Hong Kong 15 Les Paysans prennent la parole Première Séance: A quelles conditions la mondialization profite-t-elle aux Pays en Développement? G-2 and Brazil in WTO the Doha Round: Perspectives for Hong Kong Marcos S. Jank President, Brazilian Institute for International Trade Negotiations (ICONE) Professor, School of Economics, University of São Paulo (FEA-USP) Paris, France 3 November 25
GATT-WTO Negotiating Rounds and Number of Members Rounds Doha Uruguay Tokyo Kennedy Dillon Geneva Torquay Annecy Geneva Nb. members 15 14 13 12 11 1 9 8 7 6 5 4 3 2 1 1947 195 1953 1956 1959 1962 1965 1968 1971 1974 1977 198 1983 1986 1989 1992 1995 1998 21 24 27 Source: WTO
Members 16 14 12 1 8 6 4 2 WTO membership: increased developing country Developing Developed 1986 1995 24 Source: WTO. Elaboration: ABARE-Australia.
Overview of Domestic Subsidies OECD - Producer Support Estimate (PSE%) 7% 6% 69% 68% 68% 63% 56% 5% 4% 3% 34% 3% 22% 21% 2% 18% 1% 8% 8% 5% 4% 3% 3% % Iceland Switzerl. Norway Korea Japan EU OECD Canada Notes: The %PSE expresses the total producer support as a percentage of gross farm receipts, measured by the value of total production (at farm gate prices) plus budgetary support. China and Russia data are 22-3 averages. Source: OECD PSE/CSE databases, 25. Mexico USA Poland China Russia Australia Brazil N Zealand
Doha Interest Groups Group Countries Agriculture Subsidies Access Industrial Goods Services United States European Union Free traders (Cairns) Ag resistant countries Australia, Chile, New Zealand, S.Africa G1: Japan, Korea, Taiwan, Switz, Norw Brazil, Argentina G-2 main players Developing: SP, preference erosion Developing: net food importers China India G-9 and G-33 LDCs and others = Offensive position = Defensive position
Legitimacy The Emergence of the G-2 Geographic distribution: Asia, Africa, Latin America. Most dynamic exporters and markets with the highest rates of growth. Traditional Coalitions x New Forms of Pressure: Cairns: old coalition based on common interests. G-2: heterogeneous pressure group based on technical & political capacity: fast response, measurable results.
1% 9% Agricultural Negotiations in the Doha Round: Main Coalitions G-2 USA EU (15) G-1 8% 7% 6% 5% 4% 3% 2% 1% % Total GDP Agricultural GDP Total Population Rural Population Agricultural Exports Agricultural Imports Notes: Data for GDP (21) population (21) and trade (23). EU excludes intra-trade. Source: FAO and World Bank. Elaboration: ICONE.
Agricultural Trade Negotiations: Main Issues Market Access: Tariff Peaks & Tariff Overhang ( water ) Tariff Escalation Specific Duties (conversion to ad valorem) Tariff-Rate Quotas Special Safeguards (SSG, SSM) Domestic Support: Amber Box payments Blue/New Blue Box payments Green Box disciplines De Minimis payments Overall cut of all distorting support Export Competition: Export Subsidies Export Credits Food Aid State Trade Enterprises & Monopoly Power Other Issues: Geographical Indications Differential Export Taxes (DET) Sectoral Initiatives: Level Playing Field
WTO: Overview of Total Domestic Support USD Billion 12 1 8 6 4 AMS: trade-distorting price or income guarantee payments linked to current levels of production, whether or not directed at specific products. They are subject to binding and reduction commitments. S&D (Special and Differential Treatment): measures exempt from reductions for developing countries. De Minimis: trade-distorting payments, whether or not directed at specific products, which represent less than 5% of the production value. Blue Box: trade-distorting compensatory payments linked to production-limiting programs. They are exempt from binding and reduction commitments. Green Box: payments that cause minimal or no distortion, exempt from binding/reduction commitments 2 95 96 97 98 99 1 Source: WTO notifications. EU 95 96 97 98 99 1 US 95 96 97 98 99 Japan 95 96 97 98 99 1 2 3 Brazil
Agricultural Domestic Support EU "greening its subsidies for internal reasons: budget constraints, enlargement. US increasing subsidies: doubled in 2 Farm Act Unfair competition: no round if the US does not cut and "decouple subsidies. The new blue box loophole. Cotton case (US vs. Developing World): implementation and spillovers.
