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WTO agreements regarding Agriculture. Agreement on Agriculture Agreements on Standards Agreement on Intellectual Property. General framework of the AoA. Objective : to ensure a certain discipline in agricultural trade
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WTO agreements regarding Agriculture Agreement on AgricultureAgreements on StandardsAgreement on Intellectual Property Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
General framework of the AoA • Objective : to ensure a certain discipline in agricultural trade • Means : restricting the use of agricultural policy tools having negative or distorting effects on trade. • Came into force 1 July 1995 • For 6 years (Developed countries) • For 10 years (Developing countries ) • Three pillars Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Coverage of the AoA • Relevant for agricultural products, raw and processed, including fibres (cotton, wool, silk, flax) and raw skins • Fish products, wood, agricultural inputs are submitted to the GATT agreement (trade in goods) Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
General provisions for developing countries • Developing countries : level of reduction are 2/3 level of reduction for Developed countries • No reduction for LDCs • More time for implementation • Possible use of specific tools Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Market access : relevant measures • Restrict access to national markets • Tariffs barriers : custom duties • ad valorem, or minimum custom value • Non tariffs barriers • import quotas • variable entry levies • minimum import prices • import licenses Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Market access: transparency • Transparency • tariffication: conversion of non tariffs barriers in custom duties (tariffs equivalents) • binding principle : tariffs bound at a certain level. Cannot increase. Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Market access : openness • Reduction of tariffs • 36% in 6 years for developed countries • 24% in 10 years for developing countries • Minimum import threshold for tariffied products • 5% of the average of the internal consumption during the period of reference. Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Market access exceptions • Special Safeguard clause : rapid surge in the volume of imports, or strong fall in domestic prices, possible to add a tax of 30 % (max), for a limited period. For tariffied products only • Other safeguard provisions in GATT • significant deterioration of the balance of payments • clearly established dumping (sale under the price in the country of origin) • to protect a newly developing industry (infant industry) • to protect health and life of human, animals, plants Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Domestic support (1) • Objective : reducing production supports with distorting effects on trade • Classification of support into three boxes • amber box: price support measures • blue box: aides partially discoupled and given to producers within the framework of a production-limiting programme • green box : subsidies with minimal or no distorting effects • government services programmes : research, extension, training, infrastructures, pest controls, food security stocks • direct payment to producers non linked to production level or factor of production. Ex : insurance mechanism (market crisis, natural disasters) • programmes for protection of the environment and support to less favoured areas Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
The Amber box • Calculation of the price support : the Aggregated measure of support (AMS) • AMS = (Domestic price – world price) X volume of production • Reduction of domestic support in the amber box : • minus 20% on 6 years • minus 13,3% on 10 years for developing countries • Exception : the “De minimis” Provision : no reduction • if the value of the support for a given products < 5 % of the total production value of this product (10 % for DCs) • or • if the value of non product-specific support < 5% of the value of the whole agricultural production (10% for DCs) Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Other boxes (3) • Blue box : for the EU and the US. Not compulsory to decrease, impossible to increase • Green box : no limitation (can increase) Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Exceptions for developing countries • Following measures are not subject to reduction • agricultural investment incentives • subsidies for the input of low-income producers • assistance to replace illicit crops • Least developed countries are not subject to reduction commitments Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Export competition • Objective : to limit export supports • Measures • Type of support concerned by the AoA • direct export subsidies • stock sale under the domestic price • support to reduce marketing and transport costs • AoA provided a cut in the budget and in the volume of subsidised export • Volumes supported cut of 21% (14 % for developing countries) • Budget decreases of 36 % (24 % for developing countries) • There is no commitment for LDCs Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Classification of agricultural policy tools Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Example for China Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
The Peace clause • Most of AoA clauses are not in conformity with GATT • The Peace clause protects this exception • Covers a period of nine years (1995 - 2003) • End on July 2004 Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Two case of dispute seton the AoA, initiated by Brazil US / cotton EU / sugar Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
The cotton case Initiated in october 2002 - won in march 2005 (appeal) Direct aid = 617 M$; Export credits = 1,6 B$ (several products); Step 2 = 415 M$ Total = 3 billions $ in 2002 Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
The sugar case • EU sugar policy: • Production quota, high price • Part of the producer price is take off, to fund export support • Preferential import of ACP countries, refined in the EU and re-exported with export subsidies • According to the EU: no export subsidies • Decision of the appellate body: they are export subsidies Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
WTO agreements on standards Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Introduction • WTO agreements on standards : prevent them from being used as protection tools. • Two agreements: • TBT : Technical barriers to trade • SPS : Sanitary and Phytosanitary • TBT existed before the WTO : Tokyo round standards code (1979). Uruguay round : strengthening and clarifying. Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
