A further round of WTO agricultural trade negotiations is now underway. This lecture discusses
Non-trade concerns are not elaborated further in this Article, but the preamble to the URAA indicates that these
include food security and the need to protect the environment. The EU is keen to see a discussion of multifunctionality
and animal welfare under this heading. Other objectives and concerns mentioned in that preamble include the establishment
of fair and market-oriented agricultural trading system (repeated in Article 20) and the need to take into account
the particular needs and conditions of developing countries and the 'possible negative effects of the implementation
of the reform programme on least developed and net food importing countries'. The special and differential
treatment to developing country Members is also referred to in the URAA preamble where it says that such treatment
'is an integral element of the negotiations'.
The agricultural text in the Doha Ministerial Council Declaration initiating the Doha Round reads as follows:
'13. We recognize the work already undertaken in the negotiations initiated in early 2000 under Article 20 of the Agreement on Agriculture, including the large number of negotiating proposals submitted on behalf of a total of 121 Members. We recall the long-term objective referred to in the Agreement to establish a fair and market-oriented trading system through a programme of fundamental reform encompassing strengthened rules and specific commitments on support and protection in order to correct and prevent restrictions and distortions in world agricultural markets. We reconfirm our commitment to this programme. Building on the work carried out to date and without prejudging the outcome of the negotiations we commit ourselves to comprehensive negotiations aimed at: substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support. We agree that special and differential treatment for developing countries shall be an integral part of all elements of the negotiations and shall be embodied in the Schedules of concessions and commitments and as appropriate in the rules and disciplines to be negotiated, so as to be operationally effective and to enable developing countries to effectively take account of their development needs, including food security and rural development. We take note of the non-trade concerns reflected in the negotiating proposals submitted by Members and confirm that non-trade concerns will be taken into account in the negotiations as provided for in the Agreement on Agriculture.
14. Modalities for the further commitments, including provisions for special and differential treatment, shall be established no later than 31 March 2003. Participants shall submit their comprehensive draft Schedules based on these modalities no later than the date of the Fifth Session of the Ministerial Conference. The negotiations, including with respect to rules and disciplines and related legal texts, shall be concluded as part and at the date of conclusion of the negotiating agenda as a whole.'
Note the commitment to 'substantial improvements in market access' and the rather convoluted wording on export subsidies 'reductions of, with a view to phasing out, all forms of export subsidies', which stops short of mandating the actual elimination of export subsidies in the current round. The EU invested huge energy in avoiding a commitment to eliminate export subsidies, although later (in May 2004) it recognised that maintaining this position was just a huge stumbling block to progress.
The agricultural negotiations are part of what is referred to as the WTO's 'built-in agenda'. In other words, these negotiations (along with new negotiations in the services and intellectual property rights protection) were already mandated in the Uruguay Round Agreements.
At the Third WTO Ministerial Meeting in Seattle in November 1999, WTO Members sought to launch a new comprehensive round of trade negotiations (dubbed by some the Millenium Round) which would have embraced all the issues covered by the Uruguay Round plus, some countries hoped, new issues such as competition policy, labour standards, trade and the environment, etc. The Seattle talks failed to reach agreement to launch a new round, but agreement was reached in November 2001 at Doha to launch a new round of negotiations as a single undertaking.
From the point of view of the agricultural negotiations, including it in a comprehensive round has ambiguous effects. On the one hand, negotiating across a range of issues simultaneously broadens the scope for trade-offs and makes it easier to reach an overall agreement (in other words, a country can make up for perceived losses or concessions in the agricultural negotiations by making gains in the negotiations on services; otherwise, it must try to find offsetting gains in the agricultural talks which may be more difficult). On the other hand, introducing all the complexities of a comprehensive Round can lead to negotiations extending over many years, whereas a narrower focus on agriculture alone (especially given that the modalities of disciplining agricultural support were agreed in the Uruguay Round) could lead to an earlier agreement.
Negotiations are held in a Special meeting of the Committee of Agriculture. This Committee oversees the implementation of the UR Agriculture Agreement and meets monthly in Geneva. The Special Committee meets back to back with the regular meetings. Agreed texts must be adopted at meetings of the WTO Ministerial Council which usually meeting every two years (1999 Seattle, 2001 Doha 2003, Cancun, 2005 Hong Kong), where decisions are taken by consensus. Due to the ever-increasing membership of the WTO, negotiations in the full Special Committee would be too unwieldy, and the practice has emerged of 'Green Room' meetings where a selected group of countries representing the main country interests try to reach agreements.
Developing countries have played a much more dynamic and important role in the Doha Round negotiations compared to the Uruguay Round. Negotiations have been facilitated by the emergence of a number of well coordinated groups: the G-20, led by Brazil, China, India and South Africa, with strong offensive export interests; the G-90, consisting of most other developing countries who have lobbied hard for special and differential treatment; the G-33, who are largely net-importing developing countries who have pushed the ideas of Special Products and a Special Safeguard Mechanism for developing countries; as well as other groups, e.g. the Cotton-4 consisting of four West African countries particularly dependent on cotton exports.
