wto(agriculture negotiation)

7/30/2019 wto(agriculture negotiation)

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Presented ByAnu Nain

Roll No. 16

10th Sem.


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Agriculture: Fairer Markets for

Farmers The original GATT did apply to agricultural trade, but

it contained loopholes. For example, it allowedcountries to use some non-tariff measures such as

import quotas, and to subsidize. Agricultural tradebecame highly distorted, especially with the use ofexport subsidies which would not normally have beenallowed for industrial products.

The Uruguay Round produced the first multilateralagreement dedicated to the sector. It was a significantfirst step towards fair competition andless distorted sector.


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The first major reform was the result of the 198694

Uruguay Roundnegotiations, which produced thepresentAgricultureAgreement.

In it, member countries started to close agriculturalloopholes in WTO agreements by

1. binding and cutting tariffs,2. removing import bans or restrictions, and

3. cutting subsidies that distort trade, both in domesticmarkets and on exports.

Poorer countries are allowed more lenient terms, andleast developed countries have not made any reductioncommitments.


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An important area of work in the WTO is monitoringhow governments are implementing their obligationsunder the agreement and discussing issues that arise,in the regular Agriculture Committee.

WTO members agreed to initiate negotiations forcontinuing the agricultural trade reform process oneyear before the end of the implementation period, i.e.by the end of 1999. These talks began in early 2000

under the original mandate of Article 20 of theAgriculture Agreement.

Negotiations since 2000 - brought into the DohaDevelopmentAgendain 2001 - aim to continue the

reform.


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Key dates in the WTO agriculture negotiations


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THE STORY SO FAR

2000:Agriculture negotiations launched (March).2001: Doha Development Agenda launched.Agriculture

included (November)2004: Frameworkagreed (August)2005: Further agreements inHong Kong Ministerial

Conference (December)2006: Draft modalities(June)2007: Revised draft modalities(July)2007: Intensive negotiations with working

Documents (September-January)2008: The July 2008 package full coverage and the chairs report2008: Revised draft modalities (February, May, July and

December)


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The Agriculture Agreement: New

Rules And CommitmentsThe objective of theAgriculture Agreement is to reform

trade in the sector and to make policies more market-oriented. This would improve predictability and security

for importing and exporting countries alike.The new rules and commitments apply to:

1. Market access - various trade restrictions confrontingimports

2. Domestic support - subsidies and other programmes ,including those that raise or guarantee farm gate pricesand farmers incomes

3. Export subsidies and other methods used to makeexports artificially competitive.


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The agreement does allow governments to support

their rural economies, but preferably through policiesthat cause less distortion to trade. It also allows someflexibility in the way commitments are implemented.

Developing countries do not have to cut their subsidiesor lower their tariffs as much as developed countries,and they are given extra time to complete theirobligations.

Least-developed countries dont have to do this at all.Special provisions deal with the interests of countries

that rely on imports for their food supplies, and theconcerns of least-developed economies.


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WTO

AGRICULTURE NEGOTIATIONSIssues raised before and in the current

negotiations

Export

Subsidies

Market

Access

Domestic

Support


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Cont. The negotiations are difficult because of the wide

range of views and interests among membergovernments. They aim to contribute to furtherliberalization of agricultural trade.

This will benefit those countries which can competeon quality and price rather than on the size of theirsubsidies.

That is particularly the case for many developingcountries whose economies depend on an increasinglydiverse range of primary and processed agriculturalproducts, exported to an increasing variety of markets,including to other developing countries.


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EXPORTSUBSIDIES :

Limits on Spending and Quantities The Agriculture Agreement prohibits export subsidies

on agricultural products unless the subsidies arespecified in a members lists of commitments, where

they are listed. The agreement requires WTO members to cut both

the amount of money they spend on export subsidiesand the quantities of exports that receive subsidies.

Some countries, such as India, propose additionalflexibility for developing countries to allow subsidieson some products to increase when subsidies on otherproducts are reduced.


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ASEAN and India, propose scrapping all developed

countries export subsidies while allowing developingcountries to subsidize for specific purposes such asmarketing.

Some developing countries say they should be allowedto retain high tariff barriers or to adjust their currenttariff limits, in order to protect their farmers unlessexport subsidies in rich countries are substantiallyreduced.

After negotiations it is decided that Least-developed

countries do not need to make any cuts.During the six-year implementation period,

developing countries are allowed under certainconditions to use subsidies to reduce the costs of

marketing and transporting exports.


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MARKETACCESS : Tariffs only

The new rule for market access in agricultural products istariffsonly. Before the Uruguay Round, some agriculturalimports were restricted by quotas and other non-tariff

measures. These have been replaced by tariffs that providemore-or-less equivalent levels of protection. (Convertingthe quotas and other types of measures to tariffs in this way

was called tariffication.)

The newly committed tariffs and tariff quotas, covering all

agricultural products, took effect in 1995. Uruguay Roundparticipants agreed that developed countries would cut thetariffs (the higher out-of-quota rates in the case of tariff-quotas) by an average of 36%, in equal steps over six years.Developing countries would make 24% cuts over 10 years.


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For products whose non-tariff restrictions have beenconverted to tariffs, governments are allowed to take

special emergency actions (specialsafeguards) in order toprevent swiftly falling prices or surges in imports fromhurting their farmers.

