WTO Agriculture Negotiations Outstanding Issues for Developing Countries

1. WTO Agriculture NegotiationsOutstanding Issues for Developing Countries Tim Ruffer Oxford Policy Management tim.ruffer@opml.co.uk

2. Presentation Outline • Background • Key issues, what has been agreed and what remains to be negotiated • Market access • Domestic support • Export competition • Key issues for developing countries • Timing and requirements for agreement

3. Background to the negotiations • Under ‘built in agenda’, negotiations began in 2000 • New mandate under DDA 2001 • Work on technicalities of modalities began October 2003 • Framework agreed July 2004 • Deadline of 1 January 2005 postponed • No new deadline, but unofficial target of agreement at Hong Kong in December 2005. But behind schedule – failed to reach deal on “first approximations” in July • However some progress made in Dalian – agreement to use G20 framework (which focused on market access) as a starting point for future negotiation

4. Market Access • Most important part of modalities and most difficult to negotiate Key issues: • Tariff reduction formula (precondition for setting modalities in other market access areas) • Sensitive & special products • Special safeguards • How to address preference erosion • Quota size, administration and in-quota tariffs

5. Market Access What has been agreed • Ad valorem equivalents (agreement reached in May) • Tariff reductions • Tiered formula – steeper cuts for higher tariffs • Single approach – improved market access by all (except LDCs) • Reductions from bound rates • S&DT integral • TRQs. Expansion required • Sensitive products. Lower tariff reductions for an “appropriate number” of tariff lines. But “substantial improvements” in market access still required through tariff reductions and TRQ commitments • Special products. More moderate treatment for an “appropriate number” of products designated by developing countries • SSM. To be established for developing countries • Preference erosion. Will be addressed

6. Market AccessWhat remains to be negotiated • Tariff reduction under the tiered formula • Number of bands (Dalian proposed 5/4 for developed/ developing) • Thresholds for defining bands (Dalian proposed 20, 40, 60, 80% for developed and 30, 80, 130% for developing) • Type of tariff reduction for each band (Dalian proposed linear with cuts by developing countries at 2/3 of developed. EU has proposed flexibility on the level of cut around an average). Level of reduction not agreed • Dalian also proposes tariffs capped at 100%/150% for developed/ developing – fiercely opposed by G10 and ACP • Timeframe for tariff reduction • Tariff simplification?

7. TRQ expansion and administration • TRQ expansion if product shielded from major tariff cuts? • Ceiling on out-of-quota tariffs? • Improvements in TRQ administration • Sensitive and Special Products • Number of products and criteria for selection • Market-opening obligations (tariff reduction or TRQ expansion?) • SSG & Special safeguard mechanism • Little discussion of details • Preference erosion • Little discussion of details • Africa Group has proposed establishment of adequate timeframe and support mechanism for adjustment to erosion

8. Domestic SupportKey issues • Formula and timeframe for reductions • Methodology for establishing Amber Box caps • Future disciplines for Blue Box and Green Box

9. Domestic SupportWhat has been agreed • Tiered formula for overall level of support (amber box, de minimis and blue box). • Downpayment. Ceiling of overall support cut by 20% in first year. • Amber Box. Tiered formula and limits on supports for specific products. • De Minimis. Reduced by amount to be negotiated. Developing countries exempt if most allocated for subsistence and resource poor farmers. • Blue Box. Capped at 5% country’s agric production. Definition changed to include direct payments that do not require production. • Green Box. Review and clarification of supports. • S&DT. Longer implementation periods and lower reduction coefficients. Continued access to Article 6.2.

10. Domestic SupportWhat remains to be negotiated • Formula for reductions. Bands. • Methodology for establishing Amber Box caps. Base period and whether approach should be uniform • Green Box. Review and clarification of criteria. New disciplines? • Blue Box. How to measure BB component for cut and new measures (especially for US counter-cyclical payments)

11. Export Subsidies and CompetitionWhat has been agreed • All export subsidies eliminated by annual instalments • Developing countries provided longer implementation period • Continuation of Article 9.4 (subsidies for transportation and marketing) for a ‘reasonable period'

12. Export Subsidies and CompetitionWhat remains to be negotiated • Date for elimination of export subsidies • Disciplines for export credit, guarantees and insurance of 180 days or less • Food aid: role of international organisations, whether fully in grant form, monetisation, prohibition of tied food aid, transparency, binding commitments on supply from donors. • State Trading Enterprises. Approach to disciplines, definition of entities covered, S&DT, etc

13. Groser – key elements for progress • Market access • Number of tiers • Description of nature of tariff reduction formula • Further elaboration of flexibilities (SPs & sensitive products) • Domestic support • Structure of reduction commitments • Convergence on green box criteria • Export competition • Further elaboration of parallel commitments – particularly STEs & food aid

14. Key issues for developing countries

15. Timing and Requirements for Agreement • Urgency to complete by end 2006 – expiry of US ‘Trade Promotion Authority’. Requires agreement on modalities at Hong Kong • Intensive negotiations in September – 11 weeks before ministerial • Need to narrow negotiations to areas where a few political decisions required

16. Main blockages are currently tariff reduction formula (EU) and domestic support (US) – agreement required for progress in other areas. How can DCs influence? • Will require significant acceleration in negotiation pace and readiness by members to move away from entrenched positions • Concessions need to be provided for agreement  developing countries must weigh up priorities and consider where their key interests lie • At what cost are they willing to compromise to enable agreement?