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CIS countries: Issues and challenges for agriculture in the WTO context Lars Brink Agricultural Trade Expert Network in Europe and Central Asia, Food and Agriculture Organization of the United Nations Conference: Integration processes in the CIS region and their implications for agricultural trade Kaliningrad State Technical University 26-27 March 2015, Kaliningrad, Russia [email protected] m

CIS countries: Issues and challenges for agriculture in the WTO context

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Page 1: CIS countries: Issues and challenges for agriculture in the WTO context

CIS countries: Issues and challenges for agriculture in the WTO context

Lars Brink

Agricultural Trade Expert Network in Europe and Central Asia, Food and Agriculture Organization of the United NationsConference: Integration processes in the CIS region and their implications for agricultural tradeKaliningrad State Technical University26-27 March 2015, Kaliningrad, Russia

[email protected]

Page 2: CIS countries: Issues and challenges for agriculture in the WTO context

2

Georgia

Moldova

Armenia

Kyrgyzstan

Turkmenistan

Tajikist

an

Azerb

aijan

Belarus

Kazakhsta

n

Uzbekist

an

Ukraine

Russia

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80

85Value of production in agriculture:

average 2010-12

USD billion

Lars BrinkSource: Gross production value, FAOSTAT. Uzbekistan estimated by author.

Not CIS

Not CIS

Not CIS

WTO accession process

Page 3: CIS countries: Issues and challenges for agriculture in the WTO context

3

Georgia

Moldova

Armenia

Kyrgyzstan

Turkmenistan

Tajikist

an

Azerb

aijan

Belarus

Kazakhsta

n

Uzbekist

an

Ukraine

Russia

0

1

2

3

4

5

6

7

8

9

10

11

12

Value of production in agriculture: average 2010-12

USD billion

Lars BrinkSource: Gross production value, FAOSTAT. Uzbekistan estimated by author. Year indicated is year of WTO accession.

2013

1998200120012000

Acce

ssio

n pr

oces

s

Acce

ssio

n pr

oces

s

Acce

ssio

n pr

oces

s

Acce

ssio

n pr

oces

s

Page 4: CIS countries: Issues and challenges for agriculture in the WTO context

4

– Market access• Bilateral negotiations with many countries in parallel

– Bound tariffs; also tariff rate quotas for some candidates

– Export subsidies• Plurilateral negotiations

– No accession with export subsidy entitlements (after 1997)

– Domestic support• Plurilateral negotiations

– Bound Total AMS for some, nil for some AMS = Aggregate Measurement of Support

– De minimis percentage – Entitlement to use Article 6.2 exemption?

Accession negotiations in agriculture

Lars Brink

Page 5: CIS countries: Issues and challenges for agriculture in the WTO context

5

– Privatization

– State-owned or state-trading enterprises

– Agricultural taxation

– SPS and TBT Sanitary and phytosanitary; Technical barriers to trade

– Export subsidies in agriculture

– Sugar

Agr policy change in accession process

Lars Brink

Page 6: CIS countries: Issues and challenges for agriculture in the WTO context

6

• Do recent policies meet green box criteria?– Georgia: only green box; all others: both green and AMS

• No WTO definition of developing vs. developed country– Makes difference for policy space: de minimis and Article 6.2

» Tajikistan acceded as developing country» Kyrgyz Rep, Georgia, Armenia, Moldova, Ukraine, Russia:

developed» Kazakhstan and Azerbaijan: outcome not yet known

• Value of production VOP defines de minimis levels– Kyrgyz NPS at 4.87% of VOP vs. Russia NPS at 5.07% of VOP

Domestic support issues in accessions

Lars Brink

Page 7: CIS countries: Issues and challenges for agriculture in the WTO context

7

• Tajikistan– 2009 writeoff of cotton debt gave Bound Total AMS of $183 million

• Armenia– Very little AMS support through 2011 notification

• Moldova– 1996-98 AMSs for many products; Bound Total AMS only $20 mill.

• Georgia– Only country in CIS region to report nil AMS support in all years– Notified up through 2013, much more up to date than most Members

• Kyrgyz Republic– 1998 (!) latest notification

Base data, commitments, notified support

Lars Brink

Page 8: CIS countries: Issues and challenges for agriculture in the WTO context

8

Domestic support parameters: five smaller WTO members

Base years Base Total AMS Final Bound Total AMS De minimis % Special features

Tajikistan 2008-10 183 USD mill. 183 USD mill. 10% Used Article 6.2 exemption in

base years

Armenia 1995-97 0 USD 0 USD De minimis 10% through 2008, then 5%

Moldova 1996-98 16 SDR mill. 13 SDR mill. in 2004 5% Reduce by 20% in 2001-04

from Base Total AMS

Georgia 1996-98 0 GEL 0 GEL 5% -

Kyrgyz Republic 1994-96 0 KGS 0 KGS 5% -

Lars Brink

Page 9: CIS countries: Issues and challenges for agriculture in the WTO context

920012002

20032004

20052006

20072008

20092010

20112012

20132014

20152016

20172018

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Russia: Applied support and limits on support

Current Total AMS (applied)Bound Total AMS (limit)Green

billion USD

Lars BrinkSource G/AG/W/141-02

Page 10: CIS countries: Issues and challenges for agriculture in the WTO context

10Lars Brink

Bound in USD RUB Equivalent0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

