Implementation of the Uruguay Round Agreement

1. Implementation of the Uruguay Round Agreement Lecture 20. Economics of Food Markets Alan Matthews

2. The legal framework • Commitments entered into Schedules attached to the final WTO Agreements • Monitored by a WTO Committee on Agriculture which meets every 6 months • Attempts to settle complaints should first be made bilaterally, but countries have recourse to the WTO’s Dispute Settlement Mechanism

3. Market access • Tariffication a major achievement • Now 100% coverage of tariff bindings

4. Pre- and post-Uruguay Round scope of bindings for agricultural products (Number of lines, billions of US dollars and percentages) x                                                                                       <>

5. Market access – how much liberalisation? • Effectiveness of the agriculture agreement in cutting protection was less impressive than the nominal cuts suggest, because : • tariff cuts took place from base levels that were frequently inflated through the choice of base year, • through the methods used to measure protection existing prior to the round (‘dirty tariffication’), • Through use of unweighted average of 36% • through the use of ‘ceiling’ bindings in developing countries • Uneven tariff reduction – many sensitive products still protected by high tariffs • Minimum access commitments counted imports under existing special arrangements, despite MFN requirement

6. Tariff rate quotas

7. Reductions in Domestic Support to Agricultural Producers (Millions of US dollars)                                                                                       <>

8. Domestic support • various types of supports excluded from the AMS disciplines, e.g. de minimis, Blue Box, Green Box • AMS discipline established at an aggregate level, not on a commodity by commodity basis.

9. Export subsidy reduction commitments by country (Millions of US$)                                                                                       <>

10. Export subsidy commitments • Front-loading • Credit for unused commitments could be brought forward to later year • Concerns about the behaviour of State Trading Enterprises in agricultural marketing 1995 2000

11. Assessing the impact of the URAA • overall gains in world welfare though of a relatively small magnitude • Tangermann puzzle: why so little change in OECD PSE figures despite the mandated UR reductions? • Water in the bindings • Distinction between implicit and explicit policy change • UR established a framework for further disciplines • UR framework is shaping domestic policy discussions

12. Adjusting CAP to the URA What changes were necessary to the CAP mechanisms? • the implementation of tariffication • other market access provisions • no real effect of AMS provision • more active management of export refund system to stay within subsidised export targets Were the GATT disciplines consistent with the MacSharry 1992 reforms?

14. Some specifics of CAP adaptation to WTO disciplines • Examples of how tariff for wheat was set • Variable levy system retained for cereals and fruits and vegetables • (Ab)use of special safeguard provision • Removal of domestic support to Blue Box • But export subsidy restrictions have had some effect

15. Reading • Tangermann two articles • OECD 2001 report • Ingco paper • Swinbank and Tangermann articles on adaptation of the CAP