Flexibilities for Developing Countries Case Study on Thailand s Agriculture. Robert Scollay New Zealand APEC Study Centre

Transcription

1 Flexibilities for Developing Countries Case Study on Thailand s Agriculture Robert Scollay New Zealand APEC Study Centre

2 Thailand s Agriculture (1) Shares of GDP: 9% Employment: 48% Exports: 19% Average tariffs Bound: 36% (non-agriculture: 27%) Applied: 26% (non-agriculture: 13%) High proportion of agricultural tariffs are non-ad valorem

3 Thailand s Agriculture (2) Characteristics low, declining productivity relatively low incomes + high share of employment important implications for poverty alleviation competitive export sectors coexist with sensitive sectors heavily dependent on protection for viability selected food processing industries benefit from high tariffs on competing inputs and low tariffs on inputs

4 Thailand s Agriculture (3) International Positioning member of Cairns group developed and developing country exporters pressing for market access and subsidy reduction/elimination G-20 Developing countries pressing for elimination of developed country subsidies while retaining some flexibilities for developing countries Less concerned about market access not a member of G-33 (promoters of special products ) actively pursuing FTA linkages

5 Market Access Flexibilities (1) Hierarchy of special access arrangements GSP: all developing countries (in principle): available to Thailand Better than GSP EU s Cotonou Agreement (formerly Lome Convention) with (77) ACP states US AGOA and CBI Duty free EU s EBA for least developed countries duty free quota free access for least developed countries committed at Hong Kong ministerial Australia/New Zealand SPARTECA provisions for Pacific island states Also special exclusionary preferential arrangements e.g EU s Sugar Protocol with ACP sugar producers compare EU and US arrangements on sugar

6 Market Access Flexibilities (2) Thailand s situation in top tier of preferential access (lowest preferences) disadvantaged relative to many other developing countries conflicts with other developing country interests, e.g. with ACP states over canned tuna exports to EU sugar dispute with EU Qualifying factors biased product coverage (preferences generally less generous for agriculture) but EBA is comprehensive poorer countries have weaker capacity to utilise preferences rules of origin certification requirements, TBT, SPS proliferation of FTAs cuts across existing preferences

7 Policy Space Flexibilities Agreement on Agriculture: General Flexibilities Market Access very high tariffs (sometimes prohibitive, or with substantial water ) Special safeguards (SSG) (restricted to countries that scheduled them) TRQs (prohibitive tariffs + SSG + TRQs = business as usual for many products) special exceptions for designated products (e.g. rice) discriminatory quotas allowed under TRQ arrangements Domestic Support green box for non-distorting measures normally actionable subsidies ( amber box ) permitted within reducing limits, exempt from challenge ( Peace Clause ) de minimis exemptions from reduction commitments (5% of value of production) special blue box dispensation for US and EU choice of base year + plus porous boundary between green and amber boxes + ability to switch support between products = business as usual for many products) Export subsidies permitted within reducing limits (normally considered red box measures under the SCM Agreement) available only to countries that scheduled them

8 Policy Space Flexibilities Agreement on Agriculture: Flexibilities for Developing Countries lower reduction commitments (LDCs exempt) longer implementation periods domestic support: exemption from reduction commitments de minimis threshold increased to 10% input subsidies for low income farmers and investment subsidies available to agriculture in general maintenance of non-tariff measures for staple diet items additional measures for least-developed and net food importing developing countries

9 Thailand s Use of Policy Space Flexibility Measures (1) General Flexibilities Tariffs often high, with gaps between bound and applied rates TRQs for 23 sensitive products milk and cream, potatoes, onions, garlic, tea, coconut, coffee, pepper, feed maize, rice, soya beans, soya bean cake, soya bean oil, palm oil, coconut oil, sugar, instant coffee, raw silk, tobacco list includes export products eg rice and sugar political economy eg soya bean products soya bean and soya meal (input): over-filled quota and low applied tariff soya oil (consumer product): under-utilised tariff and higher applied tariff extensive use of green box domestic support reduction commitments applicable mainly to rice (77%), manioc (18%), coffee (3%), coconut (2%).

10 Thailand s Use of Policy Space Flexibility Measures (2) Developing Country Flexibilities lower reduction commitments and longer implementation periods domestic support minor use of increased de minimis threshold (3 of 11 programmes exceed the 5% threshold: maize, garlic, milk) two minor programmes utilising exemption of measures for low income farmers and general investment for agriculture

11 Thailand s Use of Flexibility in PTAs (1) WTO rules North-North PTAs: Article XXIV South-South PTAs: Enabling Clause increasing trend to North-South agreements: also subject to Article XXIV e.g. Thailand s agreements with Australia, New Zealand; proposed agreements with US, Japan; ASEAN s proposed agreement with EU new challenges for many developing countries

12 Thailand s Use of Flexibility in PTAs (2) Use of Enabling Clause flexibilities in Thailand s FTAs facilitated inclusion of agriculture in FTA with China assisted India in insisting on exclusion of most agricultural products

13 Thailand s Use of Flexibility in PTAs (3) Use of Article XXIV flexibilities in Thailand s FTAs General Principles: requirement for coverage of substantially all trade leaves room for exclusion of some products by developed as well as developing countries (e.g. rice by Japan in Thailand s proposed FTA with Japan) requirement for implementation within reasonable period of time clarified by 1994 Understanding to mean within 10 years other than in exceptional cases exceptional cases might suggest limitation to developed countries but developed countries have also used this flexibility (e.g. US in Australia-US FTA)

14 Thailand s Use of Flexibility in PTAs (4) Use of Article XXIV flexibilities in Thailand s FTAs Example: treatment of sensitive agricultural products in Thailand-Australia FTA (TAFTA) and NZ-Thailand CEP (NZTCEP) all products (including sensitive products) covered sensitive agricultural products (mainly dairy and meat products but also some other TRQ products ) implementation periods of years Use of TRQs and Special Safeguards (SSGs) elements of non-reciprocity Australia and New Zealand eliminate all tariffs within 10 years and do not use TRQs or SSGs (but they do use very restrictive rules of origin for their most sensitive products including textiles and clothing)