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Workshop on WTO Accession UNDP/UNCTAD

Goods Commitments

Belarus, October 2008

United Nations Conference on Trade and DevelopmentUnited Nations Conference on Trade and Development

Ralf PetersTrade Negotiations and Commercial Diplomacy Branch, DITC

UNCTAD, Geneva

WTO and GATT

Umbrella AGREEMENT ESTABLISHING WTO

Goods Services Intellectual property

Basic principles GATT GATS TRIPS

Additional details Other goods agreements and annexes

Services annexes

Market access commitments

Countries’ schedules of commitments

Countries’ schedules of commitments(and MFN exemptions)

Dispute settlement DISPUTE SETTLEMENT

Transparency TRADE POLICY REVIEWS

Source: WTO

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GATT Basic principles: Trade without discrimination

• MFN-clause (Most-Favoured-Nation): Art. ICountries cannot (normally) discriminate between their trading partners. E.g. give the same tariff to all trading partners (between foreign suppliers)

• National treatment: Art. IIIOnce goods have cleared customs, imported goods must be treated equally to domestically-produced goods (between domestic and foreign supplier)

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Other important GATT Provisions

Article • 2: Schedule of Concessions (Bound rates: maximum ceiling level,

mentions exceptions such as anti-dumping, normally Article VI)• 11: Elimination of quantitative restrictions (Export restrictions allowed

for food security)• 19: Special Safeguard (emergency action on imports if quantity increased

AND causes or threatens to cause serious injury; right to prevent injury)• 20: General exceptions (protect human, animal or plant life or health)• 24: Free-trade Agreements (only under conditions) • 28: Modification of schedules (negotiate change but pay compensation)

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Outline of the Agreement on Agriculture

“Three Pillars”

Domestic Support• AMS reduction

• Green Box

• de minimis

Market Access• Tariffication

• Tariff reduction

• Minimum access

• Special Safeguard

Export Subsidies

• Reduction

• Prohibition of new subsidies

• Special and Differential (S&D) Treatment for DCs and LDCs

• Related Agreements, e.g. Marrakesh Decision

• Establishment of a Committee on Agriculture

• Continuation of the reform process

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Tariff Schedule

ID HSCODE2002 DESC Bound Final boundImplementationInterim INRs ODCs

1 0101Live horses, asses, mules and hinnies.

2 010110-Pure-bred breeding animals

3 01011010 --Of Arab breed 5 CE25,US 04 01011020 --Other 5 US 05 010190 -Other6 01019010 --Horses for sport 5 07 01019020 --Ponies 5 08 01019030 --Asses 15 09 01019040 --Mules 15 0

10 01019050 --Hinnies 15 011 01019090 --Other 5 0

Saudi Arabia

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Market Access: Current Tariffs

Bound Applied

Developed countries 38 34

Developed countries 4 3Developing countries 20 13

25Agriculture

Non-Agriculture

Developing countries 61

Source: UNCTAD TRAINS and UNCTAD calculations based on WTO CTS

Specific Problems:• Tariff escalation• Tariff peaks

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MARKET ACCESS COMMITMENTSMARKET ACCESS COMMITMENTSAgricultureAgriculture

Accession

negotiatio

ns

EntryDate

Average Bound (%)

Staging(years) TRQ SSG

EntryDate

Average Bound (%)

Staging(years) TRQ SSG

Ecuador 01/96 25.8 5 YES YES Moldova 07/01 12.4 4 - -

Bulgaria 12/96 34.9 5 – 6 YES YES China 12/01 15.7 9 YES -

Mongolia 01/97 18.4 0 - - C. Taipei 01/02 13.1 5 YES YES

Panama 09/97 26.1 14 YES YES Armenia 02/03 14.8 0 - -

Kyrgyzstan 12/98 11.7 0 - - Macedonia 04/03 15 4 YES -

Latvia 02/99 33.6 8 YES - Nepal 04/04 41.4 2 - -

Estonia 11/99 17.7 4 - - Cambodia 10/04 28.1 7 - -

Jordan 04/00 25 10 - Saudi Arabia12/05 12.1 5 - -

Georgia 06/00 12.1 5 - - Viet Nam 01/07 20.9 7 YES -

Albania 09/00 10.6 7 - - Tonga 07/07 19.2 0 - -

Croatia 11/00 10.4 5 YES - Ukraine 05/08 10.6 5 YES -

Oman 11/00 30.5 4 - - Cape Verde 07/08 19.3 5 - -

Lithuania 05/01 15.6 7 YES -

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0 10 20 30 40 50 60

WTO average

Moldova

Lithuania

Oman

Croatia

Albania

Georgia

Jordan

Estonia

Latvia

Kyrgyzstan

Panama

Mongolia

Bulgaria

Ecuador

Accession

negotiatio

ns

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CHINA CHINESE TAIPEI Saudi ArabiaEntry date Dec 2001 Jan 2002 Dec 2005

Tariffs

Average 16 % 13 % 12 %

Max 65 % (cereal) 500 % (deer velvet)340 % (chicken offal)

