Directorate General of International Trade Cooperation PRESENTATION - - PowerPoint PPT Presentation

Boris Situmorang Directorate of Bilateral Cooperation Directorate General of International Trade Cooperation

PRESENTATION OUTLINE

 Background

• Agricultural Trade Negotiations in WTO/DDA
• Key Issues : Three Pillars (Market Access, Domestic Support,

Export Competition)

• State of Play of Agricultural Trade Negotiations

 Progress/Timeline of the Negotiations  Post-Bali Work Program  Main negotiating issues that led to MC10, Nairobi

• Export Competition, Public Stockholding (PSH), Special

Safeguard Mechanism (SSM), and Cotton

 Implications for Indonesia/What’s next?

Agriculture in DDA: Background

 Agriculture remains an important and controversial

trade negotiating issue since DDA was launched in Doha, Qatar in 2001.

 Different positions of WTO members on DDA

negotiations slowed down the negotiating progress until the last MC9 in Bali

 MC9 was very fruitful as the Trade Facilitation

Agreement (TFA) was reached in Bali. However, there was no agreement on agriculture.

Key Negotiating Issues on Agriculture

Three Pillars

 Market Access  Domestic Support  Export Subsidies and Competition

Other Issues :

Food Security Special Safeguard Mechanism S&D Treatment Cotton

Market Access

 The most difficult negotiating issue in agricultural

trade negotiations.

 Tariff to be reduced by an average 36% in the case of

developed countries and 24% in the case of developing countries during the Uruguay Round

 Most of the developed countries apply higher tariffs

than developing countries on agricultural trade

 U.S. Agricultural Bound Tariff: 30.2%  Australia Agricultural Bound Tariff: 31.3%  Japan Agricultural Bound Tariff: 34.1%

Domestic Support

 Protecting agricultural sectors through the use of subsidies.  Subsidies for food products by developed countries distort

trade of developing countries and LDCs.

 E.g.: NAFTA and Mexican farmers; dairy imports from EU.

 Three qualifications for domestic support policies (Amber Box,

Blue Box, Green Box) categorized by the impact measurement

• n trade.

 US domestic supports are qualified for green box subsidies

(minimal trade distortion) – increasing:

 1995: US$ 46.04 Billion  2010: US$ 120.53 Billion  Food aid policy contribute the most in US domestic supports

(78% in 2014)

Export Competition

 16 WTO Members are allowed to subsidize exports of

certain agricultural products.

 Three elements of Export Competition:

 Export Subsidies (no commitments on subsidies to reduce the

costs of marketing exports of agricultural products or internal transport and freight charges on export shipments);

 Export Financing Supports (Export Credits, Export Credit

Insurance Programs);

 Agricultural Export State Trade Enterprises (STEs).

 US, Australia, and Canada are making reductions in their

equivalents of export assistance.

State of Play In Agri. Negotiations

1.

Market Access

 Some discussions on tier reduction formula aimed at

reducing overall tariff, tariff peaks and tariff escalation

 Alternative approaches suggested : simplification,

recalibration, a hybrid simplified formula and request-

• ffer approach (proposed by Paraguay), request-offer

across major DDA issues (by Argentina)

 Other proposals already on the table:

• SP & SSM – by G-33
• Tropical Products – by Tropical Products Group

State of Play in Agri. Negotiations

• 2. Domestic Support
• Many support OTDS, some prefer UR disciplines (AMS and de

minimis)

• US is unwilling to do reduction and demand commercially

meaningful market access and contribution by emerging economies

• Recently Acceded members (RAMs) including China are

unwilling to provide more concessions – arguing that they have already accepted commitments upon their WTO accessions

• Some developing countries view that imposing reduction on de

minimis (product specific and non product specific) without addressing AMS disciplines is going to the opposite direction of their reform process

• “Green Box” discipline is a red line for the EU - not doable.

State of Play in Agri. Negotiations

• 3. Export Competition
• Chair of CoA-SS views some possible landing zones
• Major subsidizers indicate willingness to gradually

reduce or eliminate export subsidies (with certain time frame)

• Ambition for reductions or elimination in other areas
• f ES (export credits, export credit guarantees)
• Ambition in other two pillars of agriculture

 A new proposal based on Rev 4 text, submitted by the

Cairns group, is now on the table.