SPS agreement • Rules of procedure which define formulation and implementation of SPS measures in international trade • Set of measures to protect life and health of human / animals, and to protect plants. • But : does not define the measure. • Definition in under the responsibility of relevant international organisations ( Codex alimentarius, Office international des épizooties, International plant protection convention) or member states Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Two key principles • National treatment : non-discrimination between foreign and national products • Scientific justification : member states have to establish risk assessment, to scientifically justify the relation between a SPS measure and level of sanitary protection. Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Modalities Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Transparency and equivalence • All measures have to be notified to WTO SPS Committee, before their implementation • Other members may be allowed to contest scientific proofs • Members have to accept equivalent SPS measures implemented by other members, if they provide the same level of protection Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
TBT agreement • Technical regulations : specific characteristics of a product : • size, design, functions, performance • the way it its labelled or packaged • the way it is produced : more appropriate to draft technical regulations on the production methods rather than the characteristics per se (case of organic products) Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
The objectives of the TBT agreement • Protection of human safety or health • Protection of animal and plant life or health • Protection of the environment • Protection of deceptive practices: to protect consumers through information (labelling requirement) • Other: quality, trade facilitation.(ex: size of vegetables) Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Principles of the TBT agreement • Avoidance of unnecessary obstacles to trade • Non-discrimination and national treatment • Harmonisation: encourage members to use existing international standards • Equivalence • Mutual recognition of conformity assessment results • Transparency • notifications • national enquiry point Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Distinction between technical regulations and SPS measures • A measure is SPS if its objective is to protect • human life from risks arising from additives, toxins, plant / animal disease • animal life from risks arising from additives, toxins, pests, diseases, disease carrying organisms • plant life from risks arising from pests, diseases, disease carrying organisms • a country from the risks arising from damage caused by the entry, establishment or spread of pests • Measures adopted for other purpose are TBT measures Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Special treatment for DCs • Recognition that developing countries may face difficulties • to conform to developed countries SPS/TBT measures (access to market) • to implement into their countries SPS measures • Special treatment (market access) • provide technical assistance to developing countries • in case of implementation of new measures which may hardly reduce market access, the member have to provide technical assistance • more time to implement new measures Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
But • Technical assistance is insufficient • Restrictive implementation of equivalence: • developed countries look for similarity more than for equivalence • loss of flexibility. • Lack of human resources or expertise to participate to the international organisations : • lack of ownership on SPS measures • difficulties to harmonise and implement standards. Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
The TRIPS Agreement • Trade related intellectual property rights • Obligation to protect inventions and processes . Covers all intellectual property rights • Defines the areas that should be protected • pesticides, plant varieties, geographical indications, trademarks,… • And the means to protect them • Strong opposition on this agreement Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Plant variety protection • The TRIPS agreement • allows members to exclude living being from patentability • but a plant variety protection system is compulsory • for instance the UPOV system • difference between patent and UPOV : farmers’ right to save seeds. Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Geographical indications • Used to identify a good • as originating of a geographical area • which gives it its characteristic • Obligation to provide the legal means to prevent inappropriate use of geographical terms • Art 22 : defines a standard level of protection, all products • GI have to be protected to avoid misleading the public an prevent unfair competition • Art 23: higher level of protection for wine and spirits Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Geographical indications (cont’d) • Two issues are debated in the WTO • Creation of a multilateral register for winne and spirits • Extension of the higher protection to others products (food and handicrafts), beyond wines and spirits (China, EU, Thailand) Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Results of the implementation of WTO on agriculture in developing countries Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Expected results • More export opportunities due to better access to developed countries markets • More stable and reliable international markets, due to the reduction of distortion • Improvement of supply conditions of world market • BUT Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Tariffs obstacles remain • Still high tariffs in OECD countries • tariffs for agricultural products around 35 % • tariffs for industrial products around 4 % • peak tariffs : up to 300 % (some temperate products). Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Duties in some developed countries Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Tariffs escalation (Japan) Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
The main obstacles • Standards and quality requirements • Most of developed countries have strengthened their SPS and TBT measures • For instance, in the EU • implementation of traceability • review of authorised pesticides : most of them suppressed Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Market prices • Increasing of amount spent to supporting farmers by developed countries: shift from Amber box and Blue Box to Green Box • Export support decreased but are still used • WTO definition of dumping : not the common sense (sell under the cost of production) • No regulations of trans national corporate Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005
Trends in agricultural exports Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005