07/09/2015 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) WTO Agricultural Trade Negotiations Prepared by Rony Soerakoesoemah The Conference Board of Canada Jakarta, Indonesia September 9-10, 2015 1 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Importance of the Agricultural Sector • In Developing Countries – Agriculture – Rural Development Play a crucial role in – Trade & business economic development and reducing poverty • The sector – Contribute a large share of GDP – Primary source of employment 2 1
07/09/2015 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Developed vs. Developing in Agricultural sector Low High High Low Low High High 3 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) The Agreement on Agriculture The objective of the Agreement on Agriculture is to reform trade in the sector and to make policies more market-oriented. The Agreement consists of • the Agreement on Agriculture itself; • the concessions and commitments Members are to undertake on market access, domestic support and export subsidies; • the Agreement on Sanitary and Phytosanitary Measures; and • the Ministerial Decision concerning Least-Developed and Net Food- Importing Developing countries. 4 2
07/09/2015 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Agriculture Committee in the WTO Structure 5 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Agricultural Trade Negotiations in the Uruguay Round • During the Uruguay Round negotiations, all the agricultural products (not fisheries and forestry products) were brought under the Agreement on Agriculture • The Agreement on Agriculture is based on Three pillars: – market access — various trade restrictions confronting imports – domestic support — subsidies and other programmes, including those that raise or guarantee farmgate prices and farmers’ incomes – export subsidies and other methods used to make exports artificially competitive. • Except for LDCs, all the WTO members were required to make commitments in all these areas in order to liberalise agricultural trade. • Developing countries were given a limited element of special and differential treatment (S&DT). 6 3
07/09/2015 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) First Pillar-Market Access • Developed and developing countries to convert all non-tariff barriers into simple tariffs (a process known as tariffication). • All tariffs to be bound (i.e. cannot be increased above a certain limit). • Developed countries to reduce import tariffs by 36% (across the board) over a six-year period with a minimum 15% tariff reduction for any one product. • Developing countries to reduce import tariffs by 24% (across the board) over a ten-year period with a minimum 10% tariff reduction for any one product. 7 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Second Pillar-Export Competition • For developed countries, the value and volume of export subsidies to be reduced by 36% and 24% respectively from the base period 1986- 1990 over a six year period. • For developing countries, the value and volume of export subsidies to be reduced by 24% and 10% respectively from the base period 1986- 1990 over a ten year period. 8 4
07/09/2015 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Third Pillar-Domestic Support • All forms of domestic support are subject to rules. The WTO classifies domestic subsidies into three categories known as the Amber, Blue and Green Boxes . • Only the Amber Box is subject to reduction commitments as follows: – For developed countries, a 20% reduction in Total AMS (Amber Box) over six years commencing 1995 from a base period 1986-1988. – For developing countries, a 13% reduction in Total AMS (Amber Box) over ten years commencing 1995 from a base period 1986-1988. 9 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Domestic Support Boxes In WTO terminology Boxes -> Subsidies • Green means permitted • Amber means slow (be reduced) • Red means forbidden • NO RED BOX FOR Agreement on Agriculture • But things exceeding reduction commitment levels in Amber box are prohibited • Blue box means subsidies that are tied to programs that limit production 10 5
07/09/2015 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Domestic Support Boxes: Amber box • All domestic subsidies that are considered to distort production and trade. E.g. Market price support • Subsidies expressed in terms of “Total Aggregate Measurement of Support”(Total AMS) – all supports in one single figure • Subsidies are subject to WTO reduction commitments 11 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Domestic Support Boxes: Blue Box • This is the Amber box with conditions • Conditions designed to distort production • Deemed by WTO rules to be ‘partially decoupled’ from production and are not subject to WTO reduction commitments 12 6
07/09/2015 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Domestic Support Boxes: Green Box • Subsidies that are deemed not to distort trade, or at least cause minimum distortion and are not subject to WTO reduction commitments • They tend to be programmes that are not targeted at particular products, and include direct income supports for farmers that are not related to current production levels or prices. • Mostly they are government funded 13 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Special Safeguard Mechanism • Safeguards are contingency restrictions on imports taken temporarily to deal with special circumstances such as a sudden surge in imports • higher safeguards duties can be triggered automatically when import volumes rise above a certain level, or if prices fall below a certain level; and it is not necessary to demonstrate that serious injury is being caused to the domestic industry. 14 7
07/09/2015 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Agricultural Trade Negotiations in the Doha Development Agenda • Early 2000 Negotiations on agriculture began under Article 20 of the WTO Agriculture Agreement • November 2001 - Fourth Ministerial Conference in Doha, Qatar WTO Member governments agreed to launch new negotiations and other issues, in particular the implementation of the present agreements. – 121 governments submitted a large number of negotiating proposals with respect to agriculture – The declaration confirmed and elaborated the objectives, and set a timetable. Agriculture became part of the single undertaking in which virtually all the linked negotiations were to end by 1 January 2005 – long-term objective in the WTO Agreement: to establish a fair and market-oriented trading system through a programme of fundamental reform. 15 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) DDA Agricultural Trade Negotiations (2) • The programme included strengthened rules, and specific commitments on government support and protection for agriculture. • Purpose : to correct and prevent restrictions and distortions in world agricultural markets. The Implementation decision included: • Rural development and food security for developing countries • Least-developed and net food-importing developing countries • Export credits, export credit guarantees or insurance programmes • Tariff rate quotas 16 8
07/09/2015 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) DDA Agricultural Trade Negotiations (3) • September 2003 - Fifth Ministerial Conference in Cancún , Mexico, was intended as a stock-taking meeting. • 1 August 2004 - Some real progress was evident when members agreed on a framework with a set of decisions in the General Council • January 2005 - Original deadline was missed. • end of 2006 - Members unofficially aimed to finish the negotiations, but again unsuccessfully. 17 Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) DDA Agricultural Trade Negotiations (4) • December 2005 - Further progress in narrowing members’ differences was made at the Hong Kong Ministerial Conference • July 2008 - ministers came to negotiate “modalities” in Geneva where Director-General Pascal Lamy said they had agreed tentatively on a number of issues but were stuck on the “special safeguard mechanism” for developing countries. • Ambassador David Walker of New Zealand held talks on unsettled issues arising from the December 2008 draft 18 9
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