completely but resulted in structural surpluses. Export subsidies used to dump surpluses on world market – thus depressing prices The UR produced the most multilateral agreement dedicated to the sector. It was a significant step towards order, fair competition and a less distorted sector. UR. Needed disciplines on subsidies and SPS
  • The objective of the AoA is to reform trade in the sector and to make policies more market-oriented. This would improve predictability and security for importing and exporting countries alike. The new rules and commitments apply to: Market access : various trade restrictions confronting imports Domestic Support : subsidies and other programmes, including those that raise or guarantee farmgate prices and farmer’s incomes Export Competition : includes export subsidies and other methods used to make exports artificially competitive S&D : Agreement does allow governments to support their rural economies, but preferably through policies that cause less distortion to trade. It allows some flexibility in the way commitments are implemented . Developing countries do not have to cut their subsidies or lower their tariffs as much as developed countries, and they are given extra time to complete their obligations. Special provisions deal with the interests of countries that rely on imports for their food supplies and the concerns of LDCs. Peace provisions within the agreement aimed to reduce the likelihood of disputes or challenges on agricultural subsidies over a period of 9 years, until the end of 2003 (expired). The UR AoA included a commitment to continue the reform through new negotiations- these were launched in 2000, as required by article 20 of the AoA.
  • The new rule for market access in agricultural products is “Tariffs only”. Before the UR some agricultural imports were restricted by quotas and other non-tariff measures. These have been replaced by tariffs that provide more-or-less equivalent levels of protection – if the previous policy meant domestic prices were 75% higher than world prices, then the new tariff would be around 75%. Converting the quotas and other types of measures to tariffs in this way was called “tariffication”. It also ensured that quantities imported before the agreement took effect could continue to be imported, and it guaranteed that some new quantities were charged duty rates that were not prohibitive- this was achieved by a system of tariff quotas- lower tariff rates for specified quantities, higher (sometimes much higher) rate for quantities that exceed the quota.
  • For products whose non-tariff restrictions have been converted to tariffs, Article 5 of the AoA, allowed governments to take special emergency actions (special safeguards) in order to prevent swiftly falling prices or surges in imports from hurting their farmers. But the agreement specifies when and how those emergency actions can be introduced (for example, they cannot be used on imports within a tariff-quota).
  • The main complaint about policies which support domestic prices, or subsidize production is some other way, is that they encourage over-production. This squeezes out imports or leads to export subsidies and low-priced dumping on world markets. The AoA distinguishes between support programmes that stimulate production directly, and those that are considered to have no direct effect. Those that have a direct effect on production and trade have to be cut back- basically the Amber box. Measures with minimal impact on trade or production can be used freely- those in the green box. They include government services such as research, disease control, infrastructure and food security. They also include payments made directly to farmers that do not stimulate production, such as certain forms of direct income support, assistance to help farmers restructure agriculture, and direct payments under environmental and regional assistance programmes. Blue Box- Also permitted are certain direct payments to farmers where the farmers are required to limit production, (called blue box measures), certain government assistance programmes to encourage agricultural and rural development in developing countries, and other support on a small scale (de minimis) when compared with the total value of the product or products supported (5% or less in the case of developed countries and 10% or less for developing countries).
  • The AoA prohibits exports subsidies on agricultural products unless the subsidies are specified in a member’s lists of commitments. Where they are listed, the agreement requires WTO members to cut both the amount of money they spend on export subsidies and the quantities of exports that receive subsidies. During the 6 yr. implementation pd (until 2004) for developing countries- they were allowed under certain conditions to use subsidies to reduce the costs of marketing and transporting exports.
  • Uruguay Round reform programme Major achievements but also some unfinished business Mandate for further reform - Article 20 Committee on Agriculture role to monitor implementation of UR commitments - matters raised under Article 18.6 - review of notifications preparatory work – analysis/exchange of information mandated negotiations - Special Sessions (since 2000)
  • Cap: Japan opposes strongly, have some very high tariffs which want to maintain Groups: G33: India, Indonesia, St Lucia LDC: granted flexibilities so that do not have to change market access or export competition policies.
  • In the Doha Round– as during the preceding Uruguay Round which lasted from 1986-94 agriculture is the main stumbling block, and is largely responsible for the various crises and impasses which have characterised the negotiations since their launch in Nov. 2001. The reason why Agriculture is again providing to be so difficult to negotiate is clear: it is politically sensitive in virtually all countries, large and small, developed and developing. There is widespread concern that a delay in concluding the Doha Round would inevitably lead to increased uncertainty and volatility in the agricultural trade environment; an increase in protectionist measures; growing risks of backsliding of recent unilateral agricultural policy reform, i.e., within the EU; an increase in litigation and a further proliferation of preferential trade agreements.
  • Market access is also a major concern – Many argue that not much was done during the UR in favour of the interests of Developing countries with respect to limiting the problems in agriculture, other than simply bringing agriculture into the WTO framework. Policies aimed at maintaining domestic prices above world prices have required additional import protection and have stimulated production to such an extent that various forms of export assistance were necessary to dispose of the resulting surpluses onto world markets. Elements on the top of the slide add ambition to the cuts that would result after applying the tariff cutting formula- all those elements on the bottom of the slide erode the potential results of the tariff cutting formula or introduce flexibilities
  • Market Access What is the approach to tariffs? The basic idea of the tariff cutting formula is that developed and developing countries’ tariff lines would be divided into different sets of tariff bands according to the level of duties currently levied, with each band subject to different percentage cuts. For developed countries four different bands would be available, comprising tariffs up to 20%, up to 50%, up to 75% and (the fourth band) all tariffs over 75%. The tariffs within each band would be subject to linear cuts of progressively higher percentages for each band. The percentage cuts proposed are 50, 57, 64 and 70 percent, respectively. There is a minimum average reduction of 54% for developed countries. Time period for making the cuts are 5yrs. Cuts would be made in equal annual steps, starting from the first day of implementation.
