I. Agriculture
The agriculture negotiations
apply to the products covered under the Agreement
on Agriculture (AOA) of the World Trade
Organisation (WTO), namely, all basic agricultural
products, the products derived from them and all
processed agricultural products. This also
includes wines, spirits, tobacco products, fibres
such as cotton, wool and silk and raw animal skins
for leather production. Fish and fish products and
forestry products are not included.
The three main elements or
“pillars” of the Agreement on Agriculture (AOA)
and the negotiations are: (i) market access, (ii)
domestic support and (iii) export competition. The
Doha Ministerial Declaration of November 2001
committed Members 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.
Special and differential treatment for developing
Members is also intended to be an integral part of
the modalities.
The Chair of the Committee on
Agriculture (Special Session) brought out a fourth
revision of draft modalities for agriculture on 6
December 2008. Discussions on this text began in
September 2009. From July 2009, the Chair has been
conduction discussions along two tracks: namely,
data requirements for implementing modalities and
issues bracketed or otherwise annotated in the
draft agriculture modalities text issued on 6
December 2008. The discussions in the first
track are aimed at identifying the base data that
needs to be annexed with modalities and devising
the formats in which this data will be presented.
The main elements of the draft
agriculture proposals are summarized below:
II. MARKET ACCESS
The customs tariff is the duty charged on
the import of any good into the domestic territory
of a country. The negotiations at the WTO are on
bound customs tariffs, which are the ceiling rates
notified to the WTO, while the tariffs which are
actually applied by the customs authorities on
imports into a country are the applied customs
tariffs. The applied tariffs cannot ordinarily
exceed the bound customs tariffs in the WTO Member
countries.
Developed countries would have to reduce
their bound tariffs in equal annual instalments
over five years with an overall minimum average
cut of 54%. Developing countries would have to
reduce their final bound tariffs in equal annual
instalments over ten years undertaking a maximum
overall average cut of 36%.
Both developed and developing Members
would have the flexibility to designate an
appropriate number of tariff lines as Sensitive
Products, on which they would undertake lower
tariff cuts. Even for these products, however,
there has to be “substantial improvement” in
market access, and so the smaller cuts would have
to be offset by tariff quotas allowing greater
access for imports. The three issues being
negotiated, therefore, are the number of Sensitive
Products, the tariff cuts they are to take and the
compensatory access through tariff quotas.
While this flexibility is available to
both developing and developed countries, it is
particularly important for developed countries to
be able to protect their commercially sensitive
tariff lines.
III. Special Products
This is a special and differential
treatment provision that allows developing
countries some flexibility in the tariff cuts that
they are required to make on a designated number
of products. This is critical for countries such
as India to meet their food and livelihood
security concerns and rural development needs.
The revised draft modalities of 6
December 2008 propose an SP entitlement of 12% of
agricultural tariff lines. The average tariff cut
on SPs is proposed as 11%, including 5% of total
tariff lines at zero cuts.
IV. Special Safeguard Mechanism
This is another special and
differential treatment provision exclusively for
developing countries that gives them the right to
have recourse to a Special Safeguard Mechanism (SSM)
based on import quantity and price triggers. The
SSM is important for developing countries in order
to protect their poor and vulnerable farmers from
the adverse effects of an import surge or price
fall.
The safeguard duties under the
proposed SSM would be triggered by either an
import quantity trigger or a price trigger. The
trigger for invoking the SSM determines when the
safeguard duty can be imposed. If the import
quantity trigger is set too high, the SSM loses
all efficacy because it can then only be used in
the most exceptional circumstances. The same holds
true if the price trigger is set too low.
The main issues being
discussed are: (a) the trigger: i.e. when the
mechanism would be applicable; (b) the size of the
remedy: i.e. how high overall duties can go above
the MFN tariff; and (c) duration of the remedy and
whether safeguard duties could be applied in
consecutive years. In July 2008, discussion was
essentially centred on the second part, namely,
the circumstances in which the pre-Doha bound
rates could be breached. Exporting countries
wanted an initial trigger of 40% i.e imports had
to be at least 140% of the previous period imports
before the country would impose a safeguard duty.
The G-33 (and India) argued that this was far too
high a trigger, effectively denying them recourse
to the SSM.
Unreasonable restrictions on
the SSM in terms of very high triggers and
inadequate remedies defeat the very objective of
protecting poor, vulnerable farmers in developing
countries. Given its objectives, it must be a
simple and effective mechanism. The exporting
countries on the other hand are seeking to ensure
market access into developing countries by trying
to limit such provisions. The G-33 coalition has
been striving to ensure an effective safeguard
instrument.
The G-33 has circulated a set
of documents in the WTO. These documents call for
refocusing discussions on the development
dimension of the measure and offer a response
based on the Group’s technical analysis to
various restrictive elements being proposed by the
SSM opponents.
V. Tariff Capping
This is primarily a developed
country concern, particularly some countries
belonging to the G-10, namely, Japan, Iceland,
Switzerland and Norway. These countries impose
prohibitively high tariffs on their agricultural
products. Tariff capping would bring down these
very high tariffs, over and above what would be
required by the tariff reduction formula. While
these developed countries are not prepared to
accept this, on the other hand, on industrial
goods, the Swiss coefficient in the tariff
reduction formula limits all new bound tariffs to
levels below the coefficient (except for the
products under flexibilities).
VI.Tariff Simplification
This is an entirely developed
country concern, particularly for the EU, Norway,
Switzerland and Canada. These countries use a
large number of non-ad valorem (NAV) tariffs on
their agricultural imports. Developing countries,
on the other hand, rely predominantly on ad
valorem (AV) duties. NAV duties act as an
additional layer of non-transparent protection. As
these are used mainly by developed countries, they
act as a barrier to market access for developing
country exports. In contrast, in the case of
industrial goods, the draft modalities propose
100% tariff simplification.
