1

Issues related to the Accession to the WTO

Agriculture

Syria, 26. – 28. November 2008

United Nations Conference on Trade and DevelopmentUnited Nations Conference on Trade and Development

Ralf Peters

UNCTAD, Geneva

2

Outline of the Agreement on Agriculture

“Three Pillars”

Domestic Support• AMS reduction

• Green Box

• de minimis

Market Access• Tariffication

• Tariff reduction

• Minimum access

• Special Safeguard

Export Subsidies

• Reduction

• Prohibition of new subsidies

• Special and Differential (S&D) Treatment for DCs and LDCs

• Related Agreements, e.g. Marrakesh Decision

• Establishment of a Committee on Agriculture

• Continuation of the reform process

3

1. Accession Negotiations

4

ISSUES FOR AGRICULTURAL NEGOTIATIONSISSUES FOR AGRICULTURAL NEGOTIATIONSMarket access

Tariffs Bind & evtl. reduce

Non-tariff barriers Eliminate

Tariff rate quotas ?

Safeguard ?

Agri policies

Farm subsidies

(Amber) Bind & Reduce

(Blue) ?

(Green) Provide information

Export subsidies Bind & eliminate or reduce

Other trade policies

State trading enterprises Article XVII of the GATT

Taxation regime Article III of the GATT

Product quality standard Agreements on SPS, TBT

Accession

negotiatio

ns

5

Multilateral TrackMultilateral Track

Working Party (WP) Working Party (WP) meetingsmeetings

(negotiations on rules)(negotiations on rules)

1.1. Memorandum of Trade RegimeMemorandum of Trade Regime

2.2. Questions & repliesQuestions & replies

3.3. Working Party ReportWorking Party Report

Negotiating ProcessNegotiating ProcessAccession

negotiatio

ns

6

Tariff Schedule

ID HSCODE2002 DESC Bound Final boundImplementationInterim INRs ODCs

1 0101Live horses, asses, mules and hinnies.

2 010110-Pure-bred breeding animals

3 01011010 --Of Arab breed 5 CE25,US 04 01011020 --Other 5 US 05 010190 -Other6 01019010 --Horses for sport 5 07 01019020 --Ponies 5 08 01019030 --Asses 15 09 01019040 --Mules 15 0

10 01019050 --Hinnies 15 011 01019090 --Other 5 0

Saudi Arabia

7

Market Access: Current Tariffs

Bound Applied

Developed countries 38 34

Developed countries 4 3Developing countries 20 13

25Agriculture

Non-Agriculture

Developing countries 61

Source: UNCTAD TRAINS and UNCTAD calculations based on WTO CTS

Specific Problems:• Tariff escalation• Tariff peaks

8

MARKET ACCESS COMMITMENTSMARKET ACCESS COMMITMENTSAgricultureAgriculture

Accession

negotiatio

ns

EntryDate

Average Bound (%)

Staging(years) TRQ SSG

EntryDate

Average Bound (%)

Staging(years) TRQ SSG

Ecuador 01/96 25.8 5 YES YES Moldova 07/01 12.4 4 - -

Bulgaria 12/96 34.9 5 – 6 YES YES China 12/01 15.7 9 YES -

Mongolia 01/97 18.4 0 - - C. Taipei 01/02 13.1 5 YES YES

Panama 09/97 26.1 14 YES YES Armenia 02/03 14.8 0 - -

Kyrgyzstan 12/98 11.7 0 - - Macedonia 04/03 15 4 YES -

Latvia 02/99 33.6 8 YES - Nepal 04/04 41.4 2 - -

Estonia 11/99 17.7 4 - - Cambodia 10/04 28.1 7 - -

Jordan 04/00 25 10 - Saudi Arabia12/05 12.1 5 - -

Georgia 06/00 12.1 5 - - Viet Nam 01/07 20.9 7 YES -

Albania 09/00 10.6 7 - - Tonga 07/07 19.2 0 - -

Croatia 11/00 10.4 5 YES - Ukraine 05/08 10.6 5 YES -

Oman 11/00 30.5 4 - - Cape Verde 07/08 19.3 5 - -

Lithuania 05/01 15.6 7 YES -

9

0 10 20 30 40 50 60

WTO average

Moldova

Lithuania

Oman

Croatia

Albania

Georgia

Jordan

Estonia

Latvia

Kyrgyzstan

Panama

Mongolia

Bulgaria

Ecuador

Accession

negotiatio

ns

10

CHINA CHINESE TAIPEI Saudi ArabiaEntry date Dec 2001 Jan 2002 Dec 2005

Tariffs

Average 16 % 13 % 12 %

Max 65 % (cereal) 500 % (deer velvet)340 % (chicken offal)

