AGRICULTURAL POLICY REFORM IN THE WTO
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AGRICULTURAL POLICY REFORM IN THE WTO. The Road Ahead. PROJECT GOALS. Calculate the costs of global agricultural policies and the potential gains from their elimination Evaluate broad options for reforming tariffs, TRQ’s, domestic support and export subsidies. Major Findings.

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Project goals
PROJECT GOALS

  • Calculate the costs of global agricultural policies and the potential gains from their elimination

  • Evaluate broad options for reforming tariffs, TRQ’s, domestic support and export subsidies


Major findings
Major Findings

  • Eliminating global ag. policy distortions would:

    • raise world welfare $56 billion annually

    • raise world agricultural prices 12 percent

  • Roles of policies in reducing world prices:

    • Tariffs (52%)

    • Domestic subsidies (31%)

    • Export subsidies (13%)

  • Developing countries can benefit from further WTO reforms



  • Estimated annual gain in purchasing power 56 billion
    Estimated annual gain in purchasing power = Than They Otherwise Would be $56 billion


    Options for reform
    OPTIONS FOR REFORM Than They Otherwise Would be

    • Market Access: Approaches to reducing global tariffs and liberalizing TRQs

    • Domestic Support: Reducing aggregate AMS versus leveling AMS across countries and commodities

    • Export Subsidies: Effects of eliminating EU subsidies


    Options for market access reform
    OPTIONS FOR MARKET ACCESS REFORM Than They Otherwise Would be

    • Linear vs. harmonization formula formulas are needed to address the very high tariffs in global markets

    • Harmonization formulas benefit U.S. ag. US profile: large number of low tariffs (12 percent average) Top U.S. ag. exports face tariffs of 50-100 percent

    • TRQ’s: no one-size-fits-all rule for reform


    Two options for reforming domestic support
    TWO OPTIONS FOR REFORMING DOMESTIC SUPPORT: Than They Otherwise Would be

    • Continue the UR reforms: lower the AMS ceilings for OECD countries an additional 20%

    • Level the playing field for OECD countries - support for each commodity must be at or below 30% of the value of production


    1/ 1997. Than They Otherwise Would be

    Source: ERS calculations


    U s ams approaches wto ceiling
    U.S. AMS Approaches WTO Ceiling Than They Otherwise Would be


    Ams support 1997
    AMS Support (1997) Than They Otherwise Would be


    Conclusions on export subsidies
    Conclusions on export subsidies Than They Otherwise Would be

    • Effects on aggregate world agricultural prices and trade relatively small

    • Export subsidies remain important because: effects in specific markets can be large they are linked to domestic support they can slow progress on market access


    Developing country issues
    Developing Country Issues Than They Otherwise Would be

    • For middle income DCs - improved market access for ag. exports trade linked productivity gains

    • For lower income DCs - erosion of preferences lower food aid needs

    • Developing countries increasingly critical of directions in domestic support in developed countries


    Food aid needs decline
    Food Aid Needs Decline Than They Otherwise Would be


    Tariffs faced by us ag exports
    Tariffs faced by US ag. exports Than They Otherwise Would be



    Effects of ams reform on u s trade
    Effects of AMS Reform on U.S. Trade Less than 30% of Value of Production


    For more information www ers usda gov
    For more information…. Less than 30% of Value of Productionwww.ers.usda.gov


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