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Agriculture Negotiations: Moving Forward

This article discusses the key questions and issues for developing countries like India in the agriculture negotiations of the WTO's Doha Round. It explores topics such as domestic support, market access, and export competition, and proposes strategies and options for moving the negotiations forward.

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Agriculture Negotiations: Moving Forward

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  1. Agriculture Negotiations: Moving Forward Ashok Gulati IFPRI Director in Asia WTO and The Doha Round: The Way forward ICRIER-SRTT Conference 6-7 April, 2006, ITPO, New Delhi.

  2. Key Questions for India (and developing countries like India) • Doha outcome: More or less ambitious? • A hollow outcome: missed opportunity for Doha as a development round? • Should one play defensive or pro-active? • Peace Clause is dead: Can one use it to put pressure in the negotiations? Page 2

  3. Domestic Support- Issues in Negotiations • Tiered formula for cuts on overall level of trade distorting support • Tiered formula for cuts in AMS • Capping of product specific AMS • Reduction of de minimis • Review of criteria for Blue Box and Green Box • Lower reduction coefficient and longer implementation period for developing countries Page 3

  4. Example US: Falling Commitment levels but rising actual AMS Source: Hoda and Gulati, forthcoming: WTO, Agricultural Negotiations, and Developing Countries: Lessons from the Indian Experience Page 4

  5. Example US: Falling World Prices and Increasing Domestic Support for rice (similar story for cotton and many other products) Source: Hoda and Gulati, forthcoming: WTO, Agricultural Negotiations, and Developing Countries: Lessons from the Indian Experience Page 5

  6. Suggestions on Domestic Support • Tiered formula for cut in overall Trade Distorting Support (to say 5% of value of production) most important. • Total AMS, Product Specific AMS, De minimis and Blue Box should get squeezed. • Developing countries can accept a low limit for overall TDS. • Green Box criteria: it is important to propose that direct payments be limited to small farmers. Page 6

  7. Issues in Market Access • Basic approach: toward progressive reduction • Tiered formula for reduction of tariffs • Sensitive products (???) • Special products (???) • Special Safeguards Mechanism Page 7

  8. Defensive means hollow outcome • If one per cent of tariff lines are categorized as sensitive or special products, 75% of potential gains from trade liberalization are lost (Bouet, 2006) • In that case, Doha round can not be a “development” round. • If deeper cuts in tariffs realized, Special safeguards would be needed by all. Page 8

  9. Example Switzerland: Concentration of high Bound duties in 1% of tariff lines, 2001 Source: Antoine Bouët, “WHAT CAN THE POOR EXPECT FROM TRADE LIBERALIZATION? OPENING THE “BLACK BOX” OF TRADE MODELING”, forthcoming Page 9

  10. Example India: Surges in Vegetable oil imports(SSM needed if peak tariffs capped a low levels) Source: Hoda and Gulati, forthcoming: WTO, Agricultural Negotiations, and Developing Countries: Lessons from the Indian Experience Page 10

  11. Suggestions on Market Access • Capping is critical • Any reasonable reduction • Special and sensitive Products: Self selection would be credible only if products are extremely limited in number • Maximum reliance on SSM Page 11

  12. Issues in Export Competition • Implementation period for elimination of direct export subsidies • Disciplines on export credit, export credit guarantees and insurance programmes less than 180 days • Disciplines on food aid • Disciplines on State Trading Enterprises • S&D treatment of developing countries Page 12

  13. Suggestions on Export Competition • Suggested period of 5 years for elimination of direct export subsidies should be maintained • While developing disciplines on export credit for under 180 days the possibility of any exceptions or looseness should be ruled out • For food aid fundamental changes are necessary • The exporting STEs should not have monopoly powers • For S&D treatment by way of longer period should be with reference to the period of elimination Page 13

  14. Way Ahead: Strategies and Options • Developing Countries' offer of tariff cuts must be conditional on steep cut of domestic support of US and EU. • Domestic support disciplines must be simplified. The current structure based on the three boxes is complex and ambiguous. • To identify well-targeted and transparent exempt measures that minimizes trade distortion. Page 14

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