In the next section, we review the opening positions and issues in the negotiations.Safeguards are contingency restrictions on imports taken temporarily to deal with a sudden surge in imports. WTO has special rules governing safeguards, but the Agriculture Agreement has its own (slightly less constraining) rules - the Special Safeguard clause SSG. However, only countries which underwent tariffication and reserved the right to use the SSG in their schedules of commitments can make use of this clause for those particular commodities. Issues include whether the SSG should be abolished, or extended to a wider group of countries.
Multifunctionality exists where a public good is a joint product with agricultural production
activity, such that the stimulation of the public good requires payments coupled to the maintenance of agricultural
production. Currently, such payments would have to be included in the Amber Box as part of a country's AMS and
would have to be reduced over time. The EU wants the right to support agricultural production where it provides
multifunctional benefits to be recognised in the WTO rules.
The legitimacy of multifunctionality as a justification for permitting general payments to farmers has been attacked
(see Lecture 5 for discussion of multifunctionality). What is at issue is whether general agricultural programmes are the most efficient means of ensuring
the provision of those public goods associated with agricultural production, as distinct from targeted programmes
which address the market failure directly. Also, given the EU's generally protectionist record in the agricultural
negotiations, many other countries are highly suspicious that the proposal is designed simply to allow the EU to
continue to support its farmers under another guise.
[Download a summary of the US negotiating proposal]
An issue for the US is that the credibility of its proposals was undermined by the significant increases in support payments it has made to its farmers since the late 1990s and which are now written into its 2002 Farm Act, even though these increased payments look likely to be within its WTO commitments. The USDA ERS page explains the contents of the 2002 Farm Act.
[download its negotiating proposal]
Proposals for the EU's agricultural offer in the WTO negotiations were submitted by the European Commission to EU agricultural ministers and the Article 133 Committee on December 16th 2002. The EU proposal suggests the following actions be taken over a six-year period for developed countries and a ten-year period for developing countries:
In addition the EU is proposing that:
See specific lecture.
By common consent, the market access issue pillar is proving the most difficult to negotiate. The Framework Agreement (FA) had set out a number of agreed principles to guide the negotiations. These were: a high level of ambition in the overall outcome; that highest tariffs would be reduced the most; that a tiered approach would be used; that special treatment would apply to sensitive products; and that SDT would apply to developing countries. However, no numbers were provided to show how these principles would be made operational.
A number of proposals were made regarding the structure of an appropriate formula in the run-up to the Hong Kong Ministerial. The G-20 put forward a possible structure with the following elements. Developed countries' tariffs would be categorised in 4 bands (0-20%; 20-50%; 50-75%; 61-80%; and above 75%). Developing countries would have four wider bands (0-30%; 31-80%; 81-130%; and above 130%). There would be a linear cut for each tariff line within each band, with the rate of reduction being steeper, the higher the band. The cuts would be on a line-by-line basis (in contrast to an average cut, as in the Uruguay Round). The rates of reduction for developing countries would be lower than those for developed countries. Developed countries would cap their tariffs at 100% and developing countries at 150%.
The US proposal was for a single set of four bands to be applied to both developed and developing countries, with the following thresholds: tariff lines of 0-20%, 20-40%, 40-60%, and above 60%. It suggested a mixed approach to the formulae to be used for making tariff reductions. Tariff lines which fall into the highest band would be reduced using a Swiss formula, those lines in the middle bands would be cut using a linear formula, and those lines in the lowest band would be subjected to a Uruguay Round approach. However, it later adopted the G-20 proposal of a linear formula cut in each band with modifications to ensure deeper cuts and to apply the concept of progressivity in each band. SDT would be operationalised by allowing lower reduction coefficients to developing countries in whichever formula applied. It also sought a cap on tariffs though at a lower level than the G-20 proposal.
The EU proposal in July 2005 was for a formula with three bands, with different thresholds for developed and developing countries. For developed countries, the thresholds would be 0-20%, 20-100% and above 100%. For developing countries, the thresholds would be 0-30%, 30-150% and above 150%. Within each band, it proposed the Uruguay Round approach (average percentage cuts with minimum cuts in each band). It proposed that the rates of reduction by developing countries would be two-thirds of the reduction rates for developed countries. It disagreed with the capping of tariffs. In October 2005 it made a more radical offer which narrowed the bands (0-30%, 30-60%, 60-90%, and over 90%) and increased the cuts within each band (with a maximum of 50% in the highest band, or 60% if additional flexibility was built in).
In the absence of numbers, the likely outcomes from these proposals cannot be compared. The G-20 proposal can be seen as forging a middle ground between the radical liberalisers (such as the US and the Cairns Group which advocate the use of the Swiss formula with a low tariff cap) and the reluctant liberalisers (such as the G-10 and the EU who favour the Uruguay Round approach).