  • For the Developing Countries, the principle of progressivity is important, and also the higher average level and wider variety of tariffs across developing countries. (The majority of developing countries have bound most of their agricultural tariffs between 50 and 130 percent. Therefore, developing country tariffs would fall into four different bands: those between zero and 30%; between 30 and 80%; between 80 and 130%; and over 130%. And the percentage cuts for each of the bands would be smaller- 2/3rds of the cuts that developed countries would make in equivalent brands. In addition for small and vulnerable economies (SVEs) and Recently acceded Members (RAMS) the cuts would be lower. There is also a maximum average reduction cut of 36% for developing countries, (two thirds of the minimum required average of 54% for developed countries). Developed countries (with the US being the most vocal) and some export oriented developing countries argue that insufficient new market access would result from the proposed average reduction cut of 36% in the bound tariffs of developing countries (arguing for 40%). Given that these cuts are taken from bound rather than applied tariffs, in most instances they would in many cases simply be decreasing the amount of “water” or overhang in developing countries’ tariffs. However, the general tiered formula will not apply to all products. Some flexibility is spelt out for some products, including sensitive and special products. We will turn to those now.
  • Everything presented earlier (market access tariff cutting formula) is linked to sensitive products, which refers to those products that are politically “sensitive”. If the product is designated sensitive then they would undergo cuts of only 1/3, ½ or 2/3 of the normal cut but with new quotas allowing imports at lower tariffs (tariff quotas) to provide some access to the market. The latest version of the modalities paper includes tariff caps -which retains the incentive for countries to restrict tariffs above 100% to no more than 4% of sensitive products (or products with quotas) with separate treatment for sensitive and non-sensitive products. Sensitive products are allowed to have tariffs above 100% but those that do have to add 0.5% of domestic consumption more to the tariff quota.
  • For products designated as Special Products (for Developing Countries only) for specific vulnerabilities including food security, livelihood security and rural development in poor countries). the cuts would also be smaller than the general tiered formula and some might be exempt completely. Overall, developing countries have more exceptions, particularly the smallest and most vulnerable among them- the modalities text lists around 45 small and vulnerable economies, meaning that over half of developing countries that are not least-developed would be eligible for even smaller reductions. LDCs and some recent new members will not have to make any cuts. The revised text retains the two-tier structure, removes the option of no products escaping tariff cuts, and replaces ranges with single figures. Now, 12% of products could be declared “special” guided by indicators for food and livelihood security or rural development. Up to 5% of products could be exempt completely from cuts. In any case, the tariff cuts on special products would have to average 11%. For SVEs and RAMS there are different conditions. SVEs-smaller maximum average cut without using the formula at all (45 SVEs) – 24% achieved by designating products as “special” if they deviate from the formula including exemption from cuts, and no need to use indicators….or smaller cuts by 10% points. RAMS 13% of products can be designated special with a 10% average cut.
  • Developed Countries would reduce the coverage of the Special Safeguard immediately to 1% of products and eliminate the current “special safeguard” after 7 years. While still in use the SSG could not raise a tariff above its pre-Doha Round bound rate. The new text includes provisions on additional tariff quota expansion. Developing countries would cut the number to 2.5% of products immediately, SVEs to 5% over 12 years. Important to note that this safeguard can be used on products whose variable duties, discretionary import licensing, quotas or import quotas were converted to tariffs in the UR, and many developing countries gave up their right to use it because they chose to set ceiling bindings instead of to “tariffy”.
  • The New Special Safeguard Mechanism (SSM) remains a difficult subject and the previous chair issued an additional paper. In sum, developing countries could be able to temporarily protect their producers by applying the new special safeguard mechanism. The main text proposes options for formulas for the mechanism, and includes possible disciplines to avoid the safeguard being triggered frequently and frivolously, and suggests (if at all), and by how much, the increase in tariffs can exceed present bound ceilings (or “pre-Doha Round Bindings”) with more leniency proposed for SVEs than other developing countries.
  • The provisions on tropical and diversification products and long standing preferences are designed to accelerate liberalization of tropical products- alternative proposals suggest imports could be duty-free if the present tariff is no more than 25% or 10%, otherwise having a range of cuts, depending on the proposal. Slower liberalization for products with long-standing preferences- alternative proposals suggest a 10 year delay in starting tariff cuts or simply two years longer to make the cuts. Where the two overlap, the tropical products (and tariff escalation) provisions could override those of preferences, except for some products (still to be identified). Recent work has focused on negotiating the lists of products in each category, but the discussion continues and therefore the lists remain unchanged.
  • “ Tariff escalation” (the problem of higher tariffs on processed products than on raw materials, which hinders processing for export in the country producing the raw materials). Where the escalated processed product has a tariff that is significantly above the unprocessed product Commodities : This aims to strengthen provisions on tariff escalation for developing countries depending on commodity exports. It includes possibilities for eliminating non-tariff barriers and for price stabilization. Simplifying tariffs. The text includes options for all tariffs to end up as simple ad valorem (percentages of the price) or for this to be delayed for 10% of products subject to certain conditions. But in any case no tariffs would be made more complex than they are already. For the EU, 85% could be ad valorem after 5 years, with 5% kept as compound or mixed tariffs. And, in any case, the most complex tariffs (“complex composite matrices”) have to be simplified, either as ad valorem or specific duties (dollars, euros etc, per tonne, litre, etc). The text includes more technical issues such as the method of converting tariffs to their ad valorem equivalents. Tariff quotas (where a higher tariff is charged on quantities outside the quota, and a lower or zero duty for quantities inside. The out-of-quota tariff is the normal rate determined by the reduction formula). The latest revision includes provisions on bound in-quota tariffs, how much they should be cut, and whether new quotas should have zero in-quota duties. Under a simplified formulation, in-quota tariffs would be cut by 50% or to 10%, whichever gives a lower result (the 10% acting as a ceiling on the tariffs), while tariffs of 5% or less would be eliminated within a year. Developing countries would make a 15% cut, and small and vulnerable economies 7.5%, without a cap or elimination. Recent new members make smaller cuts and no cuts on low tariffs and those of the very recent new members and Venezuela would not be cut at all. There would be no cuts on in-quota tariffs of special products Provisions on tariff quota administration refer to the WTO Import Licensing Agreement with additional criteria. (Pars.115–119) The text includes the proposed treatment of cases where quotas are not filled (Par.120–125) and includes a new proposed compromise on monitoring tariff quotas and improving access to the market if imports are persistently less than the quota (“underfill”).
  • Background explanation : Cutting trade-distorting domestic support would operate simultaneously through three layers of constraints. First, each category of supports would be cut or limited: Amber Box (the most distorting, with direct links to prices and production, officially aggregate measurement of support or AMS ) De minimis (Amber Box but in relatively smaller or minimal permitted amounts defined as 5% of production for developed countries, 10% for developing countries) Blue Box (less distorting because of conditions attached to the support) Second, for each of these, there would also be some constraints on support for individual products (“product-specific”) . Third, on top of that would be cuts in the permitted amounts of all three combined: “ Overall trade-distorting domestic support” (OTDS) In these “modalities”: The cuts would be achieved by two methods (these are cuts in permitted ceilings, which may or may not bite into actual spending): 1. Tiered formulas . Like the tariff formula, the formulas for the Amber Box and overall distorting support are also expressed as “tiers” with support in the highest tier having the steepest percentage cuts. Countries with larger support go into higher tiers. 2. Limits (or cuts resulting in limits). For de minimis , Blue Box and support for each product .
  • OVERALL TRADE-DISTORTING DOMESTIC SUPPORT (Amber + de minimis + Blue) Most of this is essentially unchanged except that ranges in the formulas have been replaced by single numbers and additional flexibilities have been provided for more vulnerable countries. Cuts are to be made from figures for a base period of 1995–2000 Highest tier (above $60bn, i.e. EU), cut by 80%. (EU’s starting point or “base level” — a combination of the current ceilings in Amber Box and “de minimis” support plus a limit on Blue Box support that applies when the concept of “overall trade-distorting domestic support” kicks in — for 15 members is estimated at €110.3bn. The cut would bring the ceiling down to €22.06bn) Middle tier ($10bn–$60bn, i.e. US, Japan), cut by 70% (US’s starting point is estimated at $48.2bn. The cut would bring the ceiling down to $14.46bn) (Japan would make a bigger effort because its overall support ceiling is more than 40% of the value of its agricultural production — its cut would be 75%) Lower tier (below $10bn. i.e. other developed countries), cut by 55% Downpayment : 33.3% is cut from the start of the implementation period (a “downpayment”) for the top three subsidizers (ie, EU, US and Japan); 25% for other developed countries Implementation : 6 equal annual steps over 5 years for developed countries, 9 steps over 8 years for developing.
  • (Amber Box supports in relatively small or minimal amounts, currently limited to 5% of production in developed countries, 10% in developing) Developed countries: cut by 50% from day one (i.e. cap at 2.5% of the value of production, from the current 5%) Developing countries with Amber Box commitments: cut two-thirds of the above cuts (from the current 10% of the value of production, ie, ending up with about 6.7% of the value of production). Exempt from cuts: if almost all is for “subsistence and resource-poor farmers” or the country is a net food importer. Recent new members: no cuts for those who joined very recently and some with low incomes (Saudi Arabia, FYR of Macedonia, Viet Nam and Ukraine; Albania, Armenia, Georgia, Kyrgyz Rep, Moldova, Mongolia). Others make at least one-third of the standard cut.
  • New type . (The present Blue Box distorts trade but the distortion is limited; it’s for direct payments to farmers based on the number of animals they have or the area planted, but with production limits so that over-production is curbed.) The Agriculture Agreement would be amended to add a new type of Blue Box based on payments that do not require production but are based on a fixed amount of production in the past (eg, for US “countercyclical payments”). A country would have to decide which type of Blue Box to use. It would normally only use one type for all products and this would not change. Any exceptions would have to be approved now (when “schedules” of commitments are agreed). In any case, any product can only receive one type of Blue Box support. Limit : 2.5% of the value of production during the base period (Par.38). More is allowed for some countries (such as Norway) that now use a lot of Blue Box support as they reform their support by shifting away from the more distorting Amber Box — if the Blue Box support is more than 40% of trade-distorting support, it is cut by the same percentage as the Amber Box cut over two years (Par 39). Developing countries : 5% of the value of production, with flexibility for some special circumstances. (Pars.48–50) Recent new members : 5% of the value of production, with some flexibility over the base period. Other criteria : The 2008 texts spell out in greater detail how limits would also be imposed on Blue Box support for each product . Generally the limits are the average spent in 1995–2000, with adjustments if there are gaps in spending in some years. For the US, the limits are 10% or 20% more than estimates of maximums under the 2002 Farm Bill (sometimes called “headroom”). US data are in Annex A. Various provisions deal with a range of situations, including the possibility of going above Blue Box limits per product if an equivalent reduction is made in the Amber Box limits for that product, and for enabling Blue Box payments on products that did not previously receive them. For developing countries the combined Blue Box limit on these “new” products is 30% of the overall Blue Box limit, with a maximum of 10% for any single product, and flexibility for least developed and net food importing developing countries.
