State of WTO Agricultural Negotiations

Meeting on the Integrated Assessment of Trade

Liberalization in the Agriculture Sector 19-20 February 2003

Note: The views expressed do not represent

the WTO Secretariat or the member states of the WTO.

Introduction

• A first draft of the modalities was presented to WTO Ministers last week in Tokyo by the Chair of the Special Session (Mr S. Harbinson). They will be proposed again at the special session of the committee on agriculture at the end of this month. The paper is available at the WTO website: www.wto.org

• The proposals cover market access, export competition, domestic support, S & D provisions and non-trade concerns.

• Overall members are still far apart on many of the proposals. Fundamentally, the issue is the level of ambition of further reform in agricultural trade

• These spill over into the methods to be applied in preparing draft schedules and matters relating to the rules and disciplines of the Agreement

Outline

• Mandate of negotiations• Timeline of negotiations• Major areas of negotiations

– Market access (tariffs, tariff quotas, special safeguard, special treatment)

– Export competition (export subsidies, export credits)– Domestic support (amber, green, blue boxes)

• Background information on rice

Doha Mandate

• Doha Declaration 14 November 2001 on Agriculture– Building on the work undertaken already– Long term objective of fair and market orientated agriculture

trading system

• Doha Work Programme:– substantial improvements in market access– Reductions of, with a view to phasing out, export subsidies– substantial reductions in trade distorting support– Special and differential treatment integral to negotiations and

outcome– Take account of non-trade concerns

 

Timeline, 2003-05

• Ministerial Meeting in Tokyo (1st draft of modalities)• February 2003 – Special Session of Committee on

Agriculture• 31 March 2003 - Modalities to be established.• Fifth Ministerial Conference (Cancun) in September

2003 - members are to produce their first offers or comprehensive draft commitments

• The negotiations are to end by 1 January 2005

Recall: Major Provisions

A. Market Access B. Domestic Support C. Export Competition

TariffsBound tariffsCeiling bindings

Minimum AccessTariff Quotas

Special SafeguardSpecial Treatment

Amber BoxReduction Commitments

Blue BoxProduction Limiting

Green BoxNon Trade Distorting

De Minimis Exemptions

Developing Country Exemptions

Quantity Reductions

Value Reductions

Recall: UR commitments

Developed countries6 years: 1995–2000

Developing countries10 years: 1995–2004

Tariffsaverage cut for all agricultural

products– 36% – 24%

minimum cut per product –15% –10%Domestic support

cuts in total (“AMS”) supportfor the sector

– 20% – 13%

Exportsvalue of subsidies (outlays) – 36% – 24%subsidized quantities – 21% – 14%

Proposal on Tariffs (Applied to Developed Countries)

• The following reductions shall apply to final bound tariffs over a period of 5 years:– For all tariffs greater than 90%, average reduction by

60 percent with a minimum cut of 45 percent per tariff line

– For all tariffs lower than or equal to 90% and greater than 15%, average reduction by 50 percent with a minimum cut of 35 percent per tariff line

– For all tariffs lower than or equal to 15%, average reduction by 40 percent with a minimum cut of 25 percent per tariff line

Other Aspects of Tariff Proposals

• Tariff preferences– To minimize the loss of tariff preferences received by

some developing countries, the tariff reduction can be implemented in 8 (instead of 5) years

– However, this shall be applicable only for products representing a quarter of total exports of beneficiary countries

• Tariff Escalation– Where tariffs on processed products are higher than on

primary products, the tariff reduction must be higher on the processed products

Proposal on Tariffs (Applied to Developing Countries)

• Strategic Products– Developing countries can exempt certain products as “strategic

products” with respect to food security, rural development and/or livelihood security. Tariffs would be reduced by 10% over ten years with a minimum cut of 5%

• Other agricultural products (implemented over 10 years)– For all tariffs greater than 120%, average reduction by 40 percent

with a minimum cut of 30 percent per tariff line– For all tariffs lower than or equal to 120% and greater than 20%,

average reduction by 33 percent with a minimum cut of 23 percent per tariff line

– For all tariffs lower than or equal to 20%, average reduction by 27 percent with a minimum cut of 17 percent per tariff line

Tariff Quotas (Applied to Developed Countries)

• Final bound tariff quotas, which are less than 10% of current domestic consumption, shall be increased to 10% in equal installments over a 5 year period. Up to a fourth of tariff lines can be bound at 8% provided that a corresponding number of tariff lines are bound at 12%

• Current domestic consumption is the average consumption over the 1999-2001 period

• In-quota duty free access shall be given for tropical products, whether in processed or primary form

Tariff Quotas (Applied to Developing Countries)

• Tariff quota volumes need not be expanded for strategic products

• For other agricultural products, final bound tariff quotas that are less than 5.5% of current domestic consumption shall be increased to 6.6% in equal installments over a 10 year period. Up to a fourth of tariff lines can be bound at 5% provided that a corresponding number of tariff lines are bound at 8%

Special Safeguards

• These are to be eliminated for developed countries after the period of tariff reductions

• Developing countries shall retain the right to use special safeguards

Export Subsidies (Applicable to Developed Countries)

