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Introduction to the WTO Agreement on Agriculture (AoA) and State of Play of the Doha Agriculture Negotiations CUTS/WT

Introduction to the WTO Agreement on Agriculture (AoA) and State of Play of the Doha Agriculture Negotiations CUTS/WTO Regional Outreach Workshop Nairobi, 29-30 April 2009. Why the Agreement on Agriculture?. Agriculture in GATT but...

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Introduction to the WTO Agreement on Agriculture (AoA) and State of Play of the Doha Agriculture Negotiations CUTS/WT

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  1. Introduction to the WTO Agreement on Agriculture (AoA) and State of Play of the Doha Agriculture Negotiations CUTS/WTO Regional Outreach Workshop Nairobi, 29-30 April 2009

  2. Why the Agreement on Agriculture? • Agriculture in GATT but... • exemptions for agricultural products (import restrictions, domestic support, export subsidies – allowed) • market access difficult Punta del Este Declaration (1986) Uruguay Round Negotiations (7.5 years) Research - inefficiency of policies Trade tensions and disputes Agreement on Agriculture

  3. Structure of the AoA Three Pillars - Interlinkages Market access Domestic support Export competition Other rules: S&D, Peace Clause, commitment to reform, NFIDC Decision

  4. Long-term Objective “... establish a fair and market-oriented agricultural trading system ... ” • Uruguay Round reform programme • Major achievements but also some unfinished business • Mandate for further reform - Article 20 Committee on Agriculture • role to monitor implementation of UR commitments • - matters raised under Article 18.6 • - review of notifications • preparatory work – analysis/exchange of information • mandated negotiations - Special Sessions (since 2000)

  5. Market Access – Tariff Only Regime • Tariffication (of non-tariff measures) • Tariffs – bindings & reduction commitments (or ceiling bindings) • Tariff quota commitments Prohibition not to maintain, resort or revert to: • Quantitative Restrictions • Variable Levies • Minimum Import Prices • Discretionary Import Licensing • NTMs Maintained Through STEs • Voluntary Export Restraints • Similar Border Measures [...] BUT Annex 5 – Special Treatment

  6. Special Safeguard – Article 5 4 countries used the Special Safeguard provisions (3) to restrict imports of rice during the implementation pd (Japan, Korea, Philippines) and Israel for sheepmeat, wholemilk powder and certain cheeses. Chinese Taipei gave special treatment to rice in its first year of membership, 2002.

  7. Categories of Domestic Support Subject to reduction commitments exempt from reduction All other support No/minimal effects on trade or production Development programmes Production limiting programmes De minimis Art. 6.2 Blue Box Amber Box Green Box

  8. Green Box Basic criteria • measures freely used as long as they meet Annex 2 criteria • can be introduced new, and modify old, programmes • continuous obligation to ensure that all programmes are, and remain, Green

  9. General services, including: research pest and disease control training extension/advisory services inspection marketing and promotion infrastructural services Public stockholding for food security Domestic food aid Direct payments, including: decoupled income support income insurance and income safety-net relief from natural disasters structural adjustment assistance producer retirement resource retirement investment aids environmental programmes regional assistance programmes Green Box – Scope

  10. Policy-specific “decoupling” X • Type of production • Volume of production In any year after the base period Amount of payments not linked to: • Domestic prices • International prices • Factors of production X

  11. Blue Box • based on fixed area and yields; or • made on  85% of base level of production; or • livestock payments are made on a fixed number of head Direct payments under production-limiting programmes exempt from reduction if:

  12. Article 6.2 • investment subsidies generally available to agriculture • input subsidies generally available to low-income or resource poor producers • support to encourage diversification from growing illicit narcotic crops Development programmes exempt from reduction: • Examples of notified Article 6.2 programmes: • Bangladesh – 2% interest rebate for repayment of loan on schedule • Thailand – Farming input assistance programme • Brazil – Production credit; Investment credit; Debt rescheduling

