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Agriculture Negotiations: Moving Forward

Agriculture Negotiations: Moving Forward . Ashok Gulati IFPRI Director in Asia WTO and The Doha Round: The Way forward ICRIER-SRTT Conference 6-7 April, 2006, ITPO, New Delhi. Key Questions for India (and developing countries like India). Doha outcome: More or less ambitious?

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Agriculture Negotiations: Moving Forward

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  1. Agriculture Negotiations: Moving Forward Ashok Gulati IFPRI Director in Asia WTO and The Doha Round: The Way forward ICRIER-SRTT Conference 6-7 April, 2006, ITPO, New Delhi.

  2. Key Questions for India (and developing countries like India) • Doha outcome: More or less ambitious? • A hollow outcome: missed opportunity for Doha as a development round? • Should one play defensive or pro-active? • Peace Clause is dead: Can one use it to put pressure in the negotiations? Page 2

  3. Domestic Support- Issues in Negotiations • Tiered formula for cuts on overall level of trade distorting support • Tiered formula for cuts in AMS • Capping of product specific AMS • Reduction of de minimis • Review of criteria for Blue Box and Green Box • Lower reduction coefficient and longer implementation period for developing countries Page 3

  4. Example US: Falling Commitment levels but rising actual AMS Source: Hoda and Gulati, forthcoming: WTO, Agricultural Negotiations, and Developing Countries: Lessons from the Indian Experience Page 4

  5. Example US: Falling World Prices and Increasing Domestic Support for rice (similar story for cotton and many other products) Source: Hoda and Gulati, forthcoming: WTO, Agricultural Negotiations, and Developing Countries: Lessons from the Indian Experience Page 5

  6. Suggestions on Domestic Support • Tiered formula for cut in overall Trade Distorting Support (to say 5% of value of production) most important. • Total AMS, Product Specific AMS, De minimis and Blue Box should get squeezed. • Developing countries can accept a low limit for overall TDS. • Green Box criteria: it is important to propose that direct payments be limited to small farmers. Page 6

  7. Issues in Market Access • Basic approach: toward progressive reduction • Tiered formula for reduction of tariffs • Sensitive products (???) • Special products (???) • Special Safeguards Mechanism Page 7

  8. Defensive means hollow outcome • If one per cent of tariff lines are categorized as sensitive or special products, 75% of potential gains from trade liberalization are lost (Bouet, 2006) • In that case, Doha round can not be a “development” round. • If deeper cuts in tariffs realized, Special safeguards would be needed by all. Page 8

  9. Example Switzerland: Concentration of high Bound duties in 1% of tariff lines, 2001 Source: Antoine Bouët, “WHAT CAN THE POOR EXPECT FROM TRADE LIBERALIZATION? OPENING THE “BLACK BOX” OF TRADE MODELING”, forthcoming Page 9

  10. Example India: Surges in Vegetable oil imports(SSM needed if peak tariffs capped a low levels) Source: Hoda and Gulati, forthcoming: WTO, Agricultural Negotiations, and Developing Countries: Lessons from the Indian Experience Page 10

  11. Suggestions on Market Access • Capping is critical • Any reasonable reduction • Special and sensitive Products: Self selection would be credible only if products are extremely limited in number • Maximum reliance on SSM Page 11

  12. Issues in Export Competition • Implementation period for elimination of direct export subsidies • Disciplines on export credit, export credit guarantees and insurance programmes less than 180 days • Disciplines on food aid • Disciplines on State Trading Enterprises • S&D treatment of developing countries Page 12

  13. Suggestions on Export Competition • Suggested period of 5 years for elimination of direct export subsidies should be maintained • While developing disciplines on export credit for under 180 days the possibility of any exceptions or looseness should be ruled out • For food aid fundamental changes are necessary • The exporting STEs should not have monopoly powers • For S&D treatment by way of longer period should be with reference to the period of elimination Page 13

  14. Way Ahead: Strategies and Options • Developing Countries' offer of tariff cuts must be conditional on steep cut of domestic support of US and EU. • Domestic support disciplines must be simplified. The current structure based on the three boxes is complex and ambiguous. • To identify well-targeted and transparent exempt measures that minimizes trade distortion. Page 14

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