Christophe Bellmann Programmes Director - ICTSD

1. Identifying Special Products in Developing countries: Preliminary Findings of ICTSD’s Country Studies Christophe Bellmann Programmes Director - ICTSD

2. Special Products (SP) (para. 41) ….. Developing countries will have the flexibility to designate an appropritate number of products as Special Products, based on criteria of food security, livelihood security and rural development needs. …….These products will be eligible for more flexible treatment. ……..The criteria and treatment of these products will be further specified during the negotiation phase and will recognise the fundamental importance of SP to developing countries …….

3. The Rationale for Special Products • Food security: combination of domestic production, importation and public stockholding. However some degree of self-sufficiency for basic foodstuffs remains a major objective for DC. Availability of foreign exchange is also a constraint on the import capacity of some DC. • Livelihood security: Agriculture accounts for 70 % of the employment in low-income countries and 30 % in middle-income countries. Alternative avenues of employment are lacking. • Rural Development: In DC, agriculture constitutes a big slice of the GDP. Since in the rural areas agriculture is the dominant economic activity, rural development can be sustained only by a vibrant and growing agricultural activity. • Importance of looking at the three criteria together as opposed to individually

4. The Rationale for Special Products (cont.) • As tariffs are removed, the livelihood of communities employed in import-competing sector might be affected by lower prices and increased international competition. • While this benefits urban consumers it might affect large rural populations who rely on agriculture but cannot compete with low prices on world market. • Developing countries have limited access to domestic resources to cushion farmers against adverse effects of imports; they essentially rely on border measures (tariffs)

5. Source: Based on the Millennium Development Indicators Database (UNSD)

6. Source: FAO, WTO Agreement on Agriculture: The Implementation Experience, FAO, Rome, 2003.

7. e.g. Honduras, Peru, Jamaica, Guyana e.g. Sri Lanka, Turkey, Philippines Nigeria e.g. Kenya, Senegal, Zambia, China e.g. Haiti, India, Côte d’Ivoire, Indonesia e.g. Cuba, Venezuela, Barbados e.g. Mozambique, Tanzania, Uganda Agricultural Employment in G33 Countries Source: EarthTrends database (World Resources Institute)

8. e.g. Peru, mauritius, Jamaica e.g. Senegal, Honduras, Philippines, Suriname e.g. Indonesia, Kenya, China, Belize e.g. Nigeria, Benin, Guyana e.g. Tanzania Share of Agriculture in GDP in G33 in Countries Source: EarthTrends database (World Resources Institute)

9. LDCs and NFIDCs Agricultural Trade Evolution Source: FAO

10. Bound Tariff Structures in G33 Countries

11. Effect of a 40% Reduction of Bound Tariffs on G33 Applied Tariff

12. Examples of Tariff Structure: Subgroup A Source: The G-33: An Analysis of bound and Applied Tariffs on Agricultural Products Mario Jales, ICTSD

13. Examples of Tariff Structure: Subgroup B Source: The G-33: An Analysis of bound and Applied Tariffs on Agricultural Products Mario Jales, ICTSD

14. Examples of Tariff Structure: Subgroup C Source: The G-33: An Analysis of bound and Applied Tariffs on Agricultural Products Mario Jales, ICTSD

15. Examples of Tariff Structure: Subgroup D Source: The G-33: An Analysis of bound and Applied Tariffs on Agricultural Products Mario Jales, ICTSD

16. Examples of Tariff Structure: Subgroup D COTE D’IVOIRE 7 0 6 0 5 0 4 0 % 3 0 2 0 1 0 0 02 04 07 07 08 11 11 12 15 15 16 21 22 22 51 01 02 04 05 07 08 09 09 09 12 14 17 18 20 20 23 33 41 H S c h a p t e r B o u n d A p p l i e d Sources: WTO (2004) and WITS (2002). Source: The G-33: An Analysis of bound and Applied Tariffs on Agricultural Products Mario Jales, ICTSD

17. Country studies background • Field research component of a DFID funded project on SP-SSM • To take advantage of the strategic window of opportunityin July Framework to address food security, livelihood security and rural development needs in current agricultural negotiations • Objective of country studies: • Providing some empirical-based and “scientific” justification for the selection of SPs • Test possible indicators of food/livelihood securtiy and rural development which could subsequently be used by other countries in the preparation of their list

18. Countries Selection • Formally associated with G 33 • Non LDCs • Focus on Net Food-Importing Developing Countries (NFIDC), Low-Income Food-Deficit Countries (LIFDC), Small Island Developing States (SIDS) • Geographical balance • Focus on subgroups B and C • Countries with proven domestic research capacity • Commitment of national government to actively support and participate in the project

19. Countries Selection (cont.) Selected Countries: • Barbados, Caribbean (SIDS) • Honduras, Central America (LIFDC) • Kenya, Africa (LIFDC) • Pakistan, Asia (NFIDC) • Peru, South America (NFIDC) • Sri Lanka, Asia (LIFDC) • Methodology: • Developing an analytical framework for the operationalisation of food/livelihood securtiy and rural development • Test it in the field and refine the methodology • A two track process • Guidelines • Stakeholder consultation

20. Conceptual Framework for the Identification of Special Products Conceptual Framework for the Identification of Special Products ICTSD country studies

21. Step 1: Identification of intended beneficiaries Focus on rural poor, small & subsitance farmers but also small comercial farmers Assess economic and social importance of particular products for specific regions

22. Step 2: Identification of products:Livelihood secutrity & rural development indicators

23. Step 3: Identification of products (cont.): Food Security indicators

24. Data Used for Estimating SP Indicators Data Used for Estimating SP Indicators

25. Countries selected Barbados, Honduras, Pakistan, Kenya, Peru, Sri Lanka Most common products: Wheat, rice, maize, sugar, chicken and bovine meat, milk and diary products, tomatoes, onions, potatoes Average number of product category identified: 13.6 Study with the highest No. of products: 19 Study with the lowest No. of products: 6 Average % of total tariff lines 12.5% Study with highest % of tariff lines 20% Study the lowest % of tariff lines 3% ICTSD Country Studies Findings in a Nutshell

26. Supplementary elements for the analysis • Substitutes • Unfair competition • Vulnerability to import displacement • Current level of protection

27. Implications for negotiating modalities on SP • Selection: • Countries should be allowed to self-designate their SP within an agreed limit (eg. 15 –20 % of tariff lines). • There might be a reference to an illustrative, non-exhaustive and non-prescriptive list of indicators, but a set of multilaterally agreed indicators including thresholds would not be practicle and not desirable from a sust. dev. perspective • Treatment: • regardless of the size of the lists, there is a case for tariff reduction exemption for at least a sub-set of SPs (e.g. 7-8 % of tarif lines). • For remaining products calibrated treatment could be based on the tiered formula (e.g. 0% reduction if product falls in the lowest tier, 5% if it falls in the 2nd tier and 10% if it falls in 3rd or 4th tier)