  13. Amber Box – Current Total AMS Any form of domestic support not included in either the Green or Blue Boxes or under Article 6.2 De minimis allowance • For example • Market price support • Non-exempt direct payments • (e.g. loan deficiency payments, grants, compensatory payments) • Other non-exempt measures • All product-specific EMS Product-specific support + • For example • Water subsidies • Fertilizer subsidies • Crop insurance • Subsidized credits Non-product-specific support Current Total AMS

  14. Export Subsidies Definition Article 1(e): Subsidies contingent upon export performance, including the export subsidies listed in Article 9 Legal Framework • General prohibition under Article 3.3 of the AoA, except: • If listed in a Member’s Schedule – subject to reduction commitments (volume and budgetary outlays) • Roll-over provisions (now expired) • S&D: Article 9.4 - subsidies for marketing and internal transport (during the implementation period – now expired) • Anti-circumvention provisions

  15. Subsidy Coverage - Article 9.1 • Direct subsidies contingent on export performance • Sale or disposal for export by governments or their agencies of non-commercial stocks at prices below domestic market price • Payments on exports financed by government action (including producer financed subsidies) • Subsidies to reduce cost of marketing, including handling, upgrading, international transport and freight • Favourable internal transport and freight charges on export shipments • Subsidies on agricultural products contingent on their incorporation in exported products

  16. Subsidy Circumvention – Article 10 • Other forms of export subsidies • Export credits, insurance and guarantees • develop internationally agreed disciplines • but ... negotiations with no result - OECD Arrangement on Officially Supported Export Credits does not cover agriculture • Food aid • specific criteria, Food Aid Convention, FAO • but ... is it always genuine aid or dumping?

  17. Uruguay Round Reduction Commitments No reduction commitments for least-developed countries

  18. Doha Agriculture NegotiationsState of Play(TN/AG/W/4/Rev.4) Revised Draft Modalities for Agriculture, 6 Dec. 2008

  19. Negotiating Process concentric circles Big meetings, small meetings Formal plenary- Full membership - Speeches/consensus decisions Informal, heads of delegations - All members, no record, reports from consultations, /reactions ‘Green Room’- Informal small group consultations Key players,- reps. of all groups - hard bargaining, drafting Bilateral, very small group consultations ‘Inclusive’: all coalitions represented in consultations ‘Transparent’: reps. report back to coalitions

  20. HongKongCh MacaoCh Singapore Qatar UAE Brunei Kuwait Bahrain Albania Armenia Cape Verde(China) Croatia Ecuador FYR- Macedonia (Georgia)Jordan KyrgyzR Moldova (Mongolia) Oman (Panama)Saudi-Arabia (ChTaipei) VietNam Tonga AustriaBelgium     BulgariaCyprus CzechR Denmark Estonia Finland   France Germany Greece Hungary Ireland        Italy       Latvia Lithuania  Luxembourg Malta Netherlands Poland Portugal Romania  Slovakia Slovenia   Spain Sweden   UK USG–1 G–90 LDCs Bangladesh Cambodia Maldives   Myanmar Nepal ACP ChadBurkina Faso Burundi  Togo Central African Rep Djibouti    DR Congo Mali   Gambia   Guinea   Guinea Bissau    Lesotho    Malawi  Mauritania  Niger Sierra Leone    Rwanda    Recentnew Solomon Islands EU G-27 Gabon Ghana Namibia Mexico G-20 Haiti Fiji Papua New Guinea Benin Madagascar Senegal Uganda Zambia India China Venezuela Belize Barbados Antigua/Barbuda Dominica DominicanRep Grenada    Guyana St Vincent/Grenadines Trinidad/Tobago Jamaica   Suriname St Kitts/Nevis      St Lucia Botswana Cameroon Congo Côte d’Ivoire Kenya Mozambique Tanzania Cuba Indonesia Pakistan Philippines Peru G-33 Chile Brazil Bolivia Uruguay  Thailand  Paraguay Argentina     Honduras  Mongolia Nicaragua           Panama   Sri Lanka   Turkey El Salvador Nigeria Zimbabwe Australia Canada  Colombia Costa Rica  Guatemala   Malaysia  N Zealand Mauritius R Korea Angola Swaziland Egypt Iceland  Israel  Japan    Liechtenstein  Norway Switzerland Ch Taipei Tunisia Morocco Cairns Group African Group G-10 S Africa TROPICAL PRODUCTS (Bolivia) (Colombia) (CostaRica) (Ecuador) ElSalvador (Honduras) (Guatemala) (Nicaragua) (Panama) (Peru) (Venezuela)