The outcomes are further complicated by the provision in the FA concerning sensitive products. One issue is the number of tariff lines which might be declared sensitive - the US has suggested 1% while the EU has proposed 8%. The debate on sensitive products is linked to the degree of flexibility included in the tariff reduction formula. To ensure a significant degree of market opening, it is accepted that tariff rate quotas would have to be increased to compensate for a lower tariff reduction. However, there is disagreement whether the tariff reduction/TRQ expansion combination should be related to the main formula for tariff reduction or not. The EU has proposed a TRQ expansion formula which has not been accepted by the other main parties.
Other relevant market access commitments in the Hong Kong Declaration included the offer of duty free and quota free access to virtually all (97% of tariff lines, but the missing 3% could be crucial) exports of least developed countries to developed country markets and greater clarification on the rules governing special products and a special safeguard mechanism for developing countries.
The FA contained conditional agreement on the elimination of export subsidies. The remaining issues to be fleshed out in modalities were the parallel commitments in export credits, export state trading enterprises, and food aid, as well as to define the 'credible end date' and the implementation path. At the Hong Kong meeting, it was agreed to eliminate export subsidies by 2013, with front-loading to ensure a significant reduction in the early years of the implementation period. .
The Declaration suggested a new deadline of April 30 2006 for the completion of modalities and the submission of comprehensive draft Schedules based on these modalities by 31 July 2006. The Declaration also established a crosslink between the agricultural negotiations and negotiations on non-agricultural market access (NAMA) by stating that the negotiators should aim for a comparably high level of ambition in market access in both sets of negotiations.
Negotiating issues
Blandford, D. and Josling, T., 2006. Options for the WTO Modalities for Agriculture, IPC Discussion Paper, May.
Gifford, M., 2006. Unblocking the Doha Round Impasse: Possible Scenarios for the Agricultural Negotiations, IPC Issue Brief 21, November.
Negotiating progress
House of Commons, 2006. The WTO Doha Development Round: where next for world trade?, Research Paper 06/43
(useful background to the Doha Round as a whole, to set the agricultural negotiations in a broader context)
Supplementary reading
International Agricultural Trade Research Consortium Trade Policy Issue Papers
TP1 Disciplines on Domestic Support in the Doha Round
TP2 Market Access
TP3 Export Competition Disciplines in the Doha Round
(These papers were commissioned by the International Food and Agricultural Trade Policy Council).
Hanrahan, C. and Schnepf, R, 2005, WTO Doha Round:
Agricultural Negotiating Proposals, Congressional Research Service, Washington, D.C.
(good overview of the different positions and outstanding issues just before the Hong Kong Ministerial meeting)
The WTO Secretariat has prepared a useful briefing on tariff reduction methods in the agriculture negotiations.
The WTO website has relevant resources, including links to the main documents from the Doha Ministerial Conference and through its agriculture website. See, in particular, the Briefing Note on Agriculture prepared as background for the Hong Kong Ministerial meeting.
FAO is developing a series of short trade policy briefs and more detailed trade policy technical notes on issues related to the WTO negotiations on agriculture .
(
The trade policy briefs provide a succinct introduction to key policy questions addressed in major recent studies and their main findings. The trade policy technical notes provide a detailed discussion of the analytical approaches taken in recent studies and provide suggestions for further research required to fill identified gaps in empirical work )
World Bank pages on the agricultural negotiations. These are scattered on the Bank's Agricultural Trade website and on its Trade website. See in particular the useful Trade Notes series.
International Centre for Sustaintable Trade and Development agtradepolicy.org website
(this is a highly respected NGO which provides a reporting service on WTO meetings and events through regular weekly and monthly briefings. The agtradepolicy.org website has excellent links to documents and resources on the WTO agricultural negotiations. Their quarterly agricultural reports provide a good up to date account of developments.)
The International Food and Agricultural Trade Policy Council has a good set of short briefs on WTO and other agricultural trade issues.
Institute for Agriculture and Trade Policy
Trade Observatory pages
International Agricultural Trade Research Consortium papers
Australian Bureau of Agricultural
and Resource Economics (ABARE) trade papers (select year from button on left hand side)
The Norwegian Ministry of Agriculture maintains a 'WTO and Multifunctionality'
website which has links to conference papers produced by the 'Friends of Multifunctionality' group and other resources. See also the paper 'Non-trade
Concerns and Multifunctional Agriculture' presented by Norway to the WTO Special Session on Agriculture.
EU negotiating positions
DG Agri has started a new publications series called MAP - Monitoring Agri-Trade Policy. It consists both of a quarterly newsletter and occasional briefings providing in-depth analysis of relevant agricultural trade and agri-trade policy issues. As of December 2005, relevant briefings include:
The EU's position on trade-distorting farm support, Dec 2005 (3pp.)
The EU offer on market access, Nov 2005 (4pp.)
Technical note on deriving the TRQ expansion formula (2pp)
Analysing the EU's Oct 28th 2005 offer (4pp)
Defining AVEs (4pp)
DG Agri has also prepared a powerpoint file analysing the effects of their October 2005 offer on EU agriculture.