Timelines of Agricultural Trade Negotiations

Agriculture Talks Start – Built in Agenda (Art 20 of the AoA) DOHA Negotiations Launched (DDA) Modalities Deadline Missed Cancun Ministerial – failure to conclude modalities. “July Framework” Draft Modalities (W-3) – modalities suspended Revised Draft Modalities (W/4) Revised draft Modalities (W/4 Rev 1, Rev 2, Rev 3) Failure to Conclude Modalities W/4/Rev 4 draft modalities 2000 2001

• Mar. 2003

2002 2004 July 2006 Aug 2007 Feb – May 2008 Fall 2008 Dec 2008 Bali Package (Additional Subsidies, Public Stockholding, Tariff Rate Quota Administration, Export Competition. 2013 2015 Nairobi Package ( Ministerial Decision on Export Competition, Public Stockholding, Special Safeguard Mechanism, and Cotton).

POST-BALI WORK PROGRAM

 Public Stockholding

for Food Security Purposes (PSH)

 Export Competition

(EC)

 Tariff Rate Quota

(TRQ)

Public Stockholding for Food Security Purposes (PSH)

 Output

 Legal Text on Permanent Solution is resolved

 Pending Issues

 No member has submitted the “Peace Clause” for Interim

Solution as the result of MC9 in terms of subsidies exception for >10% of the de minimis.

 Indonesia’s positions:

 Indonesia is considering the “Peace Clause” submission.  Different information about Indonesia’s de minimis and

interpretation about the “market price” support.

Export Competition (EC)

 Output

 Legal Text on Export Competition is resolved

 Pending issues

 Developed countries’ commitments in notifying immediate export

subsidies reduction.

 WTO will establish a Dedicated Session on Export Competition.

 Indonesia’s positions

 Emphasizing and suggesting for credible and concrete outcome in

export competition by modifying paragraph 8 of draft text on modality of Agricultural Trade Negotiation in DDA (Rev.4 2008).

 Supporting and seeking for developed countries’ commitments in

exercising restraint with regard to all forms of export subsidies and all export measures with equivalent effects.

Tariff Rate Quota (TRQ)

 Output

 Legal Text on Tariff Rate Quota is resolved.  TRQ notification will cover TRQ enforcement and Import

License provision for products under the scheme of TRQ.

 Pending issues

 Bali Package agreed the renegotiation of TRQ under the Draft

Ministerial Decision

 All members are required to notify their commitments on

TRQ.

 Indonesia’s position

 Reviewing the transparency in TRQ administration.

MINISTERIAL CONFERENCE X NAIROBI 2015

Main Agricultural Issues Negotiated in Nairobi

• Agriculture was one of major and politically sensitive

issues in the MC10 negotiations in Nairobi.

• There are 4 main issues in agriculture that were

negotiated in Nairobi and brought forth Ministerial Decisions:

 Export Competition (EC)  Public Stockholding (PSH)  Special Safeguard Mechanism (SSM)  Cotton

Export Competition

 Export Subsidies

• Elimination of export Subsidies
• 16 WTO members are allowed to subsidize export of certain agricultural products,

but only for products on which they have commitments to reduce subsidies.

• Ministerial Decision on Export Competition (WT/MIN(15)/W/47)

Developed Members shall immediately eliminate their remaining scheduled export subsidy entitlements as of the date of Ministerial Decision on Export Competition

• issued. On the other hand, Developing Members shall eliminate their export subsidy

entitlements by the end of 2018.

 Export Credits, Export Credits Guarantees or Insurance Programmes

• Ministerial Decision on Export Competition (WT/MIN(15)/W/47)

The Decision set out terms and conditions for export financing support such as Maximum Repayment Term: Shall be no more than 18 months. Self-Financing: Premiums shall be charged and be risk-based.

Export Competition (Cont’d)

 State Trading Enterprises (STEs)

• Definition: Governmental and non-governmental enterprises,

including marketing boards, which have been granted privileges, including statutory, or constitutional powers, in the exercise of which they influence through their purchases

• r sales the level or direction of imports or exports.
• Ministerial Decision on Export Competition

(WT/MIN(15)/W/47) Members shall ensure that agricultural exporting state trading enterprises do not operate in a manner that circumvents any other disciplines contained in the Decision. The use of export monopoly by agricultural STEs shall not result in displacing or impeding the exports of another Member in order to minimizes trade distorting effects.