  • (Ie, support that does not distort production or prices or causes minimal distortion.) The Agriculture Agreement’s provisions (its Annex 2) would be amended to allow more development programmes by developing countries and to tighten criteria for developed countries (e.g. on decoupled income support). The July revision further refined provisions dealing with the question of “fixed and unchanging” base periods for income support, structural adjustment and regional assistance programmes (including the notion that farmers expectations or decisions must not be altered by any exceptional changes). The July and December texts refine conditions so that some government intervention in developing countries is counted in the Green Box and not the Amber Box. These deal with purchases for stockpiling or to fight hunger and rural poverty and involve governments buying from low-income farmers or those with few resources, including at prices that are higher than the market. (Some members have argued that in order to ensure Green Box programmes are genuinely “green” (i.e. non-distorting), transparency, monitoring and surveillance should be enhanced. This would be part of a general revision of monitoring and surveillance — Annex M) (Ie, support that does not distort production or prices or causes minimal distortion.) The Agriculture Agreement’s provisions (its Annex 2) would be amended to allow more development programmes by developing countries and to tighten criteria for developed countries (e.g. on decoupled income support). The July revision further refined provisions dealing with the question of “fixed and unchanging” base periods for income support, structural adjustment and regional assistance programmes (including the notion that farmers expectations or decisions must not be altered by any exceptional changes). The July and December texts refine conditions so that some government intervention in developing countries is counted in the Green Box and not the Amber Box. These deal with purchases for stockpiling or to fight hunger and rural poverty and involve governments buying from low-income farmers or those with few resources, including at prices that are higher than the market. (Some members have argued that in order to ensure Green Box programmes are genuinely “green” (i.e. non-distorting), transparency, monitoring and surveillance should be enhanced. This would be part of a general revision of monitoring and surveillance —
  • Trade-distorting domestic support for cotton would be cut by more than for the rest of the sector. The text includes a formula reflecting this, based on a formula proposed by the “Cotton Four” African countries in 2006. Mathematically, the formula says that if a country’s general Amber Box cut is “ Rg ”, then, the percentage cut for cotton = Rg + ((100- Rg )x100) / 3x Rg Eg, if the US Amber Box reduction is 60%, as above, then its cut in Amber Box support for cotton would be 82.2% i.e. (60+(40x100/180))%. That is unchanged and remains unsettled. Blue Box support for cotton would be capped at one-third of what would be the normal limit. Developing countries with Amber and Blue Box commitments would make two-thirds of developed country cuts for cotton and over a longer time period. Trade-distorting domestic support for cotton would be cut by more than for the rest of the sector. The text includes a formula reflecting this, based on a formula proposed by the “Cotton Four” African countries in 2006. Mathematically, the formula says that if a country’s general Amber Box cut is “ Rg ”, then, the percentage cut for cotton = Rg + ((100- Rg )x100) / 3x Rg Eg, if the US Amber Box reduction is 60%, as above, then its cut in Amber Box support for cotton would be 82.2% i.e. (60+(40x100/180))%. That is unchanged and remains unsettled. Blue Box support for cotton would be capped at one-third of what would be the normal limit. Developing countries with Amber and Blue Box commitments would make two-thirds of developed country cuts for cotton and over a longer time period.
  • EXPORT SUBSIDIES Eliminate by the end of 2013 (developed countries), with half cut by the end of 2010, and revised details for cutting the subsidized quantities in the period. The elimination date for developing countries would be 2016. The text ensures commitments on net food-importing and least-developed countries are unaffected.
  • EXPORT CREDITS, EXPORT CREDIT GUARANTEES OR INSURANCE PROGRAMMES These would be disciplined to avoid hidden subsidies and ensure the programmes operate on commercial terms. Proposed conditions include limiting the repayment period to 180 days, ensuring programmes are self-financing (ie, not making losses over a period), etc. An earlier revision greatly simplified the text on self-financing: instead of listing criteria it just refers to recovering costs “to a commercially viable standard”, over a “rolling” period of four or five years. For developing countries providing credit, the 180-day maximum repayment term would be reached in three steps over a period, probably four years (or by 2013 if that’s earlier). Least-developed and net food-importing developing countries would be normally be allowed 360–540 days to repay (previously 360 days). Some additional flexibility in special cases would be allowed, monitored by the WTO Agriculture Committee.
  • AGRICULTURAL EXPORTING STATE TRADING ENTERPRISES Their activities would be disciplined. A key question remains whether monopoly power would be outlawed or just disciplined. The definition of exporting state trading enterprises was simplified in the February text by referring to the relevant provisions in the General Agreement on Tariffs and Trade (Art.17).
  • INTERNATIONAL FOOD AID Emergency food aid would be in a “Safe Box” with more lenient disciplines. Emergencies would be declared or appealed by relevant international organizations such as the UN, World Food Programme, Red Cross, etc. Other food aid (ie, not emergency aid) would be disciplined to prevent the aid from displacing commercial trade, and with needs assessment, which would be under the responsibility of a UN agency. The text gives the recipient government priority over all food aid operations, emphasizes needs assessment, and gives the UN the final say when NGOs assess needs. The parts on monetization (ie, selling donated products to raise funds for aid) could be permitted under certain conditions both in emergencies and in other situations. Emergency Food Aid- Key issues: definition of emergency, role of multilateral agencies, duration of emergency food aid operations Non-Emergency Food Aid - Key issues: in-kind food aid, monetisation, targeting.
  • Export subsidies would be eliminated from the start of the implementation period. EXPORT PROHIBITIONS AND RESTRICTIONS Disciplines would be tightened for introducing new export restrictions, with increased transparency and monitoring and a new paragraph on consultation.
  • Transcript

    • 1. Introduction to the WTO Agreement on Agriculture (AoA) and State of Play of the Doha Agriculture Negotiations CUTS/WTO Regional Outreach Workshop Nairobi, 29-30 April 2009
    • 2. Why the Agreement on Agriculture?
      • Agriculture in GATT but...
          • exemptions for agricultural products (import restrictions, domestic support, export subsidies – allowed)
          • market access difficult
      Research - inefficiency of policies Trade tensions and disputes Punta del Este Declaration (1986) Uruguay Round Negotiations (7.5 years) Agreement on Agriculture
    • 3. Structure of the AoA Market access Domestic support Export competition Other rules: S&D, Peace Clause, commitment to reform, NFIDC Decision Three Pillars - Interlinkages
    • 4. Long-term Objective
      • Uruguay Round reform programme
      • Major achievements but also some unfinished business
      • Mandate for further reform - Article 20
      “ ... establish a fair and market-oriented agricultural trading system ... ”
      • Committee on Agriculture
        • role to monitor implementation of UR commitments
        • - matters raised under Article 18.6
        • - review of notifications
        • preparatory work – analysis/exchange of information
        • mandated negotiations - Special Sessions (since 2000)
    • 5. Market Access – Tariff Only Regime
      • Tariffication (of non-tariff measures)
      • Tariffs – bindings & reduction commitments (or ceiling bindings)
      • Tariff quota commitments
      • Prohibition not to maintain, resort or revert to:
          • Quantitative Restrictions
          • Variable Levies
          • Minimum Import Prices
          • Discretionary Import Licensing
          • NTMs Maintained Through STEs
          • Voluntary Export Restraints
          • Similar Border Measures [...]
