Overview and Current Status of the Overview and Current Status of the Doha Work Program and NegotiationsDoha Work Program and Negotiations
Southern Agricultural Economics AssociationSouthern Agricultural Economics AssociationAnnual MeetingsAnnual Meetings
Orlando, FL, February 6, 2006Orlando, FL, February 6, 2006
Parr Rosson and Flynn AdcockCenter for North American Studies
Department of Agricultural EconomicsTexas A&M University
Overview
International Setting
WTO Doha Agenda Progress
U.S. Trade Strategy
Conclusions & Implications
World Average Agricultural Tariffs, 2002
Source: WTO & ERS/USDA
115
85
5540
30 2510
Asia
Carib
bean Is
lands
Centra
l Am
erica
South
Am
erica
Europea
n Union
North
Am
erica
United S
tates
0
20
40
60
80
100
120
140
Percent
Region Average
World Average
62%
Agricultural Producer Support By Country1986-88 and 2001-03
-Percent of Total Farm Receipts from Government-
Source: OECD's database (see www.oecd.org)
12%
33%26%
40%
62%
71%
2%
20% 20%
39%
60% 65%
New Zealand Canada United States EU Japan Korea0%
20%
40%
60%
80% 1986-1988
2001-2003
Doha Development Agenda in the World Trade Organization
Progress to Date
Progress onDoha Development Agenda
(2001-Present)
Work on Agriculture Began in 2000 Under Auspices of the WTO
Agriculture Committee
Mandated by the Uruguay Round Agreement on Agriculture, 1994
Doha Work Program:Three Pillars of Trade Reform
(August 1, 2004)
Market Access: Reductions in Tariffs
Export Competition: Elimination of Export Subsidies
Trade Distorting Domestic Support: Reductions Over Time
Market AccessCut Highest Tariffs the MostDesignation of Some ‘Sensitive’ SectorsSpecial & Differential Treatment for
Developing & Less Developed CountriesU.S. Pushing for Deep Tariff Cuts by
EU & Some Developing Countries (60-75%)
EU Reluctant to Cut Beyond 43%
Export Competition
Reduce & Eliminate Export Subsidies by Date Certain EU Export Subsidies, $2+ Billion/Year U.S. Export Credit Guarantees > 180 Days
• $4.7 Billion/year in Recent Years
Eliminate Trade Distorting Practices of State Traders, such as Canadian Wheat Board Subsidies, Govt. Financing, Increase Transparency
Food Aid that Displaces Commercial Sales to Be Eliminated
Trade Distorting Domestic SupportYear 1 Down Payment of 20%Subsequent Phased ReductionsCaps on Amber & Blue BoxesReductions from Allowable SupportEU Even Announced Its SupportU.S. Cuts Likely to Approach 60% of
Amber Box, to $7.64 Billion
Total Allowable Trade Distorting Domestic Support, 'The Big 3,‘ 2002
WTO, Trade Policy Review and calculations.
$128
$49 $48
European Union United States Japan$0
$20
$40
$60
$80
$100
$120
$140
Billion Dollars
Includes Amber + Blue Boxes, Product Specific + Non-product Specific De Minimis, Each Based on 5% of Total Value of Agricultural Production
Total Trade Distorting Domestic Support Remaining After Year 1 Down Payment
(calculated)
$100.2
$39.2 $38.4
European Union United States Japan$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
Billion Dollars
Total Trade Distorting Domestic SupportAssuming 50 Percent Reduction
Calculated
$50.1
$19.6 $19.2
European Union United States Japan$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
Billion Dollars
Hong Kong, December 2005Little Progress Made in Hong Kong
EU Trade Commissioner said state of negotiations was “serious but not desperate.”
Agreement to Eliminate Export Subsidies by 2013
Greater “Quota-Free, Duty-Free” Access Granted LDCs, Up to 97% of Products LDC’s want it above 99% and Prepared to Veto
While Many Fundamental Issues Remain Unresolved, Deadlines Have Been Set
Hong Kong, December 2005(continued)
Agreement on Degree of Tariff Cuts by April 30, 2006 EU Wants to Reduce by 39% (They Claim 46%) while U.S.
and Others Think EU Needs to Reduce by about 60% Each Country to Submit Tariff Schedules by July 30
While Export Subsidies Addressed, More work on STE’s and Export Credit Guarantees Needed
Agreement Still Needed on Degree of Trade Distorting Domestic Support (Amber/Blue) U.S. Wants about 53%, Pushing EU and Japan Towards 80% This Does Not Address Green Box Programs U.S. wants “New” Blue Box for CCPs
Other Negotiating/Related Issues The Cotton Initiative, Begun by Benin, Burkina Faso,
Chad and Mali, Claim Rich Country Subsidies Hurting Poor Countries Compensation Requested, Issue in Negotiation
Cotton Case Won by Brazil Against U.S. Will Impact U.S. Cotton Program and Could Spur Challenges Against Other Crop Programs U.S. Could Instead Decide Not to Comply, but Would face
Brazilian Tariffs and Undermine Doha
Tight Timeline for U.S. because of Expiration of TPA in Mid-2007 and Low Prospects for Renewal
U.S. Budget Situation and Dissension within EU
U.S. Trade Strategy
Multilateral World Trade Organization China Now a Member-Currency, Textiles Only Forum Where 148 Countries Are Present
Regional/Bilateral CAFTA-DR
Unilateral Generalized System of Preferences (GSP) CBI/CBERA African Growth Opportunities Act (AGOA)
Why Regional/Bilateral Agreements?
2nd Best After MTN WTO Has Been Slower than Desired Outcome is Uncertain
Economic Incentives Open Markets Increase Business Efficiency
Keep Pressure on MTN to Perform
Australia ‘05Australia ‘05
Bahrain ‘05Bahrain ‘05CAFTA-DR CAFTA-DR ‘05‘05
Chile ‘04Chile ‘04
FTAA ‘06FTAA ‘06
Morocco ‘04Morocco ‘04
Southern African Southern African Customs Union ‘06Customs Union ‘06
Singapore ‘03Singapore ‘03
Jordan ‘01Jordan ‘01
U.S. Trade AgreementsU.S. Trade Agreements
NAFTA ‘94NAFTA ‘94 Israel ‘85Israel ‘85
CUSTA, ‘89CUSTA, ‘89
Andean FTA Andean FTA ‘06‘06
Panama ‘06Panama ‘06
Thailand ‘05Thailand ‘05
MEFTA MEFTA ‘06‘06
Conclusions and Conclusions and ImplicationsImplications
Conclusions & ImplicationsAgricultural Trade Distorted by Tariffs,
Export Subsidies, Trade Distorting Domestic Support & Non-tariff Barriers
Deep Tariff Cuts by DCs/LDCs Will Allow More U.S. Exports, But TBN
But, What is the Trade-Off? Some Reduction in U.S. Trade Distorting Domestic
Support, Likely Substantial, TBN Internal Budget Pressure Likely Affects Outcome
Conclusions & ImplicationsAbsent WTO Progress, Trade & Economic
Growth Stifled, Especially in Agriculture-Not Good for the South
Cotton Case Impacts and Potential for Similar Cases Must be Considered
Internal Political Realities Cause for Concern
Trade Reform is at a Crossroads: Protectionism or Progress? If We Want to Open More Markets, Trade
Agreements Are Needed
Thank You!
Questions?