The consequences of WTO revised draft modalities on US agricultural market access

Transcription

1 The consequences of WTO revised draft modalities on US agricultural market access David Laborde Debucquet Based on Implications of the February 2008 WTO Draft Agricultural Modalities for the United States by David Blandford (Pennsylvania State University), David Laborde (IFPRI) and Will Martin (World Bank).

2 Issues US agricultural tariffs Nature of the proposal Impacts on US agricultural tariffs Application of the tiered formula Flexibilities for sensitive products Impacts on barriers facing the United States

3 SETTING THE STAGE Page 3

4 Average bound tariffs (by instrument) 25 Ad Valorem Mixed-Compound Specific All tariffs Simple. Av. Trade Weighted Reference Group Page 4

5 Tariff Rate Quota products: the core of US agricultural protection % of TRQ products Average applied MFN By HS6 lines by Trade TRQ Non-TRQ % % % % All agriculture Meat and Offal Dairy products Edible Fruit and Nuts Oilseeds Sugar Cocoa Cereal preparations Vegetable preparations Miscellaneous food Food residues Tobacco Cotton Trade weighted, source MAcMapHS6v2 Page 5

6 The Ethanol Case Bound tariff between 1.9% and 2.5% Most protection provided by a specific additional duty of 14.27c/l (AVE 30-50%) But this is not a tariff! Additional duties and charges may will not be covered by formula up to now Page 6

7 DRAFT MODALITIES IMPACTS ON US TARIFFS Page 7

8 Modalities Bands 0/20/50/75 Proportional cut 50/57.5/63.5/68.5 Tariff Escalation Use the cut from the next higher band for escalation products, or 1.15 times the cut for products in the highest band for products in Annex D of WTO (2008). Tropical Products Products selected according to the Uruguay Round list in WTO (2008, p47). Tariffs less than 25 percent reduced to zero. Tariffs above 25 percent cut by 85 percent of their initial rate. No sensitive products. Sensitive products Minimum cut Up to 5% -of tariff lines chosen on political sensitivity to be cut by 2/3 the formula cut. An average cut of 54 percent on all products, including sensitive products, required Page 8

9 Bound tariff distribution Band I Band II Band III Band IV 6% 2% 2% 90% Page 9

10 % Impacts on the MFN applied tariffs Tiered formula effects 40 Tropical products effect Tariff escalation effects Post formula tariff Initial MFN applied tariff Trade weighted, source MAcMapHS6v2 Page 10

11 Preference erosion: a limited concern Effectively Applied Duty Initial Complete Formula Preference Margin (except TRQ) Initial Complete Formula % % % % Agriculture: total Applied to developed countries Applied to developing countries Applied to LDCs Live trees Vegetables Edible Fruit and Nuts Sugar Vegetable preparations Tobacco Trade weighted, source MAcMapHS6v2 Page 11

12 How Will Sensitive Products be Chosen? Import sensitive sectors Political economy model (Jean, Laborde and Martin, 2008) Sensitive products likely important goods, where the formula involves large cuts, and sensitive product treatment allows big reductions in cuts Sensitive products under the 54% cut constraint. Optimal trade-off for the US: limit the use of sensitive products to 3% (18 HS6 products) Exemple of sensitive product list Fresh or Chilled boneless beef Frozen boneless beef Butter Milk fats Cheese, excl fresh cheese Shelled ground nuts Raw cane sugar Cane or beet sugar Sugar confectionary Chocolate Mixes and doughs of flour Ground nuts Frozen orange juice Food preparations nec Animal feed preparations Tobacco not stemmed Tobacco stemmed Smoking tobacco Page 12

13 Final applied tariff % The role of sensitive products Effective cut Sensitive product effect Post formula tariff Trade weighted, source MAcMapHS6v2 Page 13

14 DRAFT MODALITIES CONSEQUENCES FOR US EXPORTERS Page 14

15 Overview of the market access gains Initial protection Post cut tariffs W/o sensitive & special With sensitive & special % % cut rate % cut rate All WTO members % % WTO Developed % % WTO Developing (non SVE, RAM and LDC) % % Developing excluding Korea % % WTO Small & Vulnerable % % WTO Recently Acceded % % WTO Least Developed % % Trade weighted, source MAcMapHS6v2 Page 15

16 A limited number of new markets Trade weighted, source MAcMapHS6v2 Page 16

17 The impact of sensitive and special products Trade weighted, source MAcMapHS6v2 Page 17

18 The value of duties reduction (tariff revenue) Trade weighted, source MAcMapHS6v2 Page 18

19 Market access opportunities by sector Post cut tariffs Initial protection W/o sensitive & special With sensitive & special Cost of foreign flexibility (Tariff revenue) % % % Mios Meat and Offal * $ 39,577 Prepared meat or fish * $ 4,587 Dairy products * $ 5,704 Cocoa and preparation * $ 5,286 Cereals * $ 77,825 Tobacco * $ 6,552 Miscellaneous food * $ 7,332 Food residues * $ 10,298 Cotton * $ 7,448 Cereal preparations * $ 4,219 Vegetable preparations $ 867 Beverages and spirits $ 2,066 Sugar $ 236 Albuminoids $ 254 Live Animals $ 916 Edible Fruit and Nuts $ 2,330 Organic Chemicals $ 15 Live trees $ 3 Sectors with the strongest cuts and the highest gains in value Sectors with the strongest relative cuts Sectors with the strongest cuts and the highest gains in value * Sectors for which the cost of foreign flexibility is the strongest Trade weighted, source MAcMapHS6v2 Page 19

20 Conclusion (I) Relatively low US tariffs mean very few in the higher tiers But many non ad valorem tariffs on highly protected goods and TRQ goods are important (special TRQ monitoring proposal in the draft modalities) Formula alone cuts US agric tariffs by more than half, bigger cuts in highly protected chapters covering dairy, sugar Provisions for tariff escalation and Tropical Products have limited impact But sensitive products are very important Page 20

21 Conclusion (II) Highest tariffs facing US exporters are in the industrial countries Formula reduces average tariff 20.4% 9.9% Sensitive products 9.9% 14.6% For developing countries (excl. the specific case of South Korea), even if special and sensitive products nearly eliminates tariff reduction, the latter is initially too small for having noticeable impacts In a context of weak dollar, market access opportunities can be much more important than in a traditional situation Page 21