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Nepal’s WTO Membership and the Agriculture Sector

Nepal’s WTO Membership and the Agriculture Sector . Navin Dahal South Asia Watch on Trade Economics and Environment. Content of the Presentation . Introduction to WTO Nepalese Agriculture Sector Agreement on Agriculture Nepal’s Commitments and Concerns

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Nepal’s WTO Membership and the Agriculture Sector

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  1. Nepal’s WTO Membership and the Agriculture Sector Navin Dahal South Asia Watch on Trade Economics and Environment

  2. Content of the Presentation • Introduction to WTO • Nepalese Agriculture Sector • Agreement on Agriculture • Nepal’s Commitments and Concerns • Other Agreements that impact the Agriculture Sector

  3. WTO • Successor of GATT, Operational from 1 January 1995 • Permanent inter-governmental body governing and regulating international trade in goods, services and IPR • It’s an organisation for liberalising trade – help trade flow as freely as possible • It’s a place for settling trade disputes

  4. WTO • WTO is based on four pillars • Promoting rules based multilateral trading system • Non-discrimination (Most-Favoured Nations and National Treatment) • Transparency • Special treatment for less developed countries • It has 149 members • Decisions are made through consensus • It provides for an effective dispute settlement system

  5. WTO • At the heart of the system are WTO Agreements, negotiated and signed by members • These Agreements are contracts that bind governments to keep their trade policies within agreed limits

  6. Major WTO Agreements • GATT 1994 • Trade Related Aspects of Intellectual Property Rights (TRIPS) • Agreement on Agriculture (AOA) • General Agreement on Trade in Services (GATS) • Agreement on Sanitary and Phytosanitary (SPS) Measures • Technical Barriers to Trade (TBT) • Agreement on Textile and Clothing (ATC)

  7. WTO Agreements • The WTO Agreements cover goods, services and intellectual property • They spell out principles of liberalisation and permitted exceptions • They include individual countries commitment to lower custom tariffs and other trade barriers and open key services sectors : 22,500 pages listing individual countries commitments • They set procedures for settling disputes

  8. Nepalese Agriculture Sector • 38 % of GDP • 70 % employment • 83 % of total households • Average farmland 1.09 hectares • 40 % small farmers operating less than 0.5 hectares of land

  9. AoA • Objective – To establish a fair and market-oriented agriculture trading system • Members are required to make commitments in three areas • Market Access • Domestic Support • Export Subsidies

  10. Market Access • Binding of tariff • Reduction of tariff • Developed countries 36 % 6 years • Developing countries 24 % 10 years

  11. Agriculture in WTO (contd..) Modest success in reforming agriculture Market Access • Bound tariff-62 per cent • Tariff peaks and escalation • Non-predictability of tariff structure • Use of specific duties • Tariff Rate Quota • Special Safeguard Measures (SSG) • State Trading Enterprises

  12. Tariff Structures Bound Tariffs

  13. Products with High Tariffs

  14. Domestic Support • Aggregate Measurement of Support (AMS) • Support that encourage overproduction • Amber box, blue box and green box support • 1986-88 base level • Developed countries reduce 20 percent over 6 years • Developing countries reduce 13 percent over 10 years • De minimis – 10 and 5 percent of AGDP

  15. Export Subsidies • Prohibited unless specified in Member’s commitments • Where listed members agreed to cut both amount and quantities • Developed countries agreed to cut by 36 % over 6 years • Developing countries by 21 % over 10 years

  16. Agriculture in WTO (contd..) Domestic Support • Existence of huge domestic support • Concentrated in three members – EU, US and Japan • Concentrated in grains, sugar and field cops • Existence of blue box subsidies Export Subsidies • Rights conferred only to 25 members • EU uses 90 per cent followed by Switzerland and the US • Concentrated in wheat and flour, coarse grains sugar, milk products and meat

  17. Export Subsidies • No SA country has right to use ES (EU - 20, US – 13) • Share of Total ES notified to the WTO (1995-2001) EU 25 – 90%, Sw’land –5%, USA 1.4% • Share of Total ES notified to the WTO (1995-2001) Dairy 35%, Beef 18%, Sugar 11%, Grains 14%. • To be eliminated as scheduled by the end date to be agreed • SDT 1 – Longer implementation period • SDT 2 – Continued access to the provision under Article 9.4 of the AoA for a reasonable period to be negotiated

  18. Export Credits • Share of EC (1998) – USA 49%, Australia 20%, EU 15 16%, Canada 14% • Share of EC – Cereals 28%, Livestock products 16%, Vegetable products 16%, Processed Products 10% • Export credits, export credit guarantees or insurance programs with repayment periods beyond 180 days will be eliminated by the end date to be agreed

  19. Agriculture in WTO (contd..) Nepal’s Commitment in Agriculture • Final bound tariff-42 per cent • No TRQ and SSG • Elimination of ODCs • Applied rate is 13.5 per cent: flexibility of upward revision • AMS- nil • No Export subsidies

  20. Nepal’s Interest • Opening of domestic Market • Bound Tariff • Trade with India • Making agriculture produce available and affordable to the poor • Market Access in Developed and Developing Markets • Existing distortions • Nepal net food importer

  21. Agriculture in WTO (contd..) Ongoing Negotiation • Doha Declaration • July Package • Parallelism • Recognition of development and social issues • Domestic support • Export subsidies • Market access • Special and differential treatment Work on Technical Issues not drafting of Text

  22. Nepal’s Concern Guiding Principles • Policy flexibility • Enlarged markets • Protection of small farmers • Import Bill

  23. Import • 19 % of total • Crude palm oil – 24.3 % • Rice – 2.6 %

  24. Direction of Imports • India -35.4 % • Singapore – 15 % • Malaysia – 11 % • Indonesia – 10 %

  25. Export • 26 % of total • 30 % - Vegetable fats and oils • 17.5 % wheat • 8 % lentils

  26. Direction of Exports • India – 84 % • Tibet – 7 % • EU – 3 %

  27. Nepal’s Concern (contd..) Concern on specific issues • Market Access • Domestic support • Export subsidies • Green box • Food aid • Preference erosion • Special safeguard measures • Special and sensitive products • Duty free and quota free market access

  28. HK Decisions • Elimination of export subsidy by 2013 • Four bands for reducing tariff • Three bands for reducing domestic support • Self designation of Special products • SSM – price and volume trigger

  29. Other Agreements • SPS • TBT • TRIPS

  30. Thank you for your kind attention

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