EU-LDC NETWORK CONFERENCE Trade and Poverty Reduction

1. EU-LDC NETWORK CONFERENCETrade and Poverty Reduction ISSUES FACING DEVELOPING COUNTRIES IN THE ONGOING WTO NEGOTIATIONS IN AGRICULTURE ‘A POVERTY REDUCTION ANALYSIS’ ROTTERDAM, 30-31 MAY 2001

2. THE ONGOING NEGOTIATIONS ON AGRICULTURE Focus of this Presentation 1. VULNERABILITY OF THE AGRICULTURE SECTOR IN DEVELOPING COUNTRIES 2. THEIR EXPERIENCE OF IMPLEMENTING THE AoA 3. CRITICAL ISSUES FACING FOOD INSECURE COUNTRIES IN THE ONGOING NEGOTIATIONS

3. IMPORTANCE OF AGRICULTURE IN DEVELOPING COUNTRIES IN DEVELOPING COUNTRIES: • SHARE OF AGRICULTURE IN GDP - 26.3% • SHARE OF POPULATION IN AGRIC. - 50.4% • SHARE OF AGRIC. IN TOTAL EXPORTS - 27.3% WHILE, IN DEVELOPED COUNTRIES • SHARE OF AGRICULTURE IN GDP - 3.0% • SHARE OF POPULATION IN AGRIC. - 8.7% • SHARE OF AGRIC. IN TOTAL EXPORTS - 8.3%

4. Agricultural indicators (1995-97)

5. DIFFERENCES AMONGST DEVELOPING COUNTRIES • EVEN AMONGST DEVELOPING COUNTRIES THERE ARE VERY WIDE DIFFERENCES IN THE ROLE OF AGRICUL- TURE AND IN THEIR ‘FOOD INSECURITY’ STATUS • SOME DIFFRENTIATION WILL HAVE TO BE BUILT IN SO AS TO ENSURE A TARGETTED APPROACH • AN ALTERNATIVE TO A CLUSTER APPROACH COULD BE TO TRY AND ATTEMPT DEFINING A VULNERABILITY INDEX SO THAT DIVISIONS ARE NOT CREATED AMONGST DEVELOPING COUNTRIES

6. FACTORS AFFECTING THE VULNERABILITY OF DEVELOPING COUNTRIES While a number of factors impact upon the sensitivity of the agriculture sector in any country, a possