Key issues in market access Carmel Cahill, OECD Joint ATPC/OECD Workshop on Post Bali Agricultural and Trade Policy Options: Focus on China Beijing, 23 October 2014
2 Outline of the presentation 1. Overview of agricultural trade 2. Overview of current market access measures 3. Potential reduction in tariffs and other border measures in a post-bali agreement 4. Likely market access impacts of a post-bali agreement 5. Looking forward
Overview of agricultural trade
4 How important a role does trade play in food supply? Proportion of global grain and oilseed production traded globally % Corn Soybean Rice Wheat 40 35 30 25 20 15 10 5 10% or less for rice and corn Fluctuating around 20% for wheat Highest and rising for soybean 0 1970/71 1976/77 1982/1983 1988/1989 1994/1995 2000/01 2006/2007 2012/2013 Source: USDA data
5 Net food exporters and net food importers (Number of countries) 1980-85 2005-10 Food exporters Food importers Food exporters Food importers Industrialised countries 16 18 12 22 Developing high income countries 2 13 0 15 Upper middle income countries 28 20 14 34 Lower middle income countries 23 26 15 34 Low income countries 12 25 3 34 Other 2 1 2 1 Total 83 103 46 140
6 Changes in net food trade status and progress on food security (Number of countries) Stable or not improved Little improvement Moderate improvement Great improvement Total Exporter in both periods 9 2 2 2 15 Change from exporter to importer 6 8 9 11 34 Change from importer to exporter 1 2 4 3 10 Importer in both periods 18 16 13 13 60 Total 34 28 28 29 119
7 Agricultural commodity prices in real terms (2005=100) IMF Food index Beef Rice Maize Wheat Butter,600,500,400,300,200,100,0 Source: WTO, Tangermann.
Overview of current market access measures
9 Bound and MFN applied tariffs for agricultural products, 2012 The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Source: WTO, Tangermann.
10 Maximum duty (MFN Applied) among all Tariff Lines for agricultural products, 2012 The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Source: WTO, Tangermann.
11 Change of average tariffs (MFN Applied) for agricultural products from 2007 to 2012 The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Source: WTO, Tangermann.
Potential reduction of tariffs and other border measures in a post-bali agreement
13 The 2008 modalities as the starting point Cuts in bound tariffs and potential flexibilities Average cut in bound tariffs of 54% and 36% for developed and developing countries respectively Harmonising formula with top cuts of 70% on tariffs over 75% for developed countries and top cuts of 47% on tariffs over 130% for developing countries Sensitive products: 4% of tariff lines (developed) or 5.33% (developing) would be subject to smaller cuts but would have to accord increased market access through TRQs Developing countries could apply lower cuts (11%) to 12% of tariff lines covering special products of importance for food or livelihood security or rural development, defined according to 12 specified criteria Special safeguard to be applied to 1% of tariff lines (developed) or 2.5% (developing) Deeper cuts for products subject to tariff escalation Deeper cuts by developed countries on tariffs on tropical and diversification products Additional, new Special Safeguard Mechanism for developing countries
Likely market access impacts of a post-bali agreement
15 Potential impacts Impact on the applied tariff likely none for Brazil, India, Indonesia, Mexico and South Africa Impact on the applied tariff likely minimal (less than one percentage point) for China, Korea, Thailand and Turkey Impact on the applied tariff likely significant (more than one percentage point) Canada, EU, Japan, Norway, Switzerland, United States Impact on the applied tariff likely none or minimal for recently acceded countries such as the Russian Federation and Viet Nam Tariff reductions since 2007 have widened the gap between bound and applied rates, therefore it is more likely that reductions in bound rates would not eliminate all the overhang Special rules, exemptions and exceptions give countries considerable flexibility where individual tariff lines/products would be impacted Source: Laborde, Brink
16 Potential impacts (continued) Reduction in the degrees of freedom currently enjoyed by countries with wide differences between bound and applied rates some lower applied rates would be effectively locked in Less uncertainty and improved predictability for traders Progress in the desired harmonising direction (that is, the highest tariffs would be reduced by the most) Much would depend on how countries chose to use the flexibilities likely to be agreed upon Source: Laborde, Brink
Looking forward
18 Conclusion It should not be difficult for countries to agree to actions along the lines of the 2008 modalities even easier now than then For most countries and products, the degree of liberalisation would be modest, gradual and framed within multiple safeguards allowing ample opportunity and time for adjustment Positive for food security in the long run as the stabilising and balancing role of trade will become more important due to: More frequent production shocks due to climate change Permanent shifts in comparative advantage Prosperity increasing the level and diversity of demand
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