200 % (tobacco)Specific tariffs

Mostly in 0 – 25 % 0 – 25 % 5 - 15 %

TRQs Wheat, corn, rice, soybean oil, palm oil, rapeseed oil, sugar, wool, cotton

Pork, chicken, milk, peanuts, red bean, garlic, sugar, fresh fruits, sugar, dried mashroom

None

e.g RiceIn-quota: 1 %MFN: 65 %Quantity: 9,636,000 mtStaging: 4 years

SugarIn-quota: 12.5 %MFN: 143 %Quantity: 205,000 mtStaging: 4 years

Accession

negotiatio

ns

11

CHINA CHINESE TAIPEI Saudi ArabiaSSG None 77 tariff lines None

Pork, poultry, milk, garlic, red beans, fresh fruits (pears, persimmons), peanuts, sugar

Special treatment None

Rice: import prohibitionQuantity: 205,000 mt

Some alcohol, pork:import prohibited

Accession

negotiatio

ns

12

SUPPORT TO PRODUCERS% of the total farm receipt

0

20

40

60

80

OECD EU Japan Switzerland

1986-88 1998-2000

Source: OCDE, Politiques agricoles des pays de l’OCDE, 2001

13

Support to Producers: WTO definition

Notified Domestic Support in 1995 and 2000

US$ mill.

Amber box

(AMS)

de minimis

(AMBER) Blue box

Green box Total

1995 121'570 4'019 35'907 129'011 290'507

2000 67'727 9'313 21'979 102'466 201'486

Source: UNCTAD calculation based on ERS / USDA calculation from WTO notifications

14

* Number of included countries changesSource: USDA from WTO notifications

Domestic Support by US

0

10,000

20,000

30,000

40,000

50,000

60,000

1995 1996 1997 1998 1999 2000

Mil

l. U

S$

Domestic Support by EU

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1995 1996 1997 1998 1999 2000

Mil

l. U

S$

Domestic Support by Japan

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1995 1996 1997 1998 1999 2000

Mil

l. U

S$

Other countries*

0

5,000

10,000

15,000

20,000

25,000

30,000

1995 1996 1997 1998 1999 2000

Mil

l. U

S$

AMS

deminimisBlueBoxGreenBox

15

Domestic Support COMMITMENTSDomestic Support COMMITMENTSAccession

negotiatio

ns

AMSStaging(years)

de minimis

Exp.Sub. AMS

Staging(years)

de minimis

Exp.Sub.

Ecuador - - 10 0 Moldova 20% cut 4 5 0

Bulgaria 79% cut 2 5 Yes China - - 8.5 0

Mongolia - - 10 0 C. Taipei 20% cut 8 10 0

Panama - - 10 Yes Armenia - - 5 (10 until 2008) 0

Kyrgyzstan - - 5 0 Macedonia 20% cut 4 5 0

Latvia - - 5 (8 until 2003) 0 Nepal - - 10 -

Estonia - - 5 0 Cambodia - - 10 -

Jordan 13% cut 7 10 0 Saudi Arabia 13% cut 10 10 0

Georgia - - 10 0 Viet Nam Yes, no cut - 10 0

Albania - - 10 0 Tonga - - 10 0

Croatia 20% cut 5 5 0 Ukraine Yes, no cut - 5 0

Oman - - 10 0 Cape Verde - - 10 -

Lithuania 15% cut 5 5 0

16

2. Doha Round Negotiations

17

Doha: Negotiating Mandate

• Single undertaking– Impl. Issues and SDT review

– Agriculture

– Services Market access (reduction of trade barriers)

– NAMA

– Rules (AD, SCM & RTAs)

– TRIPS

– Trade and Environment

• Singapore issues– Trade Facilitation (part of single undertaking)

• Non single undertaking– DSU Review

AD = Anti DumpingSCM = Subsidies Countervailing MeasuresRTA = Regional Trade agreementsTRIPS = Trade Related Interlectual PropertyDSU = Dispute Settlement Understanding

18

State of Play: Doha Negotiations on Agriculture

… have been a difficult & complex process:

Agriculture is a politically sensitive sector in both developed & developing countries

Countries (developed or developing) have widely divergent views on the extent of agricultural liberalization

Deadlines to agree on “modalities” were missed

The Framework Agreement (2004) brought the negotiation back on track, but the “modalities” are still left for further negotiations

Few more details have been agreed at Hong Kong Ministerial (2005)

Draft Modalities Texts (July 2007 – July 2008) widely accepted

Agreements on many issues in July 2008; Outstanding: SSM, cotton

19

The state of play

Triangle is a square

EU/G10 agricultural tariffs

US domestic support Developing countries’ industrial tariffs

Also agricultural tariffsespecially flexibilities ?