VII. Tropical and
Diversification Products and long-standing
preferences
The
mandate of the Doha Round committed Members to
addressing the issue of achieving the fullest
liberalisation of trade in tropical agricultural
products. The draft modalities, accordingly,
propose faster and deeper cuts on such products.
In the WTO agriculture negotiations, the
proponents are 10 Latin American countries (the
Tropical Products Group). They want the EU, US,
Switzerland, Japan and some of the other developed
country importers to take faster and deeper cuts
on tropical products.
The
mandate also recognized the importance of
longstanding preferences and said that the issue
of preference erosion would be addressed. As per
the modalities being discussed, the tariffs on
products in an agreed list, on which certain
countries have been accorded preferences in
imports, would be cut over a longer period and/or
take lower cuts. The proponents here are countries
belonging to the African-Caribbean-Pacific (ACP)
Group.
The
two groups involved thus have competing interests.
While the Tropical Products Group want faster and
deeper liberalization, the ACP Group is seeking to
protect its preference margins.
Discussions
in the WTO on this subject are focused on two
aspects: (i) the methodology for reducing tariffs
on tropical products and preference products and
(ii) deciding on the number of products to be
included in each list. These discussions have,
however, taken place mainly amongst the EU, US,
the Tropical Products Group and the ACP
Group.
While
India is not a member of the Tropical Products
Group, India too has export interests in many of
the products and has been demanding that the
matter should be discussed in a more transparent
manner amongst the larger WTO membership. India
has also been negotiating to protect its own
interests in tropical product exports.
Progress
on the subject was closely linked with an
agreement relating to the import of a particular
tariff line of bananas. On 15 December 2009, an
agreement was signed amongst the ACP, the EU and
the Tropical Products Group, namely, the “Geneva
Agreement on Trade in Bananas”. As per the
Agreement, the EU shall maintain an MFN
tariff-only regime for the importation of bananas.
Thus, there will be no more quotas for the ACP
countries. The EU will:
·
cut its MFN import tariff on bananas
in eight stages, from the current rate of €176/tonne
to €114/tonne in 2017 at the earliest; and
·
make the biggest cut first, by
€28/tonne to €148/per tonne, once all parties
sign the deal.
In return, Latin American countries will:
·
not demand further cuts in the
framework of the Doha Round of talks on global
trade once it resumes;
·
settle several legal disputes pending against the
EU at the WTO, some dating back as far as 1993.
Once the European Parliament gives its consent to
the deal, the EU will bind its new tariff schedule
– meaning it commits not to raise tariffs above
the new rates. The conclusion of the Banana deal
signals that rapid progress will also be made on
Tropical Products and Preference Erosion.
VIII. DOMESTIC SUPPORT
The Agreement on Agriculture
distinguishes between support programmes that
stimulate production directly, and those that are
considered to have no direct effect. Domestic
support that has a direct effect on production and
trade has to be cut back.
The draft modalities propose cuts in the
Overall Trade-distorting Domestic Support (OTDS)
as well as cuts or caps on the individual
categories of domestic support, referred to as
Amber Box, Blue Box and Green Box support.
The current proposal is for a 70% cut in
OTDS by the US and 80% by the EU. A 70% cut brings
US OTDS to about US$ 14.5 billion, from their
current ceiling of US$ 48.2 billion. This is still
well above their estimated applied level of US$ 7
billion in 2007.
IX. Cotton
This issue is of prime importance to
Burkina Faso, Benin, Mali and Chad (the Cotton 4).
The C-4 proposal on the table implies an 82.2% cut
in domestic support for cotton by the US.
Apart from the C-4, it is of significance
to Brazil and India also, both major exporters of
cotton. In India, cotton is also a politically
sensitive subject. This issue has seen very little
multilateral discussion at the WTO.
X. EXPORT COMPETITION
In terms of the draft proposals
of 6 December 2008 , developed countries are
required to eliminate all forms of export
subsidies by 2013. Developing countries have to do
so by 2016.
Under the WTO’s Agreement on
Agriculture, developing countries had the
flexibility to provide certain subsidies, such as
subsidising of export marketing costs, internal
and international transport and freight charges
etc. According to the current proposals, this
provision would continue to be available to
developing countries till 2021 i.e. 5 years beyond
the year 2016 when they would be required to phase
out all other forms of export subsidies.
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India’s Priorities in
the Agriculture Negotiations |
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Safeguarding
the interests of low income and resource
poor agricultural producers remains
paramount for India. In this context, the
following issues are vital:
·
Overall tariff
reductions on bound rates of not more than
36%;
·
Self-designation of an appropriate number of
Special Products guided by indicators based
on the three fundamental and agreed criteria
of food security, livelihood security, and
rural development needs;
·
An operational
and effective Special Safeguard Mechanism to
check against global price dips and import
surges, which is more flexible than the
existing special safeguard available mainly
to developed countries;
·
Substantial and
effective cuts in OTDS by the US and the EC
and tighter disciplines on product-specific
limits on AMS and the Blue Box;
·
Simplification
of non-ad valorem tariffs on agricultural
products, by the developed countries, as has
already been done by developing countries;
·
Capping of
tariffs on agricultural products, over and
above the tariff reduction formula, to
address the issue of some very high tariffs
imposed by some developed countries on
agricultural products; and
·
Safeguarding
India’s export interests in the
negotiations on tropical products and
preference erosion.
India
has been working constructively with her
coalition partners in developing country
groupings such as the G-20 and the G-33 in
order to achieve an outcome in the
agricultural negotiations that would fully
reflect the level of ambition of the Doha
mandate and the interests of developing
countries.
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Trade