500.0

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

USD billion

Russia: WTO commitment in US dollars USD

2015 Bound Total AMS = USD 7.2 billion

Equals RUB 224 billion at 2012 exchange rate

Equals RUB 465 billion at February 2015 exchange rate

RUB billion

Page 11: CIS countries: Issues and challenges for agriculture in the WTO context

11Lars Brink

USD Equivalent Bound in UAH0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0

50

100

150

200

250

300

350

400

450 Ukraine: WTO commitment in Ukrainian hryvnia UAH

2015 Bound Total AMS = UAH 3.0 billion

Equals USD 381 million at 2012 exchange rate

Equals USD 124 million at February 2015 exchange rate

USD million UAH billion

Page 12: CIS countries: Issues and challenges for agriculture in the WTO context

12

• Meets 3-4 times per year– Questions on trade policy and on notifications

• Most questions to Ukraine, Georgia, Armenia– Green box compatibility of domestic support programs– Price support for sugar beets: adjustment of reference price– Quota allocation, import licensing, in-quota sugar imports

• Russia started to notify in 2013– Numerous questions; some lack of transparency

• Export restrictions notified– Ukraine, Russia, Kyrgyz Rep and Moldova

WTO Committee on Agriculture

Lars Brink

Page 13: CIS countries: Issues and challenges for agriculture in the WTO context

13

– Azerbaijan– How large are input subsidies relative to VOP? De minimis %?

– Belarus– Input subsidies; also Market Price Support?; budget support declining

– Kazakhstan– Large increasing support: input & output subsidies, price support?– Base period? De minimis 5, 10, or 8.5%? Article 6.2 questionable

– Uzbekistan– Input subsidies, government control of cotton production and trade

• Turkmenistan– Accession process not started, preparations underway, negative support

Countries in process of accession

Lars Brink

Page 14: CIS countries: Issues and challenges for agriculture in the WTO context

14

– Many tariff settings at play • Applied tariffs before Customs Union: different in each country• Applied external tariffs of Customs Union• Bound WTO tariffs: Russia, Armenia, (Kyrgyz Rep.)• Negotiated tariffs earlier in WTO process: Kazakhstan, Belarus

– Which tariffs are lower or higher than those of Customs Union?• Consequences for accession negotiations? Kazakhstan, Belarus• How to negotiate bound WTO tariffs in accession? Kazakhstan, Belarus• Renegotiate bound WTO tariffs? Russia, Armenia, (Kyrgyz Rep.)

– Diverse agricultural trading relations of smaller CIS countries• Considerable trade with neighbours other than Russia

Customs Union and EaEU integration

Lars Brink

Page 15: CIS countries: Issues and challenges for agriculture in the WTO context

15

– Rules in Single Economic Space SES agreement• Modelled after WTO Agreements• Unusual, possibly unique in regional trade agreement

– Severely distorting measures not allowed• Similar to export subsidies in Subsidies Agreement ASCM

– Distorting measures and support• Similar to Annex 3 in Agr Agreement, including WTO market price support• Ceiling at 10% of VOP, declining to 10% for Belarus• Upon WTO accession, WTO rules override SES rules

– Notification requirements: Advance notifications

Rules on “state support to agriculture”

Lars Brink

Page 16: CIS countries: Issues and challenges for agriculture in the WTO context

16

– Legal obligations as a WTO member• Defending non-compliance can be costly• Correcting non-compliant policy can impose adjustment costs

– WTO rules help to resist domestic pressure for costly support• Green box criteria are a policy filter to improve transfer efficiency and

generate less distortions

– Agricultural and economic data becomes policy priority• Need data-based analysis for policy design• Need to meet requirements for WTO notifications

– E.g., estimating de minimis thresholds

Meeting WTO rules and commitments

Lars Brink

Page 17: CIS countries: Issues and challenges for agriculture in the WTO context

17

– Contribute to work of Committee on Agriculture• Review countries’ implementation of Agreement

– Participate in negotiations• Doha negotiations; accession of other countries

– For those in process of WTO accession • Continuity and communications with working party are vitally important

– How much support and protection in the future?• Competition among neighbouring countries• Address in accession negotiations

Opportunity to shape WTO processes

Lars Brink

Page 18: CIS countries: Issues and challenges for agriculture in the WTO context

Thank [email protected]

References

Brink, L. 2014. Countries in the Commonwealth of Independent States: Agricultural policy issues in the context of the World Trade Organization. Rome: Food and Agriculture Organization of the United Nations. http://www.fao.org/3/a-i3883e.pdf

Brink, L. 2015 (forthcoming). Farm support in Ukraine and Russia under the rules of the WTO. In Transition to Agricultural Market Economies: The Future of Kazakhstan, Russia, and Ukraine, ed. A. Schmitz and W. Meyers. Cambridge, USA and Wallingford, UK: CABI.

Brink, L. 2014. Evolution of trade-distorting domestic support. In Tackling Agriculture in the Post-Bali Context. Geneva: International Centre for Trade and Sustainable Development. http://www.ictsd.org/sites/default/files/research/Tackling%20Agriculture%20in%20the%20Post-Bali%20Context_0.pdf

Brink, L. 2011. The WTO disciplines on domestic support. In WTO Disciplines on Agricultural Support: Seeking a Fair Basis for Trade, ed. D. Orden, D. Blandford and T. Josling. Cambridge: Cambridge University Press.