Implications for Indonesia from Export Competition Decision

 The implementation of export subsidies in many

countries, lower the competitiveness of Indonesia export and create unfair trade. By the elimination of export subsidy in developed members could enhance Indonesian products’ competitiveness, either in domestic market or international market.

 Maximum Repayment Term Decision eases developed

countries to implement export financing policies, yet a challenge for Indonesia.

 Export STEs Decision yields a benefit for Indonesia to

strengthen the role of government in enhancing export capability.

Public Stockholding for Food Security Purposes (PSH)

 PSH programs are used by some developing countries

to purchase food at administered prices and distribute it to poor people.

 This essentially reintroduce pre Bali proposal to move

the support provided under this program into Green Box.

 More general proposals with references to the PSH

submitted by Group of African, Caribbean and Pacific countries, the G-33 developing countries and the G-90 group which includes the poorest and smallest developing countries.

PSH (Cont’d)

 Ministerial Decision on Public Stockholding for Food

Security Purposes (WT/MIN(15)/W/46) Under Bali Ministerial Decision of 2013, developing countries are allowed to continue food stockpile program, which are in risk of breaching the WTO’s domestic subsidy

• cap. (Permanent solution is yet to be found by the MC XI in

2017). The negotiations on this subject shall be held in the Committee on Agriculture in Special Session (CoA SS), in dedicated sessions and in an accelerated time-frame, distinct from the agriculture negotiations under the Doha Development Agenda (DDA).

Implications for Indonesia from Public Stockholding Decision

 The Decision help Indonesia to strengthen its

government role in providing food security for the people

Special Safeguard Mechanism (SSM)

What is SSM?

• Safeguard that can be automatic used in case of import surges

and market disruptions – Indonesia (13)

• Modelled after SSG but with many more conditions
• Integral part of S&DT in agriculture in DDA
• The goal is to protect local farmer and food processing industry
• G-33 purposes

1.

Livelihoods of small farmers

2.

Food security

3.

Rural development Mandate (Doha Declaration Para 13, July Framework 2004, Hong Kong Ministerial Decision, and Draft Text TN/AG/4/Rev4

SSM (Cont’d)

 Ministerial Decision on Public Stockholding for

Food Security Purposes (WT/MIN(15)/W/45)

Developing country Members will have the right to have recourse to a special safeguard mechanism (SSM) as envisaged under paragraph 7 of the Hong Kong Ministerial

• Declaration. To pursue negotiations on an SSM for

developing country, Members are engaged in dedicated sessions of the Committee on Agriculture in Special Session (CoASS).

Implications for Indonesia from SSM Decision

 Indonesia gains benefit from its position as developing

WTO member to have the right to increase temporarily tariff when facing import surge, especially in special products.

Trade Negotiations on Cotton

 Sectoral Initiative in favour of Cotton (African – 4:

Benin, Burkina Faso, Mali and Chad) countries

 Cotton subsidies and the on-going distortions to

cotton production in the LDCs and the African cotton producing and exporting countries.

 The WTO intended to ensure the phasing out of all

forms of subsidies and domestic support that have a distorting effect on international cotton market, and duty and quota free access for cotton and cotton by products by LDCs.

Trade Negotiations in Cotton (Cont’d)

 Ministerial Decision on Cotton (WT/MIN(15)/W/45)

 Market Access: Developed Country Members to give LDC

duty-free and quota-free market access while Developing Members grouped into two positions, to give and not to give.

 Domestic Support: Members’ reforms in their domestic

cotton policies are acknowledged by the Decision and stressed for more efforts.

 Export Competition: Developed Countries are obliged to

prohibit cotton export subsidies in immediate terms and Developing Countries later.

Implications for Indonesia from Cotton Decision

 China as the largest importer and the biggest market

for Cotton in the world is a developing member as Indonesia is listed.

 China is willing to give duty-free and quota-free access

to LDCs for Cotton products, meanwhile Indonesia is still considering this policy. This could affect Indonesia’s export to China, but not in the near future, since the main cotton exporter to China is India.

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