basicsissuesgoing for a result wto agriculture negotiations
TRANSCRIPT
Basics Issues Going for a result
WTO agriculture negotiations
Basics Issues Going for a resultBasics Issues Going for a result
1. Basics
2. Issues
3. Going for a result
Three pillars and all that jazz
Agriculture Agreement and current talks
Take agriculture out of the WTO? Or try to strike a deal?
WTO agriculture negotiations
Basics Issues Going for a resultBasics
1. BasicsThree pillars and all that jazz
Basics Issues Going for a result
Before 1995Agriculture exempt many GATT disciplines
Even nowsubsidies: ~ $300 bn per year ($1bn per day)
Tariffs on some products >> 100%
‘Unfair competition’Developing countries complain of ‘uneven playing field’
If distorting
Poorer countries cannot compete(imports and exports)
Access to markets blockedsouth-north, south-south, north-south, north-north
THE PROBLEM: ‘DISTORTION’
over-production low prices
Basics
Basics Issues Going for a result
10%
20%
30%
40%
50%
60%
70%
80%
Agricultural producer support (OECD)
% of value of gross farm receipts
Switzerland
Canada
Hungary
Czech R
New Zealand
AustraliaPoland
Mexico
Turkey
US
OECD
EU
Japan
Iceland
R Korea
NorwaySlovak R
1986–88 1999–2001
THE PROBLEM: ‘DISTORTION’
Basics
Basics Issues Going for a result
THE SOLUTION: TACKLE …
3. Domestic support (if trade distorting): if affecting prices, production levels
2. Export subsidies (all forms):Direct subsidies, subsidized credit, insurance, food aid, state trading
THE THREE PILLARS
1. Market access: tariffs, quotas, safeguards, etc
BUT …Acceptable policies: e.g. non-distorting subsidies
Developing countries: special treatmentBasics
Skip
Basics Issues Going for a result
THE THREE PILLARS
• 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
Market access
Basics
Basics Issues Going for a result
• export subsidies — cut and eliminate• subsidized export credit —
cut/eliminate, discipline• exporting state trading enterprises —
subsidy in disguise?• food aid — real aid or offloading stocks?
Developing countries: special treatment
THE THREE PILLARSExport subsidies/competition
Basics
Basics Issues Going for a result
Developing countries: special treatment
‘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
THE THREE PILLARSDomestic support
Basics
Basics Issues Going for a result
2. IssuesAgriculture Agreement and current talks
Issues
Basics Issues Going for a result
Before the WTO: the sky’s the limit
‘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
AGRICULTURE AGREEMENT: levelling the field
Under the WTO:limits and reductions agreed, first step, phased for adjustment
After ‘Doha’ negotiations:more cuts +export subsidies to be scrapped
• The WTO did not invent subsidies• Governments came to GATT/WTO to try to change things
Issues
Basics Issues Going for a result
WHY WAS THE U.R. UNFINISHED BUSINESS?First reforms were modest
Cuts in subsidies and protectionThe reductions agreed in the 1986-94 Uruguay Round
NOTE Least-developed countries: no cuts
Developed Developing
value of subsidies –36% –24%subsidized quantities –21% –14%
Export subsidies
minimum cut –15% –10%average cut –36% –24%
Tariffs
6 yrs 10 yrs1995–2000 1995–2004
3 PILLARS
cuts in total (AMS) support –20% –13%Domestic support (distorting)
Issues
Basics Issues Going for a result
SUMMARY
Pre-history(before UR): only goods, almost no constraints on agriculture
Now: revised rules new commitments
TIME LINE
1995 Uruguay Round agreements,new WTO: goods, services intellectual property, … and agriculture
2001 Doha Agenda launched November
2004 Frameworks 1 August (‘July package’)
Future: rules revised again,more commitments
2006 ‘Suspension”
2003 Cancún ministerial fails September
2005 Hong Kong ministerial December
2000 Ag talks start March
Issues
2007 Modalities and end the negotiations?
Basics Issues Going for a result
• ONE MODALITY: Tariffs between 50 and 100% —cut by 75%; except 2% of these can be cut by 33%
WHAT ARE ‘MODALITIES’?The ‘method’: Whatever is needed to make
commitments
E.g.
Issues
• 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
Basics Issues Going for a result
HISTORY COUNTS: NEGOTIATIONS BY ‘ACQUIS’Complex talks narrow down agreement in stages
Moving to middle ground
‘Acquis’ = what has been acquired
2001 DOHA DECLARATION 2004 ‘FRAMEWORKS’ 2005 HK DECLARATION
Issues
Basics Issues Going for a result
• Uruguay Round/linear approach: gentler, more flexible
• Swiss formula: more ambitious,steeper cuts on high tariffs; with maximum (cap) set
The Swiss formula:
Z = AX/(A+X)whereX = initial tariff rateA = coefficient and maximum tariff rateZ = resulting lower tariff rate
And if you’re heavily into maths ...
