What is the state of play in the WTO negotiations on the liberalisation of trade in tropical products and preference erosion? What is the state of play in the WTO negotiations on commodities And tariff escalation? Marie Chamay Dialogue on Tropical Products, Trade, Natural Resources Management and Poverty, 3 December 2007, Salvador, Brazil
Content 1. Background on the WTO Doha Round of Negotiations 2. Mandates 3. Main issues to be addressed 4. Position of the main actors
Background on the WTO Doha Round of Negotiations Agriculture is a central component of the WTO Doha Round of negotiations launched in 2001. The Doha Declaration: to establish a fair and marketoriented trading system. According to the mandate of the Doha Declaration, Member governments commit themselves to comprehensive negotiations aimed at substantial reductions in market access [ ]. In addition, Members agreed that special and differential treatment for developing countries shall be an integral part of all elements of the negotiations [ ].
1. The State of Play in the WTO Negotiations on Tropical Products Mandate on tropical products Mandate on tropical products: GATT: discussions on cocoa, coffee and tea (and known as tropical beverages ). Uruguay Round (1986-1994): discussions began on seven groups of tropical products: (i) tropical beverages (cocoa, coffee and tea); (ii) spices, flowers and plants; (iii) some oilseeds, vegetable oils and oilcakes (for example palm and coconut oil); (iv) tropical roots, rice and tobacco; (v) tropical fruits and nuts (e.g. plantains, pineapples and peanuts); (vi) tropical wood and rubber and (vii) jute and hard fibres. Preamble of the Agreement on Agriculture: having agreed that in implementing their commitments on market access, developed country Members would take fully into account the particular needs and conditions of developing country Members by providing for a greater improvement of opportunities and terms of access for agricultural products of particular interest to these Members, including the fullest liberalization of trade in tropical agricultural products as agreed at the Mid-Term Review [...]. Framework Agreement (or July Framework) adopted on 1 August 2004
Main Issues to be addressed Product coverage Liberalisation process scope Speed of the liberalisation process Treatment of tariff progression Treatment of existing trade preferences in the case of preference tropical products (preference erosion) Relation with other sensitive products
Position of main actors Two clearly opposite positions: Those who expect the tropical product list to be the most comprehensive possible and the obstacles to trade in these goods to be fully eliminated in the shortest timeframe possible Latin American countries including Bolivia, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Peru and Venezuela Those who wish to reduce the list of tropical products and seek a gradual reduction of obstacles to trade, trying to limit the erosion of trade preferences on the same commodities the African, Caribbean and Pacific Group of States (ACP)
Latin American Countries Cultivated between the Tropics of Cancer and of Capricorn UR list + other products such as sugar Maximum customs duties reductions Elimination of non-tariff barriers Not considered sensitive by developed countries The solution for the phasing-out of longstanding preferences shall not affect other developing countries whose economies are highly dependent on exports of tropical products Supporters: the G-20 and the Cairns Group
ACP countries and EC The ACP Group: Products concerned by longstanding preferences cannot be included in the list for fullest liberalization. The EC: Not include products produced in significant quantities in non-tropical countries such as sugar, rice, flowers, and onions. Tropical products may be declared as sensitive or as special products and be treated as such. When making concessions in tropical products, the topic of possible preference effect should be considered.
2. State of Play in the WTO negotiations on preference erosion Mandate: Paragraph 44 of the July Framework (2004) states that: The importance of long-standing preferences is fully recognised. The issue of preference erosion will be addressed. [ ]
MC3 Scope of preference erosion Source: A WTO Staff working paper: Non-reciprocal preference erosion Arising from MFN liberalisation in agriculture: what are the risks? March 2006
Slide 10 MC3 Marie Chamay, 12/2/2007
Domestic Support and Export subsidies Source: FAO
Main issues to be addressed The big ticket items that are at the heart of the issue: bananas and sugar. Possible responses to preference erosion (put on the table by Member countries) include non-traded based solutions and trade-based measures such as: a longer implementation period expanded market access lower tariff reductions for affected products targeted technical assistance to diversify exports additional financial assistance and capacity building to address supply constraints
Position of the Key Actor: ACP Group of State Preferences vital for foreign exchange earnings, employment growth and development. Depend on the production and exports of a few primary commodities. Find a satisfactory solution to the issue of the overlap between the mandate on tropical products and preference erosion.
3. The state of play in the WTO negotiations on commodities and tariff escalation Mandates: Paragraph 55 of the Hong Kong Declaration (adopted on 18 December 2005) states that: We recognize the dependence of several developing and least-developed countries on the export of commodities and the problems they face because of the adverse impact of the long-term decline and sharp fluctuation in the prices of these commodities. [ ] We agree that the particular trade-related concerns of developing and least-developed countries related to commodities shall also be addressed in the course of the agriculture [ ] negotiations. The Framework Agreement (adopted on 1 August 2004) states that: Tariff escalation will be addressed through a formula to be agreed.
Background on Tariff Escalation Tariffs increase, or escalate, as a good becomes more processed. Difficult for countries producing raw materials to process and manufacture value - added products for export A country uses tariff escalation to protect its processing or manufacturing industry. Tariff escalation exists in both developed and developing countries.
Main issues to be addressed Where is tariff escalation? How can we define primary products and processed products derived from them (example: pizza)? Above what particular levels tariff escalation need to be addressed through a formula? What is the formula to address the escalation? Sources: The Draft Possible Modalities on Agriculture by the Chair of the Negotiations (22 June 2006) and the Challenges Paper from the Chair of the WTO Ag Negotiations, Ambassador Falconer (30 April 2007)
Position of Key Actors African Group Commodity dependent developing countries identify and present products of interest to them for addressing tariff escalation. Developed countries and developing countries undertake tariff escalation reductions in the identified products. At the end of the implementation period, the difference between the identified primary and processed products shall not exceed [x] percentage points [number to be decided]. Other measures proposed: Elimination of non-tariff measures affecting trade in commodities. Adoption of intergovernmental commodity agreements for stabilization of prices for exports of agricultural commodities. Technical assistance for the improvement of world markets for commodities. Proposal reflected in the draft modalities text for agriculture circulated by Ambassador Falconer in August 2007
Position of key actors Canada (Proposal June 2006) Identifying a set of primary products that face higher tariffs when processed Establishing how far along a product s processing chain to go in addressing the problem, and Negotiating an appropriate formula to tackle escalated tariffs.
Position of key actors EC (Proposal June 2007) Reaching an agreement on the definition for primary and processed products would be very time consuming and may not generate a result. In addition to solving the problem of the list, tariff escalation should be clearly identified and quantified. LA countries: subject to tariff escalation; developed countries shall eliminate tariff escalation on processed tropical products.
Slovenia Italy Austria Former Yugoslav Republic Sweden Belgium Moldova Jordan Czech Republic LDCs Denmark of Macedonia Maldives Morocco Germany Portugal (FYROM) Myanmar NEW Oman Estonia EU Ireland Bangladesh Solomon Islands Georgia Netherlands Finland Cambodia ACP Croatia United Kingdom Latvia Cyprus Lithuania Nepal Niger Sierra Leone Greece Hungary Papua New Guinea Malta Central African Republic Armenia Spain Dem. Rep. of the Congo Macao, Chi Djibouti Malawi Gambia Dominica G-20 Romania US Rwanda Togo Guinea Burundi Singapore Mexico Burkina Faso Guinea Bissau Mali Gabon Haiti Chad Lesotho Fiji Hong Kong, China Philippines Namibia India Benin Mauritania C-4 Ghana Pakistan Kyrgyz Repub Madagascar Nicaragua China Senegal Honduras Cuba Tanzania Zambia Uganda Congo Grenada Brunei Darussal Suriname Guyana Peru Venezuela Côte d Ivoire St. Vincent & Grenadines Panama Botswana Dominican Republic G-11 Zimbabwe Antigua and Barbuda Ecuador Mozambique Barbados Belize G-33 Nigeria Sri Lanka Indonesia Cameroon Trinidad and Tobago El SalvadorColombia Saint Kitts and Nevis Mongolia Bolivia Chile Kenya Saint Lucia Jamaica Thailand Costa Rica Paraguay South Mauritius Turkey Africa Australia Brazil Korea Guatemala Argentina Angola New Zealand Egypt Swaziland Switzerland Kingdom of Bahrain Australia Uruguay Malaysia Tunisia Chinese Taipei Iceland Norway United Arab Emirates CAIRNS Canada Bulgaria Liechtenstein Kuwait AU Israel G-10 Japan Qatar Source: ICTSD. A Spaghetti Bowl of Coalitions in Ag Negotiations.. G-90 Albania
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