• All export subsidies shall be eliminated within 10 years. This shall be conducted in two phases:– For agricultural products representing at least half of

the aggregate final bound level of budgetary outlays, subsidies shall be eliminated within 5 years

– The remaining products shall be reduced so that by the 10th year, budgetary outlays and quantities shall be reduced to zero

Export Subsidies (Applicable to Developing Countries)

• All export subsidies shall be eliminated within 13 years. This shall be conducted in two phases:– For agricultural products representing at least half of

the aggregate final bound level of budgetary outlays, subsidies shall be eliminated within 10 years

– The remaining products shall be reduced so that by the 13th year, budgetary outlays and quantities shall be reduced to zero

Domestic Support

• Developed Countries:– Amber box (final bound total AMS) measures shall be reduced by

60% over a period of 5 years.– Blue box measures shall be bound at the average level of the

period 1999-2001 and reduced by 50% over a period of 5 years.• Developing Countries

– Amber Box measures shall be reduced by 40% in equal installments over a period of 10 years.

– Blue box measures shall be reduced by 33% over a period of 10 years.

– Article 6.2 has been enhanced with additional measures (concessional loans, risk management, etc.) which are exempt from reduction commitments

Domestic Support: Green Box

• Green box measures shall be maintained.

• Proposal to include animal welfare and new S & D elements, including support for staple crops for food security purposes and for maintenance of small scale family farms.

Final Tariff Bindings on Rice

Country Final Bound Tariffs

China 65

Columbia 189

Indonesia 160

Nigeria 150

Export Subsidies on Rice

EXPORT SUBSIDIES ON RICE

MEMBER CURRENCY YEAR Commitment level Notified Oultay Percent Utilized Commitment level Notified Oultay Percent UtilizedColumbia US $ Millions Ano civil 105.67 0 0 102.52 0 0EC Euro Millions Marketing year 40.40 26.4 65 36.80 32.3 88Indonesia US$ Millions Calendar year 24.95 0 0 24.27 0 0USA US$ Millions Year beginning with Oct. 1 5.04 0 0 2.37 n.a.Uruguay US$ Millions Año de commercialisation 1.31 0 0 1.28 n.a.Venezuela US$ Millions Calendar year 0.25 n.a. 0.24 n.a.

MEMBER UNIT YEAR Commitment level Notified VolumesPercent Utilized Commitment level Notified VolumesPercent UtilizedColumbia tonnes Año Civil 17734 0 0 17440 0 0EC tonnes 1 September - 31 August 139300 140400 101 133400 132300 99Indonesia tonnes Calendar year 278767 0 0 274571 0 0USA tonnes year beginning with July 1 85175 0 0 38554 n.a.Uruguay tonnes Año de commercialisation 49432 0 0 48686 n.a.Venezuela tonnes 01/01 al 31/12 1225.13 n.a. 1206.69 n.a.

1999 2000

1999 2000

Domestic Support Notified

Non-Exempt Domestic Support(US$ Millions)

1995 1996 1997 1998 1999 2000Australia* Rice 0 0 0 0 0Brazil* Rice 110 47 22 26Chile Rice 0 0 0 0EC* Rice 653 649 576 478Hungary* RiceIndonesia Rice 262Japan* Rice 27,597 22,705 19,540Korea* Rice 2,614 2,374 1,981 1,077 1,264Philippines Rice 10 33 21 8Thailand* Rice 352 498 299 394US* Rice 12 6 6 21

TOTAL 31,348 26,312 22,445 2,004 1,264 262

Trends in Rice Production and Trade

• Over the past twenty years, rice production, yield and trade have all gone up. – Production has gone up by 2.1 per cent annually.

– Trade measured by rice imports has gone up more at 2.7 per cent.

– Area devoted to rice has only grown by 0.3 percent per annum so that yields have gone up world-wide from 2.8 metric tons per hectare in 1980 to about 4 metric tons per hectare in 2001.

Trends in Rice Trade

RICE EXPORTS AND IMPORTS1980-2000

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

YEAR

Met

ric

To

ns

Rice Exports Rice Imports

Trends in Production

TRENDS IN RICE PRODUCTION

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

YEAR

ME

TR

IC T

ON

S

Increasing Trade in the 1990s

1980-90 1991-95 1996-2000Production 459,839,878 532,286,870 587,121,994Exports 12,749,893 17,318,722 23,578,937Imports 12,498,286 17,071,436 22,854,606Share of Exports 2.8% 3.3% 4.0%Share of Imports 2.7% 3.2% 3.9%

Share of Trade in World Production of Rice

SHARE OF RICE TRADE IN WORLD PRODUCTION

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

YEAR

PE

R C

EN

T

Imports as Share of Production Exports as Share of Production

Top Rice Traders in 2001

TOP TEN EXPORTERS IN 2001 TOP FIFTEEN IMPORTERS IN 2001  Thailand   Côte d'Ivoire  Viet Nam   Nigeria  United States of America   Iraq  Pakistan   Philippines  India Iran China   Saudi Arabia Myanmar   Brazil  Uruguay   Senegal Egypt Japan Australia Indonesia

  Korea, Dem People's Rep United Arab Emirates South Africa Malysia Cuba