MARKET ACCESS: TARIFFSThis is one of the most difficult questions
– versus –
Issues
Basics Issues Going for a result
6% per year cuts
0
20
40
60
80
100
120
140
160
Year 0 Year 1 Year 2 Year 3 Year 4 Yea r 5 Year 6
Tariff
Start 150%Start 125%Start 100%Start 75%Start 50%Start 25%Start 10%
Sw iss form ula. Coeffi cient=25
0
20
40
60
80
100
120
140
160
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Tariff
S tart 150%S tart 125%S tart 100%S tart 75%S tart 50%S tart 25%S tart 10%
Uruguay Round cuts36% average
Swiss formulacoefficient 25%
A visual indication of the difference in steepness of cuts for different starting tariffs
MARKET ACCESS: TARIFFSTARIFF FORMULAS: UR/Linear v. Swiss formula
Issues
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Basics Issues Going for a result
1. March 2003 draft ‘modalities’:UR approach in 3 bands ‘Banded’ approach
• Some products: duty-free• Some products: Swiss formula• Some products: UR approach
2. Cancún ‘frameworks’:‘Blended’ approach
• Low tariffs [<15%?] — small cuts [40% ave, 25% min]
• Middle range [15–90%?] — medium cuts [50% ave, 35% min]
• High tariffs [> 90%?] — big cuts [60% ave, 45% min]
‘Banded’
Products categorized by height of starting tariff.Higher bands: stepper cuts
‘Blended’
Products categorized by sensitivity
UR
SW
ISS
DU
TY
-FR
EE
TARIFF FORMULASAttempts to compromise
Issues
Basics Issues Going for a result
• ‘sensitive products’: flexibility for all, but ‘substantially’ better market access
Tariff formula: 4 tiers
• ‘special safeguard mechanism’ — easier, temporary; surges & price falls
• ‘special products’ — flexibility/exemptions
• more time, gentler cuts
Developing countries
• to be negotiated —which formulas, sensitive products, quotas,
etc
• ‘progressive’: higher tiers -> steeper cuts
• least-developed — no reductions
• ‘tropical products’ and narcotics replacement crops
• preferences — ‘erosion’ to be ‘addressed’
Substantial improvementsin market access for all products
‘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
Issues
Basics Issues Going for a result
THE RADICALSConfident traders
THE CONSERVATIVESCautious traders
G–10
MARKET ACCESS: DEVELOPING COUNTRIES Some alliances and issues — major battleground
Issues
G–33‘Special products’
‘Special safeguardmechanism’
ACPPreferences
CAIRNS GROUP
G–20Compromisingcoalition
Brazil, Thailand,
Argentina, etc
Malaysia, Colombia, Costa Rica, etc
IndonesiaPakistan
Philippines
Sri Lanka, Turkey, etcChina, India, etc
Nigeria, Tanzania,
etc Kenya, Jamaica, etc
Mauritius
Rep.Korea Ch.Tapei
BangladeshCambodiaMyanmarMaldivesNepal(non-ACP LDCs)
Costa Rica, El Salvador, etc(no ACP preferences) Skip
Basics Issues Going for a result
‘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?
DOMESTIC SUPPORTReminder
Issues
Basics Issues Going for a result
Substantial cuts, all products
Overall: amber + de minimis + blue
• caps by product, cuts on some products (cotton?)
• tiered formula cuts, so that higher levels are cut more
Amber Box (AMS)
• tiered formula cut + 20% downpayment (1st year)
• flexibility for developing countries (specified)
• reduced — amount to be negotiated
De minimis
• new additional type
• max (‘cap’) at 5% of production + some flexibility
Blue Box
Green Box: easier for development; monitoring
Developing countries: special treatment
3 tiersEU
Japan / USthe rest
(+G-10 contribution)
Amber what base period for
products?
New Blue disciplines and/or
cuts?
Green disciplines?
Cotton deeper, faster cuts
DOMESTIC SUPPORT2004 framework HK Declaration
Issues
Basics Issues Going for a result
0
20,000
40,000
60,000
80,000
100,000
Amber Box 47,318 16,862 6,705 1,305 2,258 1,383 631
De minimis 304 7,435 292 409 - - 741
Blue box 19,558 - 831 - - 984 -
S&D Art.6.2 52
Green box 19,694 49,749 24,081 4,590 2,190 548 1,177
Export subsidies 5,835 147 0 3 292 77 0
EU US Japan R.Korea Switzer-land Norway Canada
3 tiersEU
Japan / USthe rest
(+G-10 contribution)
DOMESTIC SUPPORTBasis for tiers: amber, amber+d.m.+blue
Issues
Basics Issues Going for a result
Elimination — 2013, substantial cut in ‘first half’, cotton 2006
• max 180-day repayment on credit, etc
All forms — ‘parallelism’ = same end-date for subsidized credit/ credit guarantees/ insurance/ food aid/ state trading …
• 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
• ‘Parallel elimination’ of all forms of export subsidies• Disciplines on measures with equivalent effect
EXPORT SUBSIDIES2004 framework, HK Declaration
Issues
Basics Issues Going for a result
Elimination — What timetable to meet 2013 end-date?
