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WTO agriculture negotiations

WTO agriculture negotiations. WTO agriculture negotiations. 1. Basics. Three pillars and all that jazz. 2. Issues. Agriculture Agreement and current talks. 3. Going for a result. Take agriculture out of the WTO? Or try to strike a deal?. Basics. Issues. Going for a result. 1. Basics.

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WTO agriculture negotiations

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  1. WTO agriculture negotiations

  2. WTO agriculture negotiations 1. Basics Three pillars and all that jazz 2. Issues Agriculture Agreement and current talks 3. Going for a result Take agriculture out of the WTO? Or try to strike a deal? Basics Issues Going for a result

  3. 1. Basics Three pillars and all that jazz Basics

  4. THE PROBLEM: ‘DISTORTION’ Before 1995Agriculture exempt many GATT disciplines Even nowsubsidies: ~ $300 bn per year ($1bn per day) If distorting over-production low prices Poorer countries cannot compete(imports and exports) Tariffs on some products >> 100% ‘Unfair competition’Developing countries complain of ‘uneven playing field’ Access to markets blockedsouth-north, south-south, north-south, north-north Basics

  5. 1986–88 1999–2001 80% 70% 60% 50% 40% 30% 20% 10% Slovak R Mexico Norway EU Poland Czech R OECD R Korea Australia Hungary US Iceland Turkey Japan New Zealand Canada Switzerland THE PROBLEM: ‘DISTORTION’ Agricultural producer support (OECD)% of value of gross farm receipts Basics

  6. THE SOLUTION: TACKLE … THE THREE PILLARS 1. Market access: tariffs, quotas, safeguards, etc 2. Export subsidies (all forms):Direct subsidies, subsidized credit, insurance, food aid, state trading 3. Domestic support (if trade distorting): if affecting prices, production levels BUT … Acceptable policies: e.g. non-distorting subsidies Developing countries: special treatment Skip Basics

  7. THE THREE PILLARS Market access • tariff cuts • flexibility in cutting tariffs • quotas to enable some market access • safeguards to deal with surges and price falls • preferences and preference erosion Developing countries: special treatment Basics

  8. THE THREE PILLARS Export subsidies/competition • export subsidies — cut and eliminate • subsidized exportcredit — cut/eliminate, discipline • exporting state trading enterprises — subsidy in disguise? • food aid — real aid or offloading stocks? Developing countries: special treatment Basics

  9. THE THREE PILLARS Domestic support ‘Three boxes’ traffic light colours • Amber Box slow down: distorts, causing over-supply • Blue Box:distorts, but less because production limited • Green Box go ahead:development projects, environmental protection, income support, insurance, etc.No or minimal distortion Developing countries: special treatment Basics

  10. 2. Issues Agriculture Agreement and current talks Issues

  11. AGRICULTURE AGREEMENT: levelling the field ‘The inadequacy of the rules legitimizes and institutionalizes dumping’[of subsidized low-priced exports on to world markets] 3D/IATP report on human rights, agricultural trade and the WTO • The WTO did not invent subsidies • Governments came to GATT/WTO to try to change things Before the WTO: the sky’s the limit Under the WTO:limits and reductions agreed, first step, phased for adjustment After ‘Doha’ negotiations:more cuts +export subsidies to be scrapped Issues

  12. WHY WAS THE U.R. UNFINISHED BUSINESS? First reforms were modest Cuts in subsidies and protectionThe reductions agreed in the 1986-94 Uruguay Round Developed Developing 6 yrs 10 yrs 1995–2000 1995–2004 Tariffs average cut –36% –24% minimum cut –15% –10% Export subsidies value of subsidies –36% –24%subsidized quantities –21% –14% Domestic support (distorting) cuts in total (AMS) support –20% –13% 3 PILLARS NOTE Least-developed countries: no cuts Issues

  13. 1995 Uruguay Round agreements,new WTO: goods, services intellectual property, … and agriculture 2000 Ag talks start March 2001 Doha Agenda launched November 2003 Cancún ministerial fails September 2004 Frameworks 1 August (‘July package’) 2005 Hong Kong ministerial December 2006 ‘Suspension” 2007 Modalities and end the negotiations? SUMMARY TIME LINE Pre-history(before UR): only goods, almost no constraints on agriculture Now: revised rules new commitments Future: rules revised again,more commitments Issues

  14. WHAT ARE ‘MODALITIES’? The ‘method’: Whatever is needed to make commitments E.g. • ONE MODALITY: Tariffs between 50 and 100% —cut by 75%; except 2% of these can be cut by 33% • RESULTING WORK ON COMMITMENT (‘SCHEDULE’):apply formula to products; bargain over which exceptions • There are modalities in all three pillars,total 20–30 pages • After modalities, 6–9 months workon schedules of commitments • The tighter the modalities,the shorter the time needed afterwards Issues