  21. Agriculture Negotiations – Timeline 2000 Agriculture talks start – Built-in Agenda (Art 20 of the AoA) 2001 Doha Negotiations launched (DDA) March 2003 -Modalities deadline missed 2003 Cancún Ministerial – failure to conclude modalities 2004 “July Framework” 2005 Hong Kong Ministerial July 2006 –draft modalities (W/3) – negotiations suspended Late 2006 – “Quiet diplomacy” Early 2007 – Resumption of negotiations Aug 2007 – revised draft modalities (W/4) Fall 2007 – intensive negotiations Feb - May 2008 - revised draft modalities W/4/Rev.1, Rev.2 & Rev.3 July 2008– failure to conclude modalities The future: conclude modalities; scheduling; legal drafting; & DDA conclusion Dec 2008 – W/4/Rev.4 draft modalities 2009??

  22. Positions • All issues are important but relative difference depending on Member and issue • All Members have offensive & defensive positions across the negotiations • Members form alliances – but often groups are not homogenous, including within developing countries • For LDCs all defensive interests have already been met through S&D Key to success – finding convergence

  23. Doha Negotiating Mandate • Comprehensive negotiations aimed at: • substantial improvements in market access • reductions of, with a view to phasing out, all forms of export subsidies • substantial reductions in trade-distorting domestic support • S&D - integral to negotiations and outcome • Non-trade concerns to be taken into account

  24. MARKET ACCESS Commodities (case by case) Tropical products (list) LDC products Tariff escalation (list) Minimum average cut (Developed) TIERED FORMULA Maximum average cut (Developing) SVE flexibility RAM flexibility SENSITIVE PRODUCTS VRAMs and small low-income RAMs flexibility SPECIAL PRODUCTS (Developing) Preference erosion SVEs SP flexibility LDC flex RAMs SP flexibility SSG SSM (Developing)

  25. THE TIERED FORMULA Overall minimum average cut of 54%

  26. THE TIERED FORMULA Overall maximum average cut of 36% (Venezuela 30%, S&D for Bolivia & Suriname) *No cuts if tariff less than or equal to 10% Very recent RAMs and small low-income RAMs with economies in transition exempt from reduction commitments Longer implementation period, 10 years

  27. FLEXIBILITIES FROM THE TIERED FORMULA • Developing Countries provided with non-tariff quota expansion possibilities • Tariff cap -100% for Developed Countries & 150% for Developing Countries outside of Sensitive Products (maybe some exceptions to cap)

  28. FLEXIBILITIES FROM THE TIERED FORMULA SVEs Special Products flexibility: apply moderated tiered cuts + Special Products provision or, simply meet an average cut target of 24%

  29. Special Agricultural Safeguard • Developed countries – reduce coverage to 1% of schedule tariff lines on 1st day of implementation • Remaining SSG coverage eliminated after 7 years • Developing countries – reduce coverage to 2.5% on 1st day of implementation • SVEs – reduce coverage to 5% of tariff lines over 12 years

  30. SSM – Volume-based Basis of rolling average of imports over 3 preceding years • Exceeding pre-Doha bindings - LDCs, SVEs and Developing C • TN/AG/W/7 suggests 2 triggers & remedies for exceeding pre-Doha bindings • (i) 120% - 140% - 1/3rd of current bound or 8 percentage pts whichever is the higher • (ii) >140% - ½ of current bound or 12 percentage pts whichever is the higher • Other Issues • Length of remedy • Cross-check (not normally applicable if domestic price falling) • Limitation on scope (2.5% Tariff Lines?) [1]

  31. SSM – Price-based • Applied on a shipment-by-shipment basis • Not normally take recourse if import volumes manifestly declining (cross-check)

  32. Tropical Products & Preference Erosion • Considerable progress made in July 08 mini-Ministerial • A lot depends on the outcome of the banana agreement • Chairman wanted to record progress in latest draft modalities text but due to “certain material changes” which occurred post July, the Chairman was unable to modify the draft modalities text • Existing text: • Tropical products – essentially seeking greater tariff reductions than under the tiered formula • Preference erosion – normally tariff reductions but greater implementation period

  33. Other Market Access Elements • Tariff escalation (the problem of higher tariffs on processed products than on raw materials, which hinders processing for export in the country producing the raw materials). • Commodities – interalia, if tariff escalation not eliminated, Members to engage with commodity-dependent producers to find satisfactory solution • Tariff simplification- conversion of complex tariffs to their ad-valorem equivalents • Tariff quotas • reductions in bound in-quota tariff rates • tariff quota administration) • LDCs – inter alia, duty- and quota-free access for at least 97 percent of products at a tariff line level • Cotton market access - duty- and quota-free for cotton exports from LDCs

  34. Domestic Support Amber Box/AMS 10% VoP (Avg 95-00) de minimis Overall trade-distorting domestic support Product-specific limits Green Box Cotton Blue Box S&D Main issue – size of reductions

  35. Reductions in Overall Trade Distorting Domestic Support (OTDS) • Tiered reduction formula – higher cuts for higher levels of OTDS • Developed Countries with high relative levels of OTDS in the second tier (≥ 40% of Value of Production) to undertake additional 5% effort (Japan) Minimum overall commitment

  36. Reductions in OTDS Special & Differential Treatment • Developing Countries reduction • 2/3rds of Developed C cuts in the third tier (37%) BUT • Developing Countries exempt from OTDS reductions if: • don’t have Amber box commitments; • NFIDCs ; • very recent RAMs and small low-income RAMs with economies in transition • very recently acceded Members

  37. Reductions in Final Bound AMS – Amber Box • Tiered reduction formula – higher cuts for higher levels of AMS support (most distorting, with direct links to prices & production) • Developed Countries with high relative levels of AMS (≥ 40% of Value of Production) to undertake additional effort ½ difference between tiers (Japan, Iceland, Norway, Switzerland)

  38. Reductions in Final Bound AMS- Amber Box Special & Differential Treatment • Developed Countries - 2/3rds of Developed Countries cuts in the third tier BUT • Developing Countries exempt from AMS reductions: • If present AMS ceilings <= US$100 million • NFIDCs; • Very recent RAMs and small low-income RAMs with economies in transition • Continued access to provisions of Article 6.2 (development programmes)

  39. Product-Specific AMS Limits Current situation: Total AMS New product-specific AMS limits Beef limit beef beef dairy dairy rice limit Rice limit rice wheat sugar wheat sugar

  40. De minimis Developed Countries • Reduce by at least 50% but more if necessary to meet OTDS Special and Differential Treatment • Reduce by at least 2/3rds of Developed Countries but more if necessary to meet OTDS commitment • RAMs with de minimis of 5 percent reduce by at least 1/3rd Developed Countries reduction • Longer implementation period (i) Developing with no Final Bound Total AMS; (ii) Developing with AMS but which allocate almost all that support to subsistence and resource poor producers; (iii) NFIDCs as list in G/AG/5/Rev.8; (iv) Very recently acceded Members; (v) Small low-income RAMs with economies in transition Exempt from reductions

  41. Blue Box • Additional criteria – expansion of policy coverage to include direct payments that do not require production • Overall cap on Blue Box – 2.5% of average total value of agricultural production, 1995-2000 (i.e. reduction from 5% vop to 2.5%) but if BB more than 40% of trade-distorting support, reduce by level of AMS cut • Product-specific limits • Special and Differential Treatment • Blue box cap at 5% of the average total value of agricultural production, either over the period 1995-2000 or 1995-2004 • Flexibilities with respect to determining the product-specific limits

  42. Reductions in Overall Trade-Distorting Domestic Support Base Overall OTDS Tiered reductions Final Overall OTDS Final Bound Total AMS Tiered reductions + Reduced AMS 10% value of Ag. production Reduced de minimis + Higher of: avg. Blue Box payments OR 5% val. Ag. prod Lower Blue Box Limit S&D for Developing Countries

  43. Green Box – Proposals Possible amendments to Annex 2, including: • expand coverage of para.2 to specifically cover the special needs of developing country Members • Additional flexibility when accounting for the acquisition of stocks for foodstuffs for food security purposes under para 3 • tighten provisions related to base period update (paras. 6, 11 & 13) • fine-tune eligibility criteria in para 8, base periods and an allowance for payments in the event of destruction of animals or crops to control/prevent pest and diseases • exempt developing country Members from the condition that disadvantaged regions must constitute a clearly designated contiguous geographical area with a definable economic and administrative identity

  44. Cotton • Reductions in support • AMS support for cotton reduced according to the following formula: Rc = Rg + (100 - Rg) * 100 3 * Rg Rc = Specific reduction applicable to cotton as a percentage Rg = General reduction in AMS as a percentage • Base value of cotton support average over 1995 to 2000 • Blue Box cap for cotton - 1/3 of the product-specific cap that would otherwise have resulted • Reductions in OTDS implemented over 1/3 of the implementation period • S&D • Developing Countries with AMS and Blue Box commitments for cotton shall make a reduction that is 2/3rds of the reduction for DDCs and shall implement it over a longer time period

  45. Export Competition Export subsidies Main issue – phasing Export credits Main issue - self-financing Parallel elimination of all forms of export subsidies by 2013 Exporting STEs Main issue – monopoly powers Food Aid Main issues – definition of safe box, monetisation Special and differential treatment

  46. Export Subsidy Elimination

  47. Export Credits – Key Elements • Forms and providers subject to disciplines • Maximum repayment term: 180 days • Must be self-financing: When premium rates charged over a previous 4 year (6yrs for Developing Countries ) rolling period are adequate to cover the operating costs and losses of the programme during the same period • Still subject to provisions of other Agreements, including the Agreement on Subsidies and Countervailing Measures (ASCM) • If an export subsidies within the meaning of Item (j) of Annex I of the ASCM, also deemed not to be self-financing • Repayment period between 360 & 540 days for LDCs and NFIDCs. Additional time in exceptional circumstances

  48. Agricultural Exporting State Trading Enterprises (STEs) • Provisions applicable to any exporting STEs meeting the definition set out in the Understanding on the Interpretation of Article XVII • Elimination of: • Export subsidies • Government financing of STEs • Government underwriting of losses • Monopoly powers – except if have small share of trade, so-called de minimis • S&D – provisions for Deveoping Countries, including SVEs and LDCs to maintain or use monopoly powers

  49. -International Food Aid- Possible new Article 10.4 of the AoA • Commitment to maintain adequate levels of food aid • General disciplines for all food aid transactions: • Needs driven; provided in fully grant form; Not tied to commercial exports of goods or services; Not linked to market development objectives of donors; Not re-exported (with exceptions) • Food aid to take into account local market conditions of the same or substitute products • Donors encouraged to procure food aid from local or regional sources • Encourage the shift towards cash-based food aid • Food Aid permitted both in emergencies and in other situations: Emergency Food Aid (Safe Box): Emergency declaration or emergency appeal, In both cases must have an assessment of need by relevant UN Agency (e.g. WFP); No monetisation in the Safe Box except for LDCs for the purpose of transport and delivery; If meets requirements, deemed in conformity with Food Aid provisions; If in conformity, may be provided for as long as necessary Non-Emergency Food Aid: Based on a targeted assessment of need; Provided to redress food deficit situations – targeted to meet nutritional requirements; Provided with the objective of preventing or at least minimising commercial displacement; Monetisation prohibited except under certain circumstances

  50. Other Issues Cotton • Developed Country export subsidies for cotton prohibited • Developing Countries to comply with prohibition by end of the 1st year of implementation period • Any new or additional obligations from export credits, STEs and food aid shall be implemented: • on 1st day of implementation for Developed Countries • by the end of the 1st year for Developing Countries Export Prohibitions and Restrictions • Strengthened disciplines

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