WTO Agricultural Trade Negotiations Prepared by Rony Soerakoesoemah - - PDF document

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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

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Canada-Indonesia Trade and Private Sector Assistance Project (TPSA)

Importance of the Agricultural Sector

• In Developing Countries

– Agriculture – Rural Development – Trade & business

• The sector

– Contribute a large share of GDP – Primary source of employment

Play a crucial role in economic development and reducing poverty

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Developed vs. Developing in Agricultural sector

High High High High Low Low Low 4

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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.

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Agriculture Committee in the WTO Structure

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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).

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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)
• ver 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)
• ver a ten-year period with a minimum 10% tariff reduction for any one

product.

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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

• ver 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

• ver a ten year period.

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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.

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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

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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

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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

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Canada-Indonesia Trade and Private Sector Assistance Project (TPSA)

Domestic Support Boxes: Green Box

• Subsidies that are deemed not to distort trade,
• r 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

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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.

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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.

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• 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

DDA Agricultural Trade Negotiations (2)

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• 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.

DDA Agricultural Trade Negotiations (3)

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• 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

DDA Agricultural Trade Negotiations (4)

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Current status of the DDA Agricultural Trade Negotiations

• 28 November 2014 Members seek more information on policies

affecting latest cotton market trends

• 17 December 2014 During an informal meeting WTO members discuss

how to advance services negotiations for post-Bali work programme which will be determined based on the progress in agriculture and non agricultural market access negotiation.

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Negotiating groups and proposals on agriculture

• 1. ACP: African, Caribbean and Pacific countries with preferences in the EU
• 2. African group - African members of the WTO
• 3. Asian developing members - Asian developing WTO members. * (Indonesia is a member)
• 4. EU (28 member states)
• 5. Mercosur - Common Market of the Southern Cone, a customs union
• 6. G‐90 (African Group + ACP + least‐developed countries) - Least developed countries: the world’s poorest
• countries. Angola, Bangladesh, Benin
• 7. Burkina Faso, Burundi, Cambodia, Central Africa
• 8. Small, vulnerable economies (SVEs)
• 9. Recent new members (RAMs)

10.Low‐income economies in transition 11.Cairns group* - Coalition of agricultural exporting nations lobbying for agricultural trade liberalization. 12.Tropical products - Coalition of developing countries seeking greater market access for tropical products 13.G‐10 - Coalition of countries lobbying for agriculture to be treated as diverse and special because of non‐trade concerns 14.G‐ ‐ ‐ ‐20* - Coalition of developing countries pressing for ambitious reforms of agriculture in developed countries with some flexibility for developing countries (not to be confused with the G‐ ‐ ‐ ‐20 group of finance ministers and central bank governors, and its recent summit meetings) 15.G‐ ‐ ‐ ‐33* (Also called “Friends of Special Products” in agriculture. Coalition of developing countries pressing for flexibility for developing countries to undertake limited market opening in agriculture) 16.Cotton‐4 - West African coalition seeking cuts in cotton subsidies and tariffs

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Indonesia’s trade disputes in agricultural trade

Measures Concerning the Importation of Chicken Meat and Chicken Products.

• On 16 October 2014, Brazil requested consultations with Indonesia concerning certain measures imposed by Indonesia on the

importation of meat from fowls of the species Gallus domesticus and products from fowls of the species Gallus domesticus.

• Brazil claims that the measures are inconsistent with Articles in the SPS Agreement; TBT Agreement; the Agreement on

Agriculture; the Agreement on Importing Licensing Procedures; the Agreement on Preshipment Inspection; the GATT 1994.

• On 31 October 2014, Australia, New Zealand, Chinese Taipei and the United States requested to join the consultations. On 3

November 2014, the European Union requested to join the consultations. Subsequently, Indonesia informed the DSB that it had accepted the requests of Australia, the European Union, New Zealand, Chinese Taipei and the United States to join the consultations.

Importation of Horticultural Products, Animals and Animal Products

• On 30 August 2013, New Zealand requested consultations with Indonesia concerning certain measures it imposes on the

importation of horticultural products, animals and animal products.

• New Zealand claims that the measures are inconsistent with Articles of the GATT 1994; the Agreement on Agriculture; the Import

Licensing Agreement; and the Agreement on Preshipment Inspection.

• On 10 September 2013, the United States requested to join the consultations. On 16 September 2013, Canada requested to join

the consultations. On 18 September 2013, the European Union and Thailand requested to join the consultations. On 19 September 2013, Australia requested to join the consultations. Subsequently, Indonesia informed the DSB that it had accepted the requests of Australia, Canada, the European Union and Thailand to join the consultations.

Importation of Horticultural Products, Animals and Animal Products

• On 30 August 2013, the United States requested consultations with Indonesia concerning certain measures it imposes on the

importation of horticultural products, animals and animal products.

• The United States claims that the measures are inconsistent with Articles of the GATT 1994; the Agreement on Agriculture; the

Import Licensing Agreement; and the Agreement on Preshipment Inspection.

• On 10 September 2013, New Zealand requested to join the consultations. On 16 September 2013, Canada requested to join the
• consultations. On 18 September 2013, the European Union and Thailand requested to join the consultations. On 19 September

2013, Australia requested to join the consultations. Subsequently, Indonesia informed the DSB that it had accepted the requests of Australia, Canada, the European Union and Thailand to join the consultations. 22

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Thank you for your attention