Four countries used special treatment provisions torestrict imports of particularly sensitive products (mainly

rice) during the implementation period, but subject tostrictly defined conditions, including minimum access foroverseas suppliers.

The four were: Japan, Rep. of Korea, and the Philippinesfor rice; and Israel for sheep meat, whole milk powder andcertain cheeses. Japan and Israel have now given up thisright, but Rep. of Korea and the Philippines have extendedtheir special treatment for rice. A new member, ChineseTaipei, gave special treatment to rice in its first year of

membership, 2002.


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DOMESTIC SUPPORT :

Some You Can, Some You CantThe main complaint about policies which support

domestic prices, or subsidize production in some otherway, is that they encourage over-production. Thissqueezes out imports or leads to export subsidies andlow-priced dumping on world markets.

The Agriculture Agreement distinguishes betweensupport programmes that stimulate productiondirectly, and those that are considered to have nodirect effect.

Domestic policies that do have a direct effect on

production and trade have to be cut back.


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Least-developed countries do not need to make any

cuts. (This category of domestic support is sometimescalled the amber box, a reference to the amber colourof traffic lights, which means slow down.)

1. Measures with minimal impact on trade can be usedfreely - they are in a green box (green as in trafficlights).

2. Also permitted, are certain direct payments tofarmers where the farmers are required to limitproduction (sometimes called blue box measures)


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GREEN BOX BLUE BOX

They include governmentservices such as research,disease control, infrastructureand food security.

They also include paymentsmade directly to farmers that donot stimulate production, suchas certain forms of directincome support, assistance to

help farmers restructureagriculture, and directpayments under environmentaland regional assistanceprogrammes.

These include certaingovernment assistanceprogrammes to encourageagricultural and ruraldevelopment in developing

countries, and Other support on a small scale

(deminimis) when comparedwith the total value of the

product or products supported(5% or less in the case ofdeveloped countries and 10% orless for developing countries).

N i l t t f i lt


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Developed

countries

6 years: 1995-2000

Developing

countries

10 years: 1995-2004

TARIFFS

average cut for all

agricultural products-36% -24%

minimum cut per product -15% -10%

DOMESTIC SUPPORT

total AMS cuts for sector -20% -13%

EXPORTS

value of subsidies -36% -24%

subsidized quantities -21% -14%

Numerical targets for agricultureThe reductions in agricultural subsidies and protection agreed in the Uruguay Round. Onlythe figures for cutting export subsidies appear in the agreement.


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INDIAS STAND IN WTOIndia submitted a very detailed and comprehensiveproposal as part of the ongoing negotiations onagriculture in the WTO in January 2001. It covered allaspects of the negotiations and remains one of thelongest proposals ever submitted by any member.


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G/AG/NG/W/102 (Proposal)India put a proposal in WTO and in it the views of India are:

Agricultural practices in most developing countries arequite different from those of the developed countries as

they are labour intensive, small-scale, low productivityand their governments cannot afford subsidies.

Those poor producers have to encounter and competeboth in the domestic and international markets with the

OECD producers who received subsidies from theirrespective governments averaging US$11,000 per person.

The scenario does not seem to be much of an evenplaying field for developing countries.


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Cont. India shares the views of the Cairns Group on the down

payment to be made by the developed countries on bothdomestic support and export subsidies, which have the

most trade distorting effects in order to even the playingfield between the developed and developing countries.

The argue, that subsidies and protection are needed toensure food security, to support small scale farming, to

make up for a lack of capital, or to prevent the rural poorfrom migrating into already over-congested cities. Indiasproposal is among those that emphasize food securityissues for developing countries.


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Groups in the agriculture negotiationsG-20 ( 23 WTO Members)

Coalition of developing countries pressing for ambitiousreforms of agriculture in developed countries with some

flexibility for developing countries. The G20, also known as the Group of 20 (and,

occasionally, the G21, G23 or G20+) is a bloc of developingnations established on 20 August 2003. The groupemerged at the 5th Ministerial WTO conference, held

in Cancn, Mexico, from 10 September to 14 September2003. The G-20 accounts for 60% of the world's population, 70%

of its farmers and 26% ofworlds agricultural exports


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G-33 ( 46 WTO Members)

Also called Friends of Special Products in agriculture.

Coalition of developing countries pressing for flexibilityfor developing countries to undertake limited market

opening in agriculture.

The G33 is the main proponent of SPs and SSM. On SPs, it

insists on self-selection on the basis of the indicatorsdeveloped.

On SSM, it proposes that this mechanism should be opento all developing countries for all agricultural products.Moreover, the SSM should be automatically triggered byeither import surges or prices falls.

The group is also very vocal on rejecting the developedcountries' proposal of cutting de minimis provision allowedfor developing countries.


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CONCLUSION The agriculture negotiations are difficult because of

the wide range of views and interests among membergovernments, the large number of active participants,

and the complexity of many issues. The aim is to contribute to further liberalization of

agricultural trade, allowing countries to compete onquality and price rather than on the size of their

subsidies. That is particularly the case for manydeveloping countries whose economies depend on anincreasingly diverse range of primary and processedagricultural products, exported to an increasing varietyof markets, including to other developing countries.


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