All forms — ‘parallelism’:
Disciplines to be negotiated:
Developing countries — some issues raised, but … later
• 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?)
Cotton — elimination settled
EXPORT SUBSIDIESCurrent technical questions
Issues
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Basics Issues Going for a result
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
Basics Issues Going for a result
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
Basics Issues Going for a result
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%
Basics Issues Going for a result
‘Inclusive’: all coalitions represented in small meetings‘Transparent’: reps report back to coalitions
Full membership, bigger roominitial reactions/consensus
Full membership, smaller roomtechnical details/reactions(Room D)
Key players(Room F and other small groups)technical details, drafting
PROCESS
Skip
Issues
Basics Issues Going for a result
ALTERNATIVELY: CONCENTRIC CIRCLES
‘Room F’ Small group consultations
Key players,reps. of all groupsconversational, hard bargaining, drafting
Formal plenaryFull membership
Speeches/consensus decisions
Informal meeting
All members, no recordreports from consultations, /reactions
Bilateral, very small group consultations
Skip
Big meetings, small meetings
Issues
‘Inclusive’: all coalitions represented in small meetings‘Transparent’: reps report back to coalitions
NEGOTIATIONS CHAIRPERSONCRAWFORD FALCONER
Basics Issues Going for a result
3. Going for a resultTake agriculture out of the WTO? Or try to strike a deal?
Going for a result
Basics Issues Going for a result
• 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?
DIFFICULT …
Going for a result
Basics Issues Going for a result
European Union
Small island developing states
Cairns Group Australia, NZ, S.Africa, Brazil, Argentina, Thailand, Philippines, etc
G20+/– India, Brazil, China, S.Africa, etc
G33 Indonesia, etc lobbying for ‘special products’
Africans, least-developed, ACP (together = ‘G90’, but with 64 WTO members)
‘Like minded’ India, Pakistan, Caribbean, etc
‘RAMs’ new members (‘recently acceded’ members)
G10 Switzerland, Norway, Japan, S.Korea, Ch.Taipei, etc
US-EU (summer 2003)
COALITIONS AND MAJORS
CONSENSUS-BUILDERS
The Five Australia, Brazil, EU, India, US (summer 2004)
United States
KEY PLAYERS AGRICULTUREJust a sample of the groupings …
Going for a result
Basics Issues Going for a result
1. What’s needed to achieve a result?
Result = consensus
- Reflecting all concerns
• Understanding all concerns• The negotiators’ concern:
how to sell the deal
Vital for consensus-building:
Worth studying:• Chairs’ summaries
- Selling the deal: all sharing the ‘pain’ (even if some share more than others)
Going for a result
Basics Issues Going for a result
2. Onus only on the rich?
• No consensus:only because of the US-EU?
‘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
• What about G-10?
• What about South-South?
Going for a result
Basics Issues Going for a result
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’, April 2005
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.
Wait a minute …
Going for a result
Skip
Basics Issues Going for a result
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, June 2005
• Remains difficult. If unsolved:no consensus, no reform
• G-33 understand: working on indicators for SP criteria
• G-20 appreciate this
Going for a result
Basics Issues Going for a result
3. The South-South debate
• Perhaps even more difficult than SPs
Erosion of preferences
• Also bitterly debated
Complicates call for developed countries to
lower barriers
Who should they export to?
Going for a result
Basics Issues Going for a result
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, July 2005
• G-33 work on SP indicators aims to make the case
Going for a result
Basics Issues Going for a result
4. Contributions to selling the deal?
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’
Some creative thinking? E.g.
Country bound ceiling%
Kenya 100 Zimbabwe 143.4
Nigeria 150Cameroon 80
Jamaica 97.4
Going for a result
Basics Issues Going for a result
4. Contributions to selling the deal?
But …
Country boundapplied
%ave %
Kenya 10020.1
Zimbabwe 143.426.1
Nigeria 15053.9
Cameroon 8022.0
Jamaica 97.415.8
(all negligible variance)
‘water’
Bound tariff
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’
‘Water’
Going for a result
Basics Issues Going for a result
0
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40
60
80
100
120
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Average applied rate % Average bound rate cut by 15 per cent (%)
Going for a result
Water %
Basics Issues Going for a result
5. Process?
Unavoidable:Mix of plenary, informal,
small group meetings
Must be:• inclusive • transparent
‘A more democraticWorld Trade Organization which gives poor countries a stronger
voice.’http://www.maketradefair.com
-> poorer countries always represented
When deadlock in WTO:members go outside WTO
Going for a result
Basics Issues Going for a result
6. Finally: ‘Take ag. out of the WTO’?
The WTO is the only place where agricultural
subsidies are negotiated
Going for a result
Basics Issues Going for a result
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
Basics Issues Going for a result
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
Basics Issues Going for a result
The World Trade OrganizationCentre William Rappard
rue de Lausanne 154CH–1211 Geneva 21
Switzerland
Tel: +41 (0)22 739 51 11Fax: +41 (0)22 739 54 58
email: [email protected]: www.wto.org