20

Outline of the Negotiations on Agriculture

“Three Pillars”

Domestic Support• Total and

AMS reduction

• de minimis

• Blue box criteria

• Green Box

Market Access• Formula

defensive interestsoffensive interests

• Preferences

• SP and SSM

Export Subsidies

• Elimination

• NFIDC

• Food aid

• Special and Differential Treatment for DCs and LDCs

• Flexibilities for recently acceded countries

• Cotton initiative

21

Market Access: Agriculture

Formula:Formula:line-by-lineline-by-line

increasing cutsincreasing cuts

•Level of ambition, S&D?•Exporter – importer•Dev’ed – dev’ing•Preferences

Flexibilities:Flexibilities:Exempt some Exempt some lines, SP & SePlines, SP & SeP

Special Products (SP) Products essential to achieve food security, livelihood security and rural development Sensitive Products (SeP):Selected number of tariff lines will receive flexibility in tariff cuts (but access is improved)

Initial tariffs:Initial tariffs:Bound ratesBound rates

Result:Meaningful better access?Protect vulnerable farmersStart

22

Market Access Agriculture: Formula

• Tiered Formula – Linear cuts in 4 bands– Higher tariffs reduced by a higher percentage

• Order of magnitude proposed– Developed countries: 50 % – 70 % (min avg. 54)– Developing countries: 33 % - 47 % (max avg. 36)– SVEs: 23 % - 37 % (max avg.

24)2/3 principle

23

Market Access Agriculture: Exceptions

• Sensitive products – 4 per cent of tariff lines; DCs: 5.3 per cent (+1/3)– 1/3 to 2/3 deviation from cuts; TRQ expansion

• Special Products– 12 per cent of tariff lines sheltered from formula– Average cut of 11 % – “Super-specials”: 5 per cent (within the 12)

24

Draft modalities text July 2008

SSM proposal: Volume Trigger• 1st step: Import surge

• 2nd step: Cross check: absolute level of imports negligible relativ to production and consumption

• 3rd step: how high is the import surge (110-115%, 115-135%, above 135%); determines additional duty: Para 124

• 4th step: beyond the UR bound rate? If yes, limits: Para 133 to 136

25

SSM for import surge 115 – 135 %

Duties

100

57 57

97115

97

0

20

40

60

80

100

120

140

Pre-Dohabound

Post-Dohabound

Applied Safeguard duty Constrain pre-Doha

Max duty

57+40=97

26

SSM for import surge 115 – 135 %

Duties

1510 10

50

30 30

0

10

20

30

40

50

60

Pre-Doha bound Post-Dohabound

Applied Safeguard duty Constrain pre-Doha

Max duty

10+40=50

27

Controversial: Special Agricultural

Safeguard• United States:

Going beyond pre-Doha bound rate only if import surge above 140 per cent

• India, China: Going beyond pre-Doha bound rate already if import surge above 115 per cent

28

Draft July 2008: Recently acceded members additional

flexibility or exemptMarket Access

• Moderate cuts under the tiered formula by 8 ad valorem percentage points in each band

• Exempt their final bound tariffs at or below 10 per cent

• VRAMS and SLI_RAM_EIT completely exempted from cuts

• Overlapping commitments? Start of implementation for such tariff lines one year after the end of implementation of accession commitment

• Implementation period for RAMs prolonged by up to two years after the end of the developing countries’ implementation period

VRAMs: Very recently acceded members (Saudi Arabia, Macedonia, Vietnam, Tonga, Ukraine); SLI_RAM_EIT: Small low income RAMs with economies in transition

29

De minimisDe minimis

Blue BoxBlue Box• Set asideSet aside• QuotaQuota

Amber Box

Product specific support• Market price support• Payment on output• Input subsidies• Investment subsidies

Non-product specific support

Exempted measures

Amber BoxAmber Box

Measures for reduction commitments

Development Development Investment subsidies and input subsidies, provided by DC’s to resource-poor

low-income farmers

• Research• Training • Extension• Infrastructure• Pest & disease control• Public stockholding• Domestic food aid • Decoupled income

support• Support to structural

adjustment

etc.

OTDS

Green BoxGreen Box

Domestic Support

30

Domestic Support: Total Trade Distorting Support

• Three tiers: percentage cuts

• Applied levels affected?e.g. US new commitment US$ 14.5 bill. Applied: US$ 8 – 19 bill.