        • BUT Annex 5 – Special Treatment
    • 6. Special Safeguard – Article 5 4 countries used the Special Safeguard provisions (3) to restrict imports of rice during the implementation pd (Japan, Korea, Philippines) and Israel for sheepmeat, wholemilk powder and certain cheeses. Chinese Taipei gave special treatment to rice in its first year of membership, 2002.
      • Volume-Based SSG
      • Import surges – volume trigger
      • Trigger volume depends on:
        • Market Penetration
        • Change in Domestic Consumption
      • Extra duty: 1/3 of applied rate
      Price-based SSG Price falls – price trigger Extra duty depends on price
      • Temporary addition tariff duty
      • Only for tariffied products
      • Only for products in schedules with “SSG”
      • Notification of volume and price triggers
      • Can’t apply to in-quota imports
    • 7. exempt from reduction No/minimal effects on trade or production Development programmes Production limiting programmes Green Box Art. 6.2 Blue Box Amber Box Categories of Domestic Support Subject to reduction commitments All other support De minimis
    • 8. Green Box Basic criteria
      • measures freely used as long as they meet Annex 2 criteria
      • can be introduced new, and modify old, programmes
      • continuous obligation to ensure that all programmes are, and remain, Green
      • No, or at most minimal, trade-distorting effects or effects on production
      • Assistance:
      • Provided through publicly funded government programme
      • Not involving transfers from consumers
      • Not resulting in price support to producers
    • 9. Green Box – Scope
      • General services, including:
      • research
      • pest and disease control
      • training
      • extension/advisory services
      • inspection
      • marketing and promotion
      • infrastructural services
      • Public stockholding for food security
      • Domestic food aid
      • Direct payments, including:
      • decoupled income support
      • income insurance and income safety-net
      • relief from natural disasters
      • structural adjustment assistance
        • producer retirement
        • resource retirement
        • investment aids
      • environmental programmes
      • regional assistance programmes
    • 10. Policy-specific “decoupling” Amount of payments not linked to: X X
      • Type of production
      • Volume of production
      • Domestic prices
      • International prices
      • Factors of production
      In any year after the base period
    • 11. Blue Box
      • based on fixed area and yields; or
      • made on  85% of base level of production; or
      • livestock payments are made on a fixed number of head
      Direct payments under production-limiting programmes exempt from reduction if:
    • 12. Article 6.2 Development programmes exempt from reduction :
      • investment subsidies generally available to agriculture
      • input subsidies generally available to low-income or resource poor producers
      • support to encourage diversification from growing illicit narcotic crops
      • Examples of notified Article 6.2 programmes:
      • Bangladesh – 2% interest rebate for repayment of loan on schedule
      • Thailand – Farming input assistance programme
      • Brazil – Production credit; Investment credit; Debt rescheduling
    • 13. Amber Box – Current Total AMS Non-product-specific support
      • For example
      • Market price support
      • Non-exempt direct payments
      • (e.g. loan deficiency payments, grants, compensatory payments)
      • Other non-exempt measures
      • All product-specific EMS
      • For example
      • Water subsidies
      • Fertilizer subsidies
      • Crop insurance
      • Subsidized credits
      Product-specific support + Current Total AMS De minimis allowance Any form of domestic support not included in either the Green or Blue Boxes or under Article 6.2
    • 14. Export Subsidies Article 1(e): Subsidies contingent upon export performance, including the export subsidies listed in Article 9 Definition Legal Framework
      • General prohibition under Article 3.3 of the AoA, except:
        • If listed in a Member’s Schedule – subject to reduction commitments (volume and budgetary outlays)
        • Roll-over provisions (now expired)
        • S&D: Article 9.4 - subsidies for marketing and internal transport (during the implementation period – now expired)
      • Anti-circumvention provisions
    • 15. Subsidy Coverage - Article 9.1
      • Direct subsidies contingent on export performance
      • Sale or disposal for export by governments or their agencies of non-commercial stocks at prices below domestic market price
      • Payments on exports financed by government action (including producer financed subsidies)
      • Subsidies to reduce cost of marketing, including handling, upgrading, international transport and freight
      • Favourable internal transport and freight charges on export shipments
      • Subsidies on agricultural products contingent on their incorporation in exported products
    • 16. Subsidy Circumvention – Article 10
      • Other forms of export subsidies
      • Export credits, insurance and guarantees
        • develop internationally agreed disciplines
        • but ... negotiations with no result - OECD Arrangement on Officially Supported Export Credits does not cover agriculture
      • Food aid
        • specific criteria, Food Aid Convention, FAO
        • but ... is it always genuine aid or dumping?