(USD billion) 34 32 3 28 26 24 22 2 18 16 14 12 1 8 6 4 2 1986 FSA 1985 1987 1988 Evolution of U.S. Subsidies 1989 CCC Net Outlays (fiscal year) 199 1991 FACT 199 1992 Net Outlays 1993 1994 Notes: FSA: Food Security Act (1985); FACT: Food, Agriculture, Conservation and Trade Act (199); FAIR: Federal Agricultural Improvement & Reform Act (1996); FSRIA: Farm Security & Rural Investments Act (22) *US nominal farm gate prices of barley, corn, cotton, oats, rice, sorghum, soybeans and wheat. Prices are weighted according to the share of each crop in the total value of production (1994-24 average). (e) Estimate (b) Budget provisions. Source: USDA CCC. Elaboration: ICONE 1995 1996 1997 FAIR 1996 FSRIA 22 1998 1999 2 21 Price Index (Weighted Average) 22 23 24 (1994=1) 25e 13 12 11 1 9 8 7 6 5
USD Billion US: Domestic Support Main Commodities 24 22 2 18 16 14 12 1 8 6 4 2 1997 1998 1999 2 21 22 23 24 25 (F) Rice Wheat Soy Cotton Corn 26 (F) (f) forecast Source: USDA-CCC, Fiscal Years. Elaboration: ICONE.
Mar-4 May-4 Jul-4 Sep-4 Nov-4 Jan-5 Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-2 Mar-2 May-2 Jul-2 Sep-2 Nov-2 Jan-3 Mar-3 May-3 Jul-3 Sep-3 Nov-3 Jan-4 1,,9,8,7,6,5,4,3,2,1, National Average Farm Price Loan Rate (LDP) Target Price less Direct Payment Rate (CCP) (US$/lb) Source : USDA US: Cotton (monthly prices).66.52
Billion or US$ 12 11 1 9 8 7 6 5 78% OVERHANG IN TRADE-DISTORTING DOMESTIC SUPPORT UNITED STATES & EUROPEAN UNION 62% 72% OTDS overhang OTDS AMS overhang AMS Blue framework Blue applied EU proposal US proposal G-2 proposal 4 3 2 1 36% % 62% EU-25 US EU-25 US EU-15 US OTDS AMS Blue Box Sources: European Commission and USDA/Commodity Credit Corporation. EU: OTDS and AMS applied levels estimations for EU-25 according to the provisions of the Fischler Reform of the CAP. Figures are estimates for 28. 26 billion were projected in OTDS. Data for the Blue Box refers to the latest EU-15 notification to the WTO. US: 24 data were collected in the USDA-CCC reports and adapted to the format of WTO notifications. Expenditures on CCP were included in the Blue Box. Elaboration: ICONE.
US$ Billions 24 22 2 18 16 14 12 1 8 6 4 2 Overhang in Agricultural Domestic Support % 1% New Blue Box 62% Framework Applied US Proposal 1% 82% EC - 15 China USA India Japan Note: latest WTO notification in Blue Box. Data from the USDA-CCC of US for 24 (countercyclical payments expenditures) and projections of the Fischler Reform of PAC-EU for 28. Source: WTO notifications. Elaboration: ICONE.
Agricultural Trade Negotiations: Main Issues Market Access: Tariff Peaks & Tariff Overhang ( water ) Tariff Escalation Specific Duties (conversion to ad valorem) Tariff-Rate Quotas Special Safeguards (SSG, SSM) Domestic Support: Amber Box payments Blue/New Blue Box payments Green Box disciplines De Minimis payments Overall cut of all distorting support Export Competition: Export Subsidies Export Credits Food Aid State Trade Enterprises & Monopoly Power Other Issues: Geographical Indications Differential Export Taxes (DET) Sectoral Initiatives: Level Playing Field
Trade Barriers to Brazilian Exports (%) Bound Tariff Product EU USA JAPAN Raw Sugar 161* 133* 311* Ethanol 43* 46* 27 Powder Milk 64* 44* 155* Frozen Chicken Cuts 94* 12* 12 Frozen Pork 43* 136* Frozen Beef 124* 26 5 Corn 73* 1* 87* Tobacco 75 35 Orange Juice 15 39* 25 (*) indicates that specific tariffs were converted into their Ad Valorem Equivalent (AVE) Underlined numbers indicate the existence of Special Safeguard Measures (SSG) Shaded cells indicate sanitary restrictions that act as a barrier to trade Source: WTO, APEC, COMTRADE, USITC, TARIC12 and ICONE
MARKET ACCESS Conflicts are worldwide. CGE models indicate that removal of tariffs has greater impact than subsidies elimination. 1. Sensitive Products EU, Japan, Norway, Switzerland, Korea. 2. LDCs: no commitments Around 32 countries: already decided. 3. Preference Erosion, Special Products: Largest group: LDCs, G-9, G-33. Ex.: sugar case/eu (developing countries divided) 4. Large consumers & rural populations India, China, Indonesia, (central role?) 5. Free-traders Net exporters: Australia, New Zealand, Brazil, Argentina, Chile, Central America, South Africa, Thailand. US and Canada are freetraders, but have have a few sensitivities (< 2 countries).
Market Access: Main Issues TARIFFS QUOTAS SAFEGUARDS Reduction Cap Escalation Expansion - volume Reduction - tariffs OLD ONES (SSG) NEW ONES (SSM) formula exceptions Special and Differential Treatment
Proposed Cuts 1 9 8 7 6 5 4 3 2 1 Market Access Bands and Cuts for Developed Countries USA G-2 EU G-1 1 2 3 4 5 6 7 8 9 Initial Tariff (AVE) 1 11 12 13 14 15
Proposed Cuts 1 9 8 7 6 5 4 3 2 1 Market Access Bands and Cuts for Developing Countries USA G-2 EU G-1 1 2 3 4 5 6 7 8 9 Initial Tariff (AVE) 1 11 12 13 14 15
14 13 12 11 9 1 8 7 6 5 4 3 2 1 AVERAGE AGRICULTURAL TARIFFS Bound x Applied Bound tariff Applied tariff Norway India Kenya Jamaica Colombia Cameroon Switzerland Japan Korea Venezuela Indonesia Mexico South Africa Bolivia Thailand Brazil Uruguai Philippines Paraguai Argentina Chile EU Canada China USA Australia Ad Valorem Equivalent (%) Note: 1) Specific and compound tariffs were converted into Ad Valorem Equivalents following the methodology agreed by WTO Members in 25. Source: WTO. Elaboration: ICONE.
NOTE: (1) EU TRQ volume: all quotes sum. (2) Canada - TRQ volume: applied volume (notified volume is 76.4). 9 TREATMENT FOR SENSITIVE PRODUCTS: IMPACT OF THE MAIN PROPOSALS ON TARIFF RATE QUOTA EXPANSIONS BEEF 898 8 7 6 629 71 584 568 th ton 5 4 443 47 355 3 268 2 1 15 184 119 79 65 63 38 19 27 EU (1) Canada (2) USA TRQ Volume Current imports USA Proposal Australia Proposal G-2 Proposal EU Proposal (2/3 deviation) EU Proposal (1/3 deviation) 14 142 71
TREATMENT FOR SENSITIVE PRODUCTS: IMPACT OF THE MAIN PROPOSALS ON TARIFF RATE QUOTA EXPANSIONS 5 473 CHICKEN MEAT 45 4 35 391 378 th ton 3 25 2 15 241 1 5 25 36 18 EU (1) Canada (2) 69 53 65 65 56 4,9 2,4 TRQ Volume Current imports USA Proposal Australia Proposal G-2 Proposal EU Proposal (2/3 deviation) EU Proposal (1/3 deviation) NOTE: (1) EU TRQ volume: all quotes sum. (2) Canada - TRQ volume: applied volume (notified volume is 39.8).
TREATMENT FOR SENSITIVE PRODUCTS: IMPACT OF THE MAIN PROPOSALS ON TARIFF RATE QUOTA EXPANSIONS 21 29 SUGAR 18 16 15 th ton 12 9 188 97 87 1117 1111 6 668 68 534 3 271 135 152 76 EU (1) USA TRQ Volume Current imports USA Proposal Australia Proposal G-2 Proposal EU Proposal (2/3 deviation) EU Proposal (1/3 deviation) NOTE: (1) EU: THE TRQ VOLUME REFERS ONLY TO ACP QUOTE AND INDIA.
TREATMENT FOR SENSITIVE PRODUCTS: IMPACT OF THE MAIN PROPOSALS ON TARIFF RATE QUOTA EXPANSIONS 1 RICE 9 8 755 th ton 7 6 5 4 682 648 653 64 522 3 2 1 84 135 111 EU 18 124 62 Japan TRQ Volume Current imports USA Proposal Australia Proposal G-2 Proposal EU Proposal (2/3 deviation) EU Proposal (1/3 deviation) 24 12
TREATMENT FOR SENSITIVE PRODUCTS: IMPACT OF THE MAIN PROPOSALS ON TARIFF RATE QUOTA EXPANSIONS 1 9 9 MILK POWDER 8 7 68 7 th ton 6 5 4 57 56 49 43 39 3 2 1 EU 13 6,7 1,2 5,9 USA TRQ Volume Current imports USA Proposal Australia Proposal G-2 Proposal EU Proposal (2/3 deviation) EU Proposal (1/3 deviation) NOTE: (1) Canada volume s sum of wheat and wheat products. 1,,5
CONCLUSIONS Time is very short!! Disciplines beyond the status quo of ag trade policies? The risk of the Water Round : Bound vs. Applied levels of protection (tariffs, subsidies). Horizontal Rules vs. Exceptions & loopholes: Sensitive & Special Products, Preference Erosion, Special Safeguards (SSM, SSG), TRQs. Trade-offs: Global vs. Agriculture. Tariffs/TRQs (trade creation) vs. Subsidies (moral issue). Market Access: Free vs. Preferential trade interests. Endless discussion on Graduation: the trees and the forest.
Marcos S. Jank Email: msjank@iconebrasil.org.br Homepage: www.iconebrasil.org.br Phone: 55 11 321 43