EU80

US , Japan70

OthersDeveloped 50 – 60

Developing* 33 - 40

* No reduction commitment if no AMS

31

Draft July 2008: Recently acceded members additional

flexibility or exemptDomestic Support

• OTDS and AMS cuts: VRAMs and SLI_RAM_EIT exempted; other RAMs 2/3 of cuts

• De minimis: VRAMS and SLI_RAM_EIT exempted; other RAMs with 5% de minimis 1/3 of cuts + five years longer implementation period

• For RAMs, the maximum permitted value of support shall be 5 per cent of the average total value of agricultural production in the 1995-2000 period

VRAMs: Very recently acceded members (Saudi Arabia, Macedonia, Vietnam, Tonga, Ukraine); SLI_RAM_EIT: Small low income RAMs with economies in transition

32

Cotton

• Four West and Central African countries put forward the cotton initiative

• Sub-committee on cotton– Few results

• Hong Kong Declaration– Progress on Export Subsidies: Elimination in 2006– Less progress on Domestic Support: more ambitious

reductions than on other products

33

Change of Cotton World Price after eliminating all

distorting supportWorld Price Change

0

5

10

15

20

25

30

FAO1 Tokarick FAO2 FAPRI ODI1 ODI2

Source: FAO policy brief No.1

34

3. Analysis

35

Questions

• Will we gain or lose from further WTO liberalisation?

• Export enhancement?

• Or flooded with imports?

• Tax revenues?

36

ATPSM

• Agricultural Trade Policy Simulation Model

• Static, deterministic, no stocks

• Tariff rate quotas, quota rents

• 35 commodities

• 160 countries plus EU25 plus RoW.

37

ATPSM Commodity Aggregation (1)

• Livestock• Bovine meat• Sheepmeat• Pigmeat• Poultry• Milk, fresh• Milk, conc. • Butter • Cheese• Hides and skins• Wheat

• Maize • Sorghum • Barley• Rice• Sugar raw• Sugar refined• Oilseeds, temperate• Oilseeds, tropical

• Vegetable oils

38

ATPSM Commodity Aggregation (2)

• Pulses

• Roots, tubers

• Tomatoes

• Non-tropical fruits

• Citrus fruits

• Bananas

• Other tropical fruits

• Coffee green

• Coffee processed

• Cocoa beans

• Cocoa processed

• Tea

• Tobacco leaves

• Tobacco processed

• Rubber

• Cotton linters

39

Base Syrian trade

0100000

200000

300000400000

500000

600000700000

800000

900000

T

Liv

esto

ckB

ovin

emea

tS

hee

pm

eat

Pig

mea

tP

oult

ryM

ilk

, co

nc.

Bu

tter

Ch

eese

Wh

eat

Ric

eB

arle

yM

aize

Sor

ghu

mP

uls

esT

omat

oes

Roo

ts &

Ap

ple

sC

itru

s fr

uit

sB

anan

asO

ther

tro

pic

alS

uga

r, r

awS

uga

r, r

efin

edC

offe

e, g

reen

Cof

fee,

pro

c.C

ocoa

bea

ns

Coc

oa,

pro

c.T

eaT

obac

coH

ides

& s

kin

sO

ilse

eds,

Oil

seed

s, t

rop

.R

ub

ber

Cot

ton

Veg

etab

le o

ils

Exports

Imports

Maize Sugar

40

Change in world prices

0

5

10

15

20

25

%

Liv

esto

ckB

ovin

emea

tSh

eepm

eat

Pig

mea

tP

oult

ryM

ilk,

con

c.B

utte

rC

hees

eW

heat

Ric

eB

arle

yM

aize

Sorg

hum

Pul

ses

Tom

atoe

sR

oots

&A

pple

sC

itru

s fr

uits

Ban

anas

Oth

er tr

opic

alSu

gar,

raw

Suga

r, r

efin

edC

offe

e, g

reen

Cof

fee,

pro

c.C

ocoa

bea

nsC

ocoa

, pro

c.T

eaT

obac

coH

ides

& s

kins

Oil

seed

s,O

ilse

eds,

trop

.R

ubbe

rC

otto

nV

eget

able

oil

s

41

Doha Round: Change in welfareSyria (no policy changes in Syria)

-150000000

-100000000

-50000000

0

50000000

100000000

150000000

$m

Consu

mer

Produ

cer

Gover

nmen

t

Total

42

Implications

• After WTO Doha Round conclusion:– World prices increase– Exports increase– Imports + or -– Welfare losses or gains

43

Implications (2)

• Countries lose because– Export subsidy removal→ ↑P– Domestic support has limited trade effects– No change in own tariffs, no allocative

efficiency gains

44

Accession: Change in welfaremaximum tariff 12 %

-60000000

-40000000

-20000000

0

20000000

40000000

60000000

80000000

$m

Consu

mer

Produ

cer

Gover

nmen

t

Total

45

Limitations

• Have ignored sensitive/special products• Tariff cuts at at HS4, not HS10• Ignore dynamic, GE effects• Poor quality data, particularly for LDCs