    • 17. Uruguay Round Reduction Commitments No reduction commitments for least-developed countries Developed Developing Time period 6 years (1995-2000) 10 years (1995-2004) Market access Tariff reduction 36% average, 15% minimum 24% average, 10% minimum Domestic support Total AMS reduction De minimis S&D exemption 20% 5% 13.3% 10% Article 6.2 (investment, input and diversification subsidies) Export competition Export subsidy reduction S&D exemption 36% value, 21% volume 24% value, 14% volume Article 9.4 (transport and marketing subsidies)
    • 18. Doha Agriculture Negotiations State of Play (TN/AG/W/4/Rev.4) Revised Draft Modalities for Agriculture, 6 Dec. 2008
    • 19. Big meetings, small meetings Negotiating Process concentric circles ‘ Inclusive’: all coalitions represented in consultations ‘ Transparent’: reps. report back to coalitions ‘ Green Room’ - Informal small group consultations Key players, - reps. of all groups - hard bargaining, drafting Formal plenary - Full membership - Speeches/consensus decisions Informal, heads of delegations - All members, no record, reports from consultations, /reactions Bilateral, very small group consultations
    • 20. TROPICAL PRODUCTS (Bolivia) (Colombia) (Costa   Rica) (Ecuador) El   Salvador (Honduras) (Guatemala) (Nicaragua) (Panama) (Peru) (Venezuela) G–90 G-10 G-33 ACP LDCs Cairns Group G-20 Recent new African Group EU  G-27 Chad Burkina Faso Burundi  Togo Central African Rep Djibouti    DR Congo Mali   Gambia   Guinea   Guinea Bissau    Lesotho    Malawi  Mauritania  Niger Sierra Leone    Rwanda    Benin Madagascar Senegal Uganda Zambia Tanzania Belize Barbados Antigua/Barbuda Dominica DominicanRep Grenada    Guyana St Vincent/Grenadines Trinidad/Tobago Jamaica   Suriname St Kitts/Nevis      St Lucia Gabon Ghana Namibia      Honduras   Mongolia Nicaragua            Panama    Sri Lanka   Turkey El Salvador Nigeria Zimbabwe Botswana Cameroon Congo Côte d’Ivoire Kenya Mozambique Egypt Tunisia Morocco Angola Swaziland Mauritius R Korea Iceland  Israel  Japan     Liechtenstein  Norway Switzerland Ch Taipei Austria Belgium     Bulgaria Cyprus CzechR Denmark Estonia Finland   France Germany Greece Hungary Ireland        Italy       Latvia Lithuania  Luxembourg Malta Netherlands Poland Portugal   Romania  Slovakia Slovenia   Spain Sweden   UK Mexico India China Venezuela Fiji Papua New Guinea Indonesia Pakistan Philippines Peru Cuba Haiti Australia Canada   Colombia Costa Rica   Guatemala   Malaysia  N Zealand Chile Brazil Bolivia Uruguay   Thailand   Paraguay Argentina Bangladesh Cambodia Maldives    Myanmar Nepal HongKongCh MacaoCh Singapore Qatar UAE Brunei Kuwait Bahrain S Africa Solomon Islands US G–1 Albania Armenia Cape Verde (China) Croatia Ecuador FYR- Macedonia (Georgia) Jordan KyrgyzR M oldova (Mongolia) Oman (Panama) Saudi-Arabia (Ch   Taipei) Viet   Nam Tonga
    • 21. 2000 Agriculture talks start – Built-in Agenda (Art 20 of the AoA) 2001 Doha Negotiations launched (DDA) 2004 “July Framework” 2003 Cancún Ministerial – failure to conclude modalities July 2006 – draft modalities (W/3) – negotiations suspended Agriculture Negotiations – Timeline 2005 Hong Kong Ministerial Late 2006 – “Quiet diplomacy” Fall 2007 – intensive negotiations March 2003 - Modalities deadline missed Early 2007 – Resumption of negotiations Feb - May 2008 - revised draft modalities W/4/Rev.1, Rev.2 & Rev.3 Dec 2008 – W/4/Rev.4 draft modalities Aug 2007 – revised draft modalities (W/4) July 2008 – failure to conclude modalities 2009?? The future: conclude modalities; scheduling; legal drafting; & DDA conclusion
    • 22. Positions
      • All issues are important but relative difference depending on Member and issue
      • All Members have offensive & defensive positions across the negotiations
      • Members form alliances – but often groups are not homogenous, including within developing countries
      • For LDCs all defensive interests have already been met through S&D
      Key to success – finding convergence
    • 23. Doha Negotiating Mandate
      • Comprehensive negotiations aimed at:
        • substantial improvements in market access
        • reductions of, with a view to phasing out, all forms of export subsidies
        • substantial reductions in trade-distorting domestic support
      • S&D - integral to negotiations and outcome
      • Non-trade concerns to be taken into account
    • 24. TIERED FORMULA Tariff escalation (list) Tropical products (list) Minimum average cut (Developed) SVE flexibility Maximum average cut (Developing) LDC flex SENSITIVE PRODUCTS SPECIAL PRODUCTS (Developing) RAMs SP flexibility SVEs SP flexibility Commodities (case by case) MARKET ACCESS SSG SSM (Developing) LDC products VRAMs and small low-income RAMs flexibility RAM flexibility Preference erosion
    • 25. THE TIERED FORMULA Overall minimum average cut of 54% TIERED FORMULA Developed countries Threshold/Tier/Band (tariffs) Cuts 0-20% 50% 20-50% 57% 50-75% 64% >75% 70%
    • 26. THE TIERED FORMULA Overall maximum average cut of 36% (Venezuela 30%, S&D for Bolivia & Suriname) * No cuts if tariff less than or equal to 10% Very recent RAMs and small low-income RAMs with economies in transition exempt from reduction commitments Longer implementation period, 10 years Developing Countries SVEs RAMs* Threshold/Tier/Band (tariffs) Cuts (2/3rds Developed cuts) Cuts Cuts 0-30% 33.3% 23.3% 25.3%* 30-80% 38% 28% 30% 80-130% 42.7% 32.7% 34.7% >130% 46.9% 46.9% 38.9%
    • 27. FLEXIBILITIES FROM THE TIERED FORMULA
      • Developing Countries provided with non-tariff quota expansion possibilities
      • Tariff cap -100% for Developed Countries & 150% for Developing Countries outside of Sensitive Products (maybe some exceptions to cap)
      SENSITIVE PRODUCTS Tariff quota expansion as a % of domestic consumption (per Sensitive Product) Deviation from otherwise applicable tiered formula 4% of Tariff Lines Developed 1/3 rd more for Developing Possibility for additional 2% of Tariff Lines but with additional tariff quota expansion (only for extra Tariff Lines) Developed Developing Developed Developing 2/3 4 2/3rds Developed Countries tariff quota expansion 4.5 2/3rds Developed Countries Tariff quota expansion 1/2 3.5 4 1/3 3 3.5
    • 28. FLEXIBILITIES FROM THE TIERED FORMULA SVEs Special Products flexibility: apply moderated tiered cuts + Special Products provision or, simply meet an average cut target of 24% SPECIAL PRODUCTS (Developing Countries) Treatment Tariff Lines Cut 12% Average Special Product cut of 11% Including 5% no cut RAMs Special Products flexibility Entitlement Treatment 13% Tariff Lines Overall average cut of 10%
    • 29. Special Agricultural Safeguard
      • Developed countries – reduce coverage to 1% of schedule tariff lines on 1 st day of implementation
      • Remaining SSG coverage eliminated after 7 years
      • Developing countries – reduce coverage to 2.5% on 1 st day of implementation
      • SVEs – reduce coverage to 5% of tariff lines over 12 years
    • 30. SSM – Volume-based [1]
        • Basis of rolling average of imports over 3 preceding years
        • Exceeding pre-Doha bindings - LDCs, SVEs and Developing C
        • TN/AG/W/7 suggests 2 triggers & remedies for exceeding pre-Doha bindings
        • (i) 120% - 140% - 1/3rd of current bound or 8 percentage pts whichever is the higher
        • (ii) >140% - ½ of current bound or 12 percentage pts whichever is the higher
        • Other Issues
        • Length of remedy
        • Cross-check (not normally applicable if domestic price falling)
        • Limitation on scope (2.5% Tariff Lines?)
      Thresholds (para 134) Remedies[1] 110%-115% 25% current bnd tariff OR 25 percentage points 115%-135% 40% current bnd tariff OR 40 percentage points >135% 50% current bnd tariff OR 50 percentage points
    • 31. SSM – Price-based
      • Applied on a shipment-by-shipment basis
      • Not normally take recourse if import volumes manifestly declining (cross-check)
      Trigger (para 136) Remedy (para 137) 85% of three year monthly average 85% of difference between trigger price and import price max duty current bound duty
    • 32. Tropical Products & Preference Erosion
      • Considerable progress made in July 08 mini-Ministerial
      • A lot depends on the outcome of the banana agreement
      • Chairman wanted to record progress in latest draft modalities text but due to “certain material changes” which occurred post July, the Chairman was unable to modify the draft modalities text
      • Existing text:
        • Tropical products – essentially seeking greater tariff reductions than under the tiered formula
        • Preference erosion – normally tariff reductions but greater implementation period
    • 33. Other Market Access Elements
      • Tariff escalation (the problem of higher tariffs on processed products than on raw materials, which hinders processing for export in the country producing the raw materials).
      • Commodities – inter alia , if tariff escalation not eliminated, Members to engage with commodity-dependent producers to find satisfactory solution
      • Tariff simplification- conversion of complex tariffs to their ad-valorem equivalents
      • Tariff quotas
        • reductions in bound in-quota tariff rates
        • tariff quota administration)
      • LDCs – inter alia , duty- and quota-free access for at least 97 percent of products at a tariff line level
      • Cotton market access - duty- and quota-free for cotton exports from LDCs
    • 34. Domestic Support Main issue – size of reductions Green Box Product-specific limits Cotton de minimis Overall trade-distorting domestic support Amber Box/AMS 10% VoP (Avg 95-00) Blue Box S&D
    • 35. Reductions in Overall Trade Distorting Domestic Support (OTDS)
      • Tiered reduction formula – higher cuts for higher levels of OTDS
      • Developed Countries with high relative levels of OTDS in the second tier ( ≥ 40% of Value of Production) to undertake additional 5% effort (Japan)
      • Minimum overall commitment
      Tier Threshold (US$ billion) Cuts 1 > 60 (EC) 80% 2 10-60 (US and Japan) 70% 3 < 10 (all other DDC) 55%
    • 36. Reductions in OTDS
        • Special & Differential Treatment
      • Developing Countries reduction
          • 2/3 rds of Developed C cuts in the third tier (37%)
      • BUT
      • Developing Countries exempt from OTDS reductions if:
          • don’t have Amber box commitments;
          • NFIDCs ;
          • very recent RAMs and small low-income RAMs with economies in transition
          • very recently acceded Members
    • 37. Reductions in Final Bound AMS – Amber Box
      • Tiered reduction formula – higher cuts for higher levels of AMS support (most distorting, with direct links to prices & production)
      • Developed Countries with high relative levels of AMS ( ≥ 40% of Value of Production) to undertake additional effort ½ difference between tiers
      • (Japan, Iceland, Norway, Switzerland)
      Tier Threshold (US$ billion) Cuts 1 > 40 (EC) 70% 2 15 - 40 (US and Japan) 60% 3 < 15 (all other Developed Countries) 45%
    • 38. Reductions in Final Bound AMS- Amber Box
      • Special & Differential Treatment
      • Developed Countries - 2/3 rds of Developed Countries cuts in the third tier
      • BUT
      • Developing Countries exempt from AMS reductions:
          • If present AMS ceilings <= US$100 million
          • NFIDCs;
          • Very recent RAMs and small low-income RAMs with economies in transition
      • Continued access to provisions of Article 6.2 (development programmes)
    • 39. Product-Specific AMS Limits Current situation: Total AMS New product-specific AMS limits sugar beef dairy rice wheat dairy beef rice wheat sugar limit Beef limit Rice limit
    • 40. De minimis
      • Developed Countries
      • Reduce by at least 50% but more if necessary to meet OTDS
      • Special and Differential Treatment
      • Reduce by at least 2/3rds of Developed Countries but more if necessary to meet OTDS commitment
      • RAMs with de minimis of 5 percent reduce by at least 1/3 rd Developed Countries reduction
      • Longer implementation period
      • (i) Developing with no Final Bound Total AMS;
      • (ii) Developing with AMS but which allocate almost all that support to subsistence and resource poor producers;
      • (iii) NFIDCs as list in G/AG/5/Rev.8;
      • (iv) Very recently acceded Members;
      • (v) Small low-income RAMs with economies
      • in transition
      Exempt from reductions
    • 41. Blue Box
        • Additional criteria – expansion of policy coverage to include direct payments that do not require production
      • Overall cap on Blue Box – 2.5% of average total value of agricultural production, 1995-2000 (i.e. reduction from 5% vop to 2.5%) but if BB more than 40% of trade-distorting support, reduce by level of AMS cut
      • Product-specific limits
      • Special and Differential Treatment
      • Blue box cap at 5% of the average total value of agricultural production, either over the period 1995-2000 or 1995-2004
      • Flexibilities with respect to determining the product-specific limits
    • 42. Final Bound Total AMS 10% value of Ag. production Higher of: avg. Blue Box payments OR 5% val. Ag. prod Base Overall OTDS Lower Blue Box Limit Reduced AMS Reduced de minimis Tiered reductions Tiered reductions Final Overall OTDS Reductions in Overall Trade-Distorting Domestic Support + + S&D for Developing Countries
    • 43. Green Box – Proposals
      • Possible amendments to Annex 2, including:
        • expand coverage of para.2 to specifically cover the special needs of developing country Members
          • Additional flexibility when accounting for the acquisition of stocks for foodstuffs for food security purposes under para 3
        • tighten provisions related to base period update (paras. 6, 11 & 13)
        • fine-tune eligibility criteria in para 8, base periods and an allowance for payments in the event of destruction of animals or crops to control/prevent pest and diseases
        • exempt developing country Members from the condition that disadvantaged regions must constitute a clearly designated contiguous geographical area with a definable economic and administrative identity
    • 44. Cotton
      • Reductions in support
        • AMS support for cotton reduced according to the following formula:
      • Rc = Rg + (100 - Rg) * 100
      • 3 * Rg
      • Rc = Specific reduction applicable to cotton as a percentage
      • Rg = General reduction in AMS as a percentage
        • Base value of cotton support average over 1995 to 2000
        • Blue Box cap for cotton - 1/3 of the product-specific cap that would otherwise have resulted
        • Reductions in OTDS implemented over 1/3 of the implementation period
      • S&D
        • Developing Countries with AMS and Blue Box commitments for cotton shall make a reduction that is 2/3 rds of the reduction for DDCs and shall implement it over a longer time period
    • 45. Export Competition Parallel elimination of all forms of export subsidies by 2013 Food Aid Main issues – definition of safe box, monetisation Exporting STEs Main issue – monopoly powers Export credits Main issue - self-financing Export subsidies Main issue – phasing Special and differential treatment
    • 46. Export Subsidy Elimination Developed Country Members Developing Country Members Elimination End of 2013 End of 2016 (no reductions for LDCs) Budgetary Outlays 50% by the end of 2010 and remaining by end 2013 Equal annual instalments Quantity levels Standstill at actual average 2003-05 levels – not to be used to new markets Equal annual instalments Article 9.4 NA 2021 (5 years after the end-date for elimination of export subsidies)
    • 47. Export Credits – Key Elements
      • Forms and providers subject to disciplines
      • Maximum repayment term: 180 days
      • Must be self-financing:
      • When premium rates charged over a previous 4 year (6yrs for Developing Countries ) rolling period are adequate to cover the operating costs and losses of the programme during the same period
      • Still subject to provisions of other Agreements, including the Agreement on Subsidies and Countervailing Measures (ASCM)
      • If an export subsidies within the meaning of Item (j) of Annex I of the ASCM, also deemed not to be self-financing
      • Repayment period between 360 & 540 days for LDCs and NFIDCs. Additional time in exceptional circumstances
    • 48. Agricultural Exporting State Trading Enterprises (STEs)
      • Provisions applicable to any exporting STEs meeting the definition set out in the Understanding on the Interpretation of Article XVII
      • Elimination of:
        • Export subsidies
        • Government financing of STEs
        • Government underwriting of losses
        • Monopoly powers – except if have small share of trade, so-called de minimis
      • S&D – provisions for Deveoping Countries, including SVEs and LDCs to maintain or use monopoly powers
    • 49. -International Food Aid-
      • Possible new Article 10.4 of the AoA
      • Commitment to maintain adequate levels of food aid
      • General disciplines for all food aid transactions:
        • Needs driven; provided in fully grant form; Not tied to commercial exports of goods or services; Not linked to market development objectives of donors; Not re-exported (with exceptions)
      • Food aid to take into account local market conditions of the same or substitute products
      • Donors encouraged to procure food aid from local or regional sources
      • Encourage the shift towards cash-based food aid
      • Food Aid permitted both in emergencies and in other situations:
      • Emergency Food Aid (Safe Box): Emergency declaration or emergency appeal, In both cases must have an assessment of need by relevant UN Agency (e.g. WFP); No monetisation in the Safe Box except for LDCs for the purpose of transport and delivery; If meets requirements, deemed in conformity with Food Aid provisions; If in conformity, may be provided for as long as necessary
      • Non-Emergency Food Aid: Based on a targeted assessment of need; Provided to redress food deficit situations – targeted to meet nutritional requirements; Provided with the objective of preventing or at least minimising commercial displacement; Monetisation prohibited except under certain circumstances
    • 50. Other Issues
      • Cotton
      • Developed Country export subsidies for cotton prohibited
        • Developing Countries to comply with prohibition by end of the 1 st year of implementation period
      • Any new or additional obligations from export credits, STEs and food aid shall be implemented:
        • on 1 st day of implementation for Developed Countries
        • by the end of the 1 st year for Developing Countries
      • Export Prohibitions and Restrictions
      • Strengthened disciplines
    • 51. What is at Stake?
      • Tariff reductions – continued reform process with a high level of ambition
      • Improved possibility for developing countries to increase trade with developed countries but also other developing countries
      • Flexibility for developing countries to protect their sensitive sectors
      • Reduction of trade-distorting domestic support and elimination of export subsidies for improved competition, both on domestic and international markets
      • No new concessions for LDCs but duty- and quota-free access for 97 percent of tariff lines
      • Way Forward?
    • 52. [email_address] http://www.wto.org