WTO AGRICULTURAL NEGOTIATIONS Portfolio Committee Agriculture and Land Affairs April 2003 Günter...

N ational Departm ent of Agriculture

WTO AGRICULTURAL NEGOTIATIONS

Portfolio Committee  Agriculture and Land Affairs

April 2003

Günter Müller

Directorate: International Trade

National Department of Agriculture

N ational Departm ent of Agriculture

WTO Agricultural Negotiations

• Part of the broader WTO Round launched in Doha, Qatar in November 2001 by the 4th WTO Ministerial Meeting

• WTO Round: “Doha Development Agenda”

• Agriculture is a critical part of broader negotiations

• 4th WTO Ministerial agreed on a detailed mandate for the agricultural negotiations

• Agreed on a schedule for the negotiations

Doha Decisions on Agriculture (“Mandate”)

Building on the work carried out to date:

Substantial improvement in market access Reductions of, with a view to phasing out, all forms of export subsidies Substantial reductions in trade distorting domestic support Special and differential treatment for developing countries Non-trade concerns will be taken into account

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WTO AGRICULTURAL NEGOTIATIONS

• Agricultural negotiations chaired by Ambassador Stuart Harbinson (Hong Kong)

• Meetings in Geneva in informal and formal negotiation sessions with broad, active participation, also by developing countries

• First Modalities Draft Paper by Chair: 12 February 2003• According to schedule: Agreement should have been

reached on modalities by 31 March 2003.

Modalities: framework/structure for commitments by individual WTO members, e.g. formula for tariff reductions, size of reduction in domestic support, time frame for eliminations of export subsidies

N ational Departm ent of Agriculture

WTO AGRICULTURAL NEGOTIATIONS

Major Negotiation Issues• Market Access: Level of tariff reductions, special treatment for

certain products, Safe Guard Clause, Tariff Preferences

• Domestic Support: Level of reduction in support, Non-trade concerns, definition of “boxes” amber, blue and green

• Export Competition: Elimination or not of export subsidies, time frame, handling of export credits, state trading enterprises

Positions of WTO members on these and other negotiation issues far from reaching a compromise

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WTO AGRICULTURAL NEGOTIATIONS

Harbinson Draft (released February 2003)

• Based on work carried out with the objective to build bridges

and “attempt to identify possible paths to solutions”• Text was discussed during special negotiation sessions in

Geneva in February and March with very little sign of progress towards an agreement

• WTO Membership is split mainly on the level of ambition• Agriculture one of various deadlines in the broad WTO

Round that has been missed

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WTO AGRICULTURAL NEGOTIATIONS

RSA Objectives (summarized)

• Domestic support: provide for the development of historicaly disadvantages farmers, rural and farming communities, and, facilitate a substantial reduction in current high levels of support to bring about real structural change in developed countries.

• Market Access: Substantial improvement in market access in targeted markets for South African agricultural products with export potential

• Export Competition: Elimination of all export subsidies (included subsidies under export credits) over the shortest period of time possible

• Link between further market access commitments by RSA and substantial reduction in domestic support by developed countries

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WTO AGRICULTURAL NEGOTIATIONS

RSA Approach

• Approach negotiations from a development perspective

• Close consultation and co-operation with SACU and SADC

• Active participation in Africa Group• Active participation in Cairns Group

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WTO AGRICULTURAL NEGOTIATIONS

Harbinson draft modalities

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HARBINSON TEXT: TARIFFS

Developed Countries (reduce over 5 years)

Original tariff Average reduction

Minimum per line

90 + 60 45

15 - 90 50 35

15 - 40 25

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TARIFFS

Developing Countries (reduce over 10 years)

Original tariff Average reduction

Minimum per line

120 + 40 30

20 - 120 33 23

20 - 27 17

SP (? % of agri products)

Food + livelihood security, rural development

10 5

HARBINSON TEXT

Harbinson

UR Formula

Developed Countries

500%

Tariff peaks? Not addressed

Tariff escalation? Reduction to be higher on processed product

Flexibility

275%

Developing countries

500%

Tariff peaks?

Tariff escalation?

SP products to be reduced by an average of 10% with minimum of 5% per line

475%

SACU IMPORTS: 2001Duties: Major Products

0

20

40

60

80

100

Applied Bound

RSA IMPORTS 2001

EU: PREF. TRADE22%

SADC10%

EU: OTHER TRADE2%

ARGENTINA15%

USA7%

AUSTRALIA7%

Thailand 6%

Brazil 5%

Malaysia 4%

China 3%

Other19%

0

30

60

90

120

Applied Bound

AVERAGE TARIFFS ON RSA EXPORTS

EXAMPLES (%)

RSA EXPORTS 2001

EU37%

USA5%

DEVELOPING26%

DEVELOPED12%

SADC20%

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Market Access (other)

Preferential Schemes tariffs of products of vital interest to developing countries may be

reduced over 8 instead of 5 years Erosion of preferences: major topic for negotiations

Tariff Quota volume

Developed Countries Increase to 10% of consumption over 5 years (additional flexibility) Developing Countries Increase to 6.6% over 10years (additional flexibility)

In quota tariff: No proposal

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Market Access

Safeguard Clause – Article 5

Will be phased-out for developed countries after 5 years

New provision for SP products developing countries based on Article 5 of AoA, detail to be agreed

Debate: Countervailing measure for developing countries to act against subsidized imports

Non-Trade Concerns

GIs, Animal welfare, food safety

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Export Competition

Export Subsidies

• 50%: to zero in 5 years

• 50% to zero in 9 years

Improved rules

Export Credits

Food Aid

State Trading Export Enterprises

Export Restrictions and Taxes

Export CompetitionCommitment and expenditure in US $m

0

2000

4000

6000

8000

10000

12000

14000

Base (end UR) 1995 1996 1997 1998

World Total

Year 1

Year 2Year 3

Year 4

Year 5

Harbinson Proposal

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Domestic Support

Green Box No major changes

Blue Box Capped at 1999 – 2001 level and reduced by 50% over 5 years Alternative: included in amber box

Amber Box To be reduced by 60% over 5 years

De Minimis Developed countries: reduce from current 5% to 2.5% over 5 years Developing countries: maintain 10% level

Article 6.2 (input subsidies, developing countries)

To be maintained and enhanced

Harbinson Proposal: EU Domestic Subsidies

0

10

20

30

40

50

60

70

80

Bound AMS Current Amber, de minimis +Blue Box(1999)

60% Reduction of AB & 50%reduction of BB

Types of Support & Effects of Reduction proposals

Harbinson Proposal on US Domestic Subsidies

19.1

10.47.6

2.4

4.8

2

4

6

8

10

12

14

16

18

20

Bound AMS Current Amber, de minimis+ Blue Box(1998)

60% Reduction of AB &50% reduction of BB &

deminimis

Types of Supprt

Lev

el o

f S

up

po

rt(

bill

ion

US

$)

Harbinson Proposal: Japan Domestic Support

0

5

10

15

20

25

30

35

40

Bound AMS Current Amber, de minimis + BlueBox(1998)

60% Reduction of AB & 0.5%reduction of BB

Types of Support & Proposed Reductions

Lev

el o

f S

up

po

rt (

Mill

ion

US

$)

N ational Departm ent of Agriculture

WTO AGRICULTURAL NEGOTIATIONS

Negotiation time frame and deadlines

• Agreement on Modalities: 31 March 2001 • Tabling of draft country schedules by the 5th Ministerial

Meeting in Mexico (September 2003)• Conclusion of Round by 1 January 2005

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WTO AGRICULTURAL NEGOTIATIONS

Contentious Issues

• Level of ambition• Special flexibility to developing countries• Scope of negotiations