Agriculture in the July Framework

1. Agriculture in the July Framework Navin Dahal South Asia Watch on Trade, Economics and Environment (SAWTEE)

2. Framework Agreement • Reform in all three pillars form an interconnected whole and to be approached in balanced and equitable manner • Operationally effective and meaningful provisions for SDT for developing country member

3. Market Access • Tiered Formula for tariff reduction • Bound rates as starting points • Progressivity – deeper cuts in higher tariffs • Proportionality • special and differential treatment for developing countries • No reduction commitments for LDCs • Special products • Flexibility – Sensitive products

4. Market Access • Reduction or elimination of in-quota tariff rates • Operationally effective improvement in tariff quota administration • Tariff escalation to be addressed through a formula to be agreed

5. Sensitive Products • “Without undermining the overall objective of the tiered approach” appropriate number of tariff lines to be treated as sensitive • Substantial improvement will apply to each product • Substantial improvement to be achieved through • Tariff quota commitments • MFN-based tariff quota expansion for all such products

6. To be Determined • Structure of the tiered formula • Selection criteria for sensitive products • Selection criteria for special products • Approach to Tariff Escalation • Approach to tariff simplification • Approach to SSM • Approach to Preference Erosion

7. Market AccessIssues • Ad-valorem equivalents • Sensitive Products • Number of Products • Selection criteria • Implications of tariff profiles • SSM for developing countries • Tariff line (six digit /eight digit level)

8. Tariff Structures Bound Tariffs

9. Products with High Tariffs

10. South Asia • Tariff only protection as non of the countries have TRQs (EU 87, US 54) • SA countries do not have the right to use Special Safeguards SSGs (EU 539, US 189) • Progress in other pillars also to be considered in the final discussion on the magnitude of tariff reductions

11. Developing Countries • Proportionality – tariff reduction/quota expansion • Longer implementation periods • Number and treatment of sensitive products • Special products – self determination • SSM

12. LDCs • Not required to reduce tariff • Developed and developing country Members should provide duty free and quota-free access to markets for products originating from LDCs • Key Goal – Maintain tariff preference levels

13. Domestic Support • Overall Support – To be reduced using a tiered formula • Bound level as starting point • Final bound total AMS – To be reduced using a tiered formula • Blue Box – Expanded • De Minimis – Reduced • Green Box Measures – Reviewed

14. Overall Reduction • Tiered formula to be used to reduce overall sum of all trade distorting domestic support (AMS+permitted de minimis level + Blue Box) • Harmonization – Higher levels to be reduced more • 20 % reduction in year 1

15. Final Bound AMS • To be reduced substantially • Harmonization • Product-specific AMS to be capped • Greater than formula reductions may be required to achieve required level of cut in overall support • SDT – longer implementation period and lower reduction coefficients

16. Blue Box • Article 6.5 to be reviewed • Additional measure inserted – Direct payments not related to production if unchanged fixed base and payments to 85% or less area • Blue Box support not to exceed 5% of total VoAP • Some flexibility to large current users

17. The De Minimis Provision • Reduction to be negotiated,taking into account SDT • Support to LIRP in developing countries to be exempt • Greater than formula reduction may be necessary to achieve required level of cut in overall support • SDT – longer implementation period and lower reduction coefficients

18. Green Box Measures • Criteria to be reviewed • The basic concepts, principles and effectiveness of Green Box to remain • Take due account of non trade concerns

19. Domestic SupportNegotiation Dynamics • No SA country has AMS reduction commitment • EU 15 - high total De Minimis and Blue Box • US – High AMS and De Minimis • India – PS AMS Negative, 5.68% VoAP under Art. 6.2 (1997) • Pakistan - PS AMS Negative - (1999) • De Minimis – Future flexibility

20. Export Competition • Export subsidies • Export credit • Trade Monopolies – STEs • Food Aid abuse

21. Export Subsidies • No SA country has right to use ES (EU - 20, US – 13) • Share of Total ES notified to the WTO (1995-2001) EU 25 – 90%, Sw’land –5%, USA 1.4% • Share of Total ES notified to the WTO (1995-2001) Dairy 35%, Beef 18%, Sugar 11%, Grains 14%. • To be eliminated as scheduled by the end date to be agreed • SDT 1 – Longer implementation period • SDT 2 – Continued access to the provision under Article 9.4 of the AoA for a reasonable period to be negotiated

22. Export Credits • Share of EC (1998) – USA 49%, Australia 20%, EU 15 16%, Canada 14% • Share of EC – Cereals 28%, Livestock products 16%, Vegetable products 16%, Processed Products 10% • Export credits, export credit guarantees or insurance programs with repayment periods beyond 180 days will be eliminated by the end date to be agreed

23. Export Credits • EC, ECG or insurance programs with repayment periods of 180 days and below will be eliminated if their terms and conditions are not in accordance with disciplines to be agreed. These disciplines will cover, inter alia: • Payment of interest • Minimum interest rates • Minimum premium requirements • Other elements that can constitute subsidies or otherwise distort trade

24. Export Credits • SDT 1 – Longer implementation period • SDT 2 – Disciplines on EC, ECG or IP to be agreed will make appropriate provisions for differential treatment in favour of LDCs and NFIDCs

25. Exporting STEs • Trade distorting practices with respect to exporting STEs, will be eliminated, including export subsidies provided to or by them, government financing,and underwriting of losses • The issues of the future of monopoly powers will be subject to further negotiation • SDT 1 – Longer implementation period • SDT 2 – STEs in developing countries that enjoy special privileges to preserve domestic consumer price stability and ensure food security will receive special consideration for maintaining monopoly status

26. Food Aid • Elimination of food aid provision that is not in conformity with operationally effective discipline to be agreed.The objective of such disciplines will be to prevent commercial displacement. • The role of international organisations as regards the provision of food aid by Members, including related humanitarian and developmental issues, will be addressed in the negotiations • The question of providing food aid exclusively in fully grant form will also be addressed in the negotiations

27. Export Competition Issues • End date • Parallel Elimination • Transparency • SDT

28. Negotiation Dynamics • US defensive interest on Domestic support and offensive interest on Market Access in developing countries • EU defensive interest on Market Access • EU-US interest on Export competition

29. Consequence for SA Countries • Minimal gain in export competition • No or minimal gain in reduction in Domestic support • No gain in market access in developed country markets • Undermine their defensive position in Market Access • Preference Erosion