  15. 2001 DOHA DECLARATION  2004 ‘FRAMEWORKS’  2005 HK DECLARATION HISTORY COUNTS: NEGOTIATIONS BY ‘ACQUIS’ Complex talks narrow down agreement in stages Moving to middle ground ‘Acquis’ = what has been acquired Issues

  16. MARKET ACCESS: TARIFFS This is one of the most difficult questions • Uruguay Round/linear approach: gentler, more flexible – versus – • Swiss formula: more ambitious,steeper cuts on high tariffs; with maximum (cap) set And if you’re heavily into maths ... The Swiss formula: Z = AX/(A+X) where X = initial tariff rate A = coefficient and maximum tariff rate Z = resulting lower tariff rate Issues

  17. MARKET ACCESS: TARIFFS TARIFF FORMULAS: UR/Linear v. Swiss formula A visual indication of the difference in steepness of cuts for different starting tariffs Uruguay Round cuts36% average Swiss formulacoefficient 25% Skip Issues

  18. ‘Banded’ Products categorized by height of starting tariff.Higher bands: stepper cuts ‘Blended’ UR SWISS DUTY-FREE Products categorized by sensitivity TARIFF FORMULAS Attempts to compromise 1. March 2003 draft ‘modalities’:UR approach in 3 bands ‘Banded’ approach • High tariffs [> 90%?] — big cuts [60% ave, 45% min] • Middle range [15–90%?] — medium cuts [50% ave, 35% min] • Low tariffs [<15%?] — small cuts [40% ave, 25% min] 2. Cancún ‘frameworks’:‘Blended’ approach • Some products: UR approach • Some products: Swiss formula • Some products: duty-free Issues

  19. ‘Tiered’ (‘banded’) Products categorized by height of starting tariff.Higher tiers: stepper cutsType of formula and thresholds for tiers? Still to be negotiated MARKET ACCESS: 2004 framework, HK Declaration Substantial improvementsin market access for all products Tariff formula:4 tiers • ‘progressive’: higher tiers -> steeper cuts • ‘sensitive products’: flexibility for all, but ‘substantially’ better market access • to be negotiated —which formulas, sensitive products, quotas, etc Developing countries • more time, gentler cuts • ‘special products’ — flexibility/exemptions • ‘special safeguard mechanism’ — easier, temporary; surges & price falls • least-developed — no reductions • ‘tropical products’ and narcotics replacement crops • preferences — ‘erosion’ to be ‘addressed’ Issues

  20. MARKET ACCESS: DEVELOPING COUNTRIES Some alliances and issues — major battleground THE RADICALS Confident traders THE CONSERVATIVES Cautious traders BangladeshCambodiaMyanmarMaldivesNepal(non-ACP LDCs) CAIRNS GROUP G–33 ‘Special products’‘Special safeguardmechanism’ G–20 Compromisingcoalition Indonesia Pakistan Philippines Malaysia, Colombia, Costa Rica, etc Brazil, Thailand, Argentina, etc Mauritius Sri Lanka, Turkey, etc Rep.Korea Ch.Tapei China, India, etc G–10    ACP Preferences Nigeria, Tanzania, etc   Kenya, Jamaica, etc Costa Rica, El Salvador, etc(no ACP preferences) Skip Issues

  21. DOMESTIC SUPPORT Reminder ‘Three boxes’ traffic light colours • Amber: distort, causing over-supply. So reduce, but how much? • Blue: distort, but has production limits. So keep, reduce, eliminate? • Green: development projects, environmental protection, income support. Do any distort? If so, move to amber? Issues

  22. DOMESTIC SUPPORT 2004 frameworkHK Declaration Substantial cuts, all products Overall: amber + de minimis + blue 3 tiers EUJapan / USthe rest (+G-10 contribution) • tiered formula cut + 20% downpayment (1st year) Amber Box (AMS) • tiered formula cuts, so that higher levels are cut more • caps by product, cuts on some products (cotton?) Amberwhat base period for products? De minimis • reduced — amount to be negotiated • flexibility for developing countries (specified) New Blue disciplines and/or cuts? Blue Box • max (‘cap’) at 5% of production + some flexibility • new additional type Greendisciplines? Green Box: easier for development; monitoring Cottondeeper, faster cuts Developing countries: special treatment Issues