200 % (tobacco)Specific tariffs

Mostly in 0 – 25 % 0 – 25 % 5 - 15 %

TRQs Wheat, corn, rice, soybean oil, palm oil, rapeseed oil, sugar, wool, cotton

Pork, chicken, milk, peanuts, red bean, garlic, sugar, fresh fruits, sugar, dried mashroom

None

e.g RiceIn-quota: 1 %MFN: 65 %Quantity: 9,636,000 mtStaging: 4 years

SugarIn-quota: 12.5 %MFN: 143 %Quantity: 205,000 mtStaging: 4 years

Accession

negotiatio

ns

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CHINA CHINESE TAIPEI Saudi ArabiaSSG None 77 tariff lines None

Pork, poultry, milk, garlic, red beans, fresh fruits (pears, persimmons), peanuts, sugar

Special treatment None

Rice: import prohibitionQuantity: 205,000 mt

Some alcohol, pork:import prohibited

Accession

negotiatio

ns

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Domestic Support

• In WTO terminology, domestic support is classified by “boxes” according to their effect on production and trade

Amber box: trade distorting support, to be reduced

Blue box: production limiting support

Green box: not or minimal distorting support

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De minimisDe minimis DevelopmentDevelopmentBlue BoxBlue Box

• Research• Training • Extension• Infrastructure• Pest & disease control• Public stockholding• Domestic food aid • Decoupled income

support• Support to structural

adjustment

etc.

Amber Box

Green BoxGreen BoxProduct specific support• Market price support• Payment on output• Input subsidies• Investment subsidies

Non-product specific support

Amber BoxAmber Box

To be reduced & bound Domestic Support

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Domestic Support COMMITMENTSDomestic Support COMMITMENTSAccession

negotiatio

ns

AMSStaging(years)

de minimis

Exp.Sub. AMS

Staging(years)

de minimis

Exp.Sub.

Ecuador - - 10 0 Moldova 20% cut 4 5 0

Bulgaria 79% cut 2 5 Yes China - - 8.5 0

Mongolia - - 10 0 C. Taipei 20% cut 8 10 0

Panama - - 10 Yes Armenia - - 5 (10 until 2008) 0

Kyrgyzstan - - 5 0 Macedonia 20% cut 4 5 0

Latvia - - 5 (8 until 2003) 0 Nepal - - 10 -

Estonia - - 5 0 Cambodia - - 10 -

Jordan 13% cut 7 10 0 Saudi Arabia 13% cut 10 10 0

Georgia - - 10 0 Viet Nam Yes, no cut - 10 0

Albania - - 10 0 Tonga - - 10 0

Croatia 20% cut 5 5 0 Ukraine Yes, no cut - 5 0

Oman - - 10 0 Cape Verde - - 10 -

Lithuania 15% cut 5 5 0

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ISSUES FOR AGRICULTURAL NEGOTIATIONSISSUES FOR AGRICULTURAL NEGOTIATIONSMarket access

Tariffs Bind & evtl. reduce

Non-tariff barriers Eliminate

Tariff rate quotas ?

Safeguard ?

Agri policies

Farm subsidies

(Amber) Bind & Reduce

(Blue) ?

(Green) Provide information

Export subsidies Bind & eliminate or reduce

Other trade policies

State trading enterprises Article XVII of the GATT

Taxation regime Article III of the GATT

Product quality standard Agreements on SPS, TBT

Accession

negotiatio

ns

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Multilateral TrackMultilateral Track

Working Party (WP) Working Party (WP) meetingsmeetings

(negotiations on rules)(negotiations on rules)

1.1. Memorandum of Trade RegimeMemorandum of Trade Regime

2.2. Questions & repliesQuestions & replies

3.3. Working Party ReportWorking Party Report

Negotiating ProcessNegotiating ProcessAccession

negotiatio

ns

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Doha: Negotiating Mandate

• Single undertaking– Impl. Issues and SDT review

– Agriculture

– Services Market access (reduction of trade barriers)

– NAMA

– Rules (AD, SCM & RTAs)

– TRIPS

– Trade and Environment

• Singapore issues– Trade Facilitation (part of single undertaking)

• Non single undertaking– DSU Review

AD = Anti DumpingSCM = Subsidies Countervailing MeasuresRTA = Regional Trade agreementsTRIPS = Trade Related Interlectual PropertyDSU = Dispute Settlement Understanding

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Market Access: Agriculture

Formula:Formula:line-by-lineline-by-line

increasing cutsincreasing cuts

•Level of ambition, S&D?•Exporter – importer•Dev’ed – dev’ing•Preferences

Flexibilities:Flexibilities:Exempt some Exempt some lines, SP & SePlines, SP & SeP

Special Products (SP) Products essential to achieve food security, livelihood security and rural development Sensitive Products (SeP):Selected number of tariff lines will receive flexibility in tariff cuts (but access is improved)

Initial tariffs:Initial tariffs:Bound ratesBound rates

Result:Meaningful better access?Protect vulnerable farmersStart

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Draft Modalities Text July 2008:

Recently acceded membersMarket Access

• Moderate cuts under the tiered formula by 8 ad valorem percentage points in each band

• Exempt their final bound tariffs at or below 10 per cent

• VRAMS and SLI_RAM_EIT completely exempted from cuts

• Overlapping commitments? Start of implementation for such tariff lines one year after the end of implementation of accession commitment

• Implementation period for RAMs prolonged by up to two years after the end of the developing countries’ implementation period

VRAMs: Very recently acceded members (Saudi Arabia, Macedonia, Vietnam, Tonga, Ukraine); SLI_RAM_EIT: Small low income RAMs with economies in transition

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Draft Modalities Text July 2008:

Recently acceded membersDomestic Support

• OTDS and AMS cuts: VRAMs and SLI_RAM_EIT exempted; other RAMs 2/3 of cuts

• De minimis: VRAMS and SLI_RAM_EIT exempted; other RAMs with 5% de minimis 1/3 of cuts + five years longer implementation period

• For RAMs, the maximum permitted value of support shall be 5 per cent of the average total value of agricultural production in the 1995-2000 period

VRAMs: Very recently acceded members (Saudi Arabia, Macedonia, Vietnam, Tonga, Ukraine); SLI_RAM_EIT: Small low income RAMs with economies in transition

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Merchandise Trade: Important factors for Acceding Countries

• Development strategy

• Advantages of being a WTO member, e.g. - market access (tariffs, NTBs)- attracting investments- dispute settlement - rule-making - national lobby groups- domestic reforms, …

• Low tariffs: good for consumers and imported inputs

Offensive interestsAccessio

n

negotiatio

ns

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Merchandise Trade:Important factors for Acceding Countries

• Protect some sensitive industries (infant industries)

• Maintain tariff revenue

• Recognition for unilateral liberalisation

=> Starting negotiations from applied rates (no rule)

• Formula does not apply BUT

• Members take impact on their tariffs into account

• Sectorials: Acceding C. may be asked to participate

• New rules will apply

• New commitments reduce gap

Defensive Interests

Defensive Interests

Doha Round

Challenges in addition to advantages of WTO

Link

Importance of Agricultural Sector

• Value added of agricultural sector in developing countries:9 per cent

• Employment: 38 per cent

• Rural population even higher

Countries Value added in agriculture (% of GDP)

Employment in agriculture (% of total)

High income 2 3Midle income 9 38Least-developed 32 71World 5 38

10 per cent of

world trade

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European Union: bound and applied tariff rates

Note: New AVEs (Paris), Five products with tariffs above 500% not plotted.

0

50

100

150

200

250

300

350

400

450

1 159 317 475 633 791 949 1107 1265 1423 1581 1739 1897 2055

Olive oil, refinedSugar, raw

Tea

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Developing countries: bound and applied tariff rates

Kenya bound and applied tariffs

0

20

40

60

80

100

120

0 200 400 600 800

bound

applied

Number of tariff lines

Tar

iffs

in p

er c

ent

Bound at ceiling level

Lower applied rates

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Related WTO Agreements

• All WTO agreements and understandings on trade in goods apply to agriculture (e.g. customs valuation, emergency safeguard measures)

• Where there is a conflict: AoA prevails

Agreement on Agriculture

Sanitary and Phytosanitary Measures (SPS)

Technical Barriers to Trade (TBT)

Trade –Related Aspects of Intellectual Property

Rights (TRIPs)Marrakesh Decision for LDC and NFIDC

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MARKET ACCESS COMMITMENTSMARKET ACCESS COMMITMENTSnon-agriculturenon-agriculture

Accession

negotiatio

ns

EntryDate

Average Bound (%)

Max ad valorem

Average Applied

EntryDate

Average Bound (%)

Max ad valorem

Average Applied

Ecuador 01/96 21.1 40 Moldova 07/01 6 20 4.1

Bulgaria 12/96 23.6 40 8.8 China 12/01 9.1 50 9.6

Mongolia 01/97 17.3 30 C. Taipei 01/02 4.8 90

Panama 09/97 22.9 81 7 Armenia 02/03 7.5 15 2.3

Kyrgyzstan 12/98 6.7 20 4.8 Macedonia 04/03 6.2 25.5 8.7

Latvia 02/99 9.4 55 2.2 Nepal 04/04 23.7 60 13.7

Estonia 11/99 7.3 30 0.1 Cambodia 10/04 17.7 42.5 15.9

Jordan 04/00 15.2 30 12.2 Saudi Arabia12/05 10.5 20 6

Georgia 06/00 6.5 20 6.9 Viet Nam 01/07 12.4 100 15.7

Albania 09/00 6.6 20 5.6 Tonga 07/07 17.4 20

Croatia 11/00 5.5 25 4 Ukraine 05/08 4.8 25

Oman 11/00 11.6 20 7.2 Cape Verde 07/08 15.3 55

Lithuania 05/01 8.4 30 2.4