WTO Update - New Paper on Agriculture

UK - On Monday the new WTO Agriculture and Non-Agricultural Market Access (NAMA) texts were released.

27 May 2008

4 minute read

Europe

According to a Livestock and Meat Commission (LMC) bulletin, the Agriculture text has simplified much of the earlier details, which the WTO Agriculture Committee Chair, Crawford Falconer, believes will give all parties the opportunity to come to an agreement.

These latest papers are currently being studied by negotiators on all sides, but it is still unclear whether there is enough progress for a WTO Ministerial Congress to be arranged. Formal and informal meetings over the next couple of weeks will determine the rate of progress and how quickly horizontal negotiations can take place. These horizontal negotiations will concentrate on the trade-offs between the Agriculture and NAMA texts.

While there has been a lot of movement in the Agriculture negotiations, indications are that the progress on NAMA has been much slower. At this stage nothing has been finalised but there are strong concerns that the EU could make large concessions in agriculture, while receiving very little in return from the NAMA and Services negotiations.

The detailed proposals cover all three main areas of the agricultural negotiations - domestic support, market access and export competition. The main elements are outlined below.

DOMESTIC SUPPORT

Overall Trade Distorting Support (OTDS), which incorporates the Amber and Blue Boxes and De Minimis payments (e.g. intervention buying, headage payments), will be reduced by 75 to 85 per cent in the EU over the next five years. OTDS shall be reduced by one-third on the first day of implementation and the remaining reductions shall be implemented annually in five equal steps. Green box payments are excluded from these subsidies. The EU Single Farm Payment is currently in the Green Box.

MARKET ACCESS

Tariff reductions

Import tariffs will be reduced and the larger that current tariffs are, the greater the cut in tariffs will be. In the EU tariffs will be reduced by 66% to 73%. These cuts will be applied in five equal annual instalments. Developed countries must have a minimum average cut on all tariffs of 54 per cent (including sensitive products) compared to 36 per cent in developing countries.

Sensitive products

The draft indicates that the number of tariff lines which a developed country may nominate as 'sensitive' should be between 4 and 6 per cent. There are three possible lines of action on sensitive products: a country may choose to moderate its tariff reduction for sensitive products by either one-third, one-half, or two-thirds. As compensation to exporters, the country concerned must create tariff quotas equivalent to 4 to 6 per cent of domestic consumption for the sensitive product in question. The smaller the reduction in the current import tariff, the larger the level of tariff free quota that has to be awarded.

If the EU plans to nominate beef as a sensitive product and reduce its tariff by the minimum amount, the EU would have to grant a new tariff free quota of approximately 300,000 – 500,000 tonnes of beef. This would be in addition to the current import quotas, which total almost 200,000 tonnes of beef at reduced tariffs. Making beef a sensitive product could increase the level of reduced/zero tariff imports by three and half times the current rate, which would have very harmful consequences for the beef sector in the EU.

Special Agricultural Safeguard (SSG)

For the SSG, which currently shields developed countries from import surges and/or price dips, the text suggests two possible approaches: a) immediate elimination, b) a reduction in the number of tariff lines which may benefit from the SSG to 1.5% of the total.

EXPORT COMPETITION

Export subsidies

These would be eliminated by the end of 2013. Maximum budgetary outlays would be cut by 50 per cent compared with the existing Uruguay Round ceiling, by the end of 2010, and then reduced in three equal installments to zero by the end of 2013. Quantity commitments would either be reduced to zero in five equal stages, or else a freeze on current export subsidy quantities would apply until 2013.