  23. 100,000 80,000 60,000 40,000 20,000 0 Switzer- EU US Japan R.Korea Norway Canada land 47,318 16,862 6,705 1,305 2,258 1,383 631 Amber Box 304 7,435 292 409 - - 741 De minimis 19,558 - 831 - - 984 - Blue box 52 S&D Art.6.2 19,694 49,749 24,081 4,590 2,190 548 1,177 Green box 5,835 147 0 3 292 77 0 Export subsidies DOMESTIC SUPPORT Basis for tiers: amber, amber+d.m.+blue 3 tiers EUJapan / USthe rest (+G-10 contribution) Issues

  24. EXPORT SUBSIDIES 2004 framework, HK Declaration • ‘Parallel elimination’ of all forms of export subsidies • Disciplines on measures with equivalent effect Elimination — 2013, substantial cut in ‘first half’, cotton 2006 All forms — ‘parallelism’ = same end-date for subsidized credit/ credit guarantees/ insurance/ food aid/ state trading … • max 180-day repayment on credit, etc • disciplines to be negotiated:•credit, to ensure not subsidized•food aid, with ‘safe box’ for true emergencies•exporting state trading enterprises Developing countries — more time, gentler cuts,extra categories allowed, taking care of net food importers Issues

  25. EXPORT SUBSIDIES Current technical questions Elimination — What timetable to meet 2013 end-date? All forms — ‘parallelism’: Disciplines to be negotiated: • credit: further progress on defining commercial terms • food aid: safe box (emergencies declared by UN, etc, but definitions too?) How to avoid commercial displacement: Cash only? No re-export/monetization/in-kind? • exporting state trading enterprises (commercial terms? Price discrimination, monopoly power?) Developing countries — some issues raised, but … later Cotton — elimination settled Skip Issues

  26. The Cotton issue • Cotton 4 countries: Benin, Burkina Faso, Chad and Mali • July 2004 recommended rapid and ambitious treatment for Cotton, Creation of the Sub-Committee on Cotton • Hong Kong: Export Subsidies eliminated, DFQF • High Level Meeting on Cotton in Geneva:15-16 March

  27. The Cotton issue • The developmental aspects of Cotton: a role for Aid for Trade? • Challenges ahead: • Progress in the Modalities on agriculture as a whole and DS particularly; • US Farm bill reform 2007; • Link between the US- Brasil Dispute on Cotton and US Farm bill reform

  28. Current developments: Chair’s text on 30 April 2007 • This “challenges paper” intend to be a trigger • Onus on G4/G6 • A possible compromise: • for cuts by the US in domestic support: $15-17 billion • And on sensitive products: could be between 4 and 5% of tariff lines • Difficulties remain : • in Market Access on cuts in the higher band:60% for EU 70 or 75% for the US • No convergence seen on special products: G33 asking for 20%

  29. PROCESS Full membership, bigger roominitial reactions/consensus Key players(Room F and other small groups)technical details, drafting Full membership, smaller roomtechnical details/reactions(Room D) ‘Inclusive’: all coalitions represented in small meetings‘Transparent’: reps report back to coalitions Skip Issues

  30. NEGOTIATIONS CHAIRPERSONCRAWFORD FALCONER ALTERNATIVELY: CONCENTRIC CIRCLES Big meetings, small meetings Formal plenaryFull membership Speeches/consensus decisions Informal meeting All members, no recordreports from consultations, /reactions ‘Room F’Small group consultations Key players,reps. of all groupsconversational, hard bargaining, drafting Bilateral, very small group consultations ‘Inclusive’: all coalitions represented in small meetings‘Transparent’: reps report back to coalitions Skip Issues

  31. 3. Going for a result Take agriculture out of the WTO? Or try to strike a deal? Going for a result

  32. DIFFICULT … • Finding a way to reach agreement • Appreciating the range of interests Key underlying question for negotiators: What does it take to reach a (good) deal? Going for a result

  33. KEY PLAYERS AGRICULTURE Just a sample of the groupings … COALITIONS AND MAJORS Africans, least-developed, ACP(together = ‘G90’, but with 64 WTO members) Cairns Group Australia, NZ, S.Africa, Brazil, Argentina, Thailand, Philippines, etc European Union G10 Switzerland, Norway, Japan, S.Korea, Ch.Taipei, etc G20+/– India, Brazil, China, S.Africa, etc G33 Indonesia, etc lobbying for ‘special products’ ‘Like minded’India, Pakistan, Caribbean, etc ‘RAMs’ new members (‘recently acceded’ members) Small island developing states United States CONSENSUS-BUILDERS US-EU (summer 2003) The Five Australia, Brazil, EU, India, US (summer 2004) Going for a result

  34. 1.What’s needed to achieve a result? Result = consensus Vital for consensus-building: • Understanding all concerns • The negotiators’ concern:how to sell the deal Worth studying: • Chairs’ summaries - Reflecting all concerns - Selling the deal: allsharing the ‘pain’ (even if some share more than others) Going for a result

  35. 2.Onus only on the rich? ‘Yet again rich countries are blocking progress behind the scenes while publicly proclaiming their willingness to reform trade so that it promotes development. … The EU and US must immediately change their attitude or they will fail the poor.’ Oxfam press release, 28 July 2005 • No consensus:only because of the US-EU? • What about G-10? • What about South-South? Going for a result

  36. 3. The South-South debate ‘Farmers and processors who can take advantage of export opportunities tend to be larger-scale and more capital-intensive …’ Oxfam: ‘Kicking down the door: How upcoming WTO talks threaten farmers in poor countries’, April2005 Wait a minute … These farmers are poor. They lack capital. They depend on exports. Most of their exports go to other developing countries. There are millions of them. Skip Going for a result

  37. 3. The South-South debate Poor, subsistence farmers also produce for export, including exports to other developing countries, and the range of products they can produce is limited. Therefore these farmers’ interests in south-south trade also need to be taken into account Summary: Thai Ambassador in agriculture negotiations, June2005 • G-33 understand: working on indicators for SP criteria • G-20 appreciate this • Remains difficult. If unsolved:no consensus, no reform Going for a result

  38. 3. The South-South debate Erosion of preferences • Also bitterly debated • Perhaps even more difficult than SPs Complicates call for developed countries to lower barriers Who should they export to? Going for a result

  39. 4.Contributions to selling the deal? • To sell the deal, governments want to say: ‘pain is shared’ • But no need to share equally ‘For these products we really don’t have high ambitions.’ If a case can be made about the vulnerability of the producers, then smaller cuts … or some other means could be used to provide no more than a minimal amount of market access Summary: US on SPs, in agriculture talks, July2005 • G-33 work on SP indicators aims to make the case Going for a result

  40. 4.Contributions to selling the deal? Some creative thinking? E.g. The ‘ceiling tariffs’ issue? • Kenya, Zimbabwe, Nigeria, Cameroon, Jamaica paper:tariffs high, all products, as S&D -> all their tariffs in highest band, steepest cuts, ‘undermining S&D’ Country bound ceiling% Kenya 100 Zimbabwe 143.4 Nigeria 150 Cameroon 80 Jamaica 97.4 Going for a result

  41. 4.Contributions to selling the deal? But … ‘water’ Country bound applied% ave % Kenya 100 20.1 Zimbabwe 143.4 26.1 Nigeria 150 53.9 Cameroon 80 22.0 Jamaica 97.4 15.8(all negligible variance) Bound tariff ‘Water’ Applied tariff =67-85% below bound E.g. 50% cut • No adjustment required • Only ‘policy space’ • But sensitive products, SPs, SSM Viable contribution to consensus-building? Depends on value of ‘policy space’ Going for a result

  42. Water % Average bound rate cut by 15 per cent (%) 120 100 80 60 40 20 Fiji 0 Cuba Bolivia Antigua &Barbuda Trinidad & Tobago Grenada Mongolia Mauritius Dominica Paraguay Barbados Honduras Papua NG Nicaragua Guatemala Saint Lucia El Salvador St Vincent &the Grenadines Dominican Rep St Kitts & Nevis Small economies: tariff cuts and ‘water’ Average applied rate % Going for a result

  43. 5. Process? ‘A more democraticWorld Trade Organization which gives poor countries a stronger voice.’ http://www.maketradefair.com Unavoidable:Mix of plenary, informal, small group meetings Must be: • inclusive • transparent -> poorer countries always represented When deadlock in WTO:members go outside WTO Going for a result

  44. 6. Finally: ‘Take ag. out of the WTO’? The WTO is the only place where agricultural subsidies are negotiated Going for a result

  45. And in the end … IN THE END:Trade agreements do not create trade They create trade opportunities. > The difference is significant Going for a result

  46. MORE ON THE WTO WEBSITE Agriculture negotiations/Cotton Sub-Committeehttp://www.wto.org/english/tratop_e/agric_e/negoti_e.htm or follow:www.wto.org > trade topics > (goods) agriculture negotiations Background explanations80-page backgrounder explaining the whole negotiation. Browse or downloaded here: www.wto.org/english/tratop_e/agric_e/negs_bkgrnd00_contents_e.htm or follow: www.wto.org > trade topics > (goods) agriculture negotiations > backgrounder

  47. The World Trade OrganizationCentre William Rappardrue de Lausanne 154CH–1211 Geneva 21Switzerland Tel: +41 (0)22 739 51 11 Fax: +41 (0)22 739 54 58 email: enquiries@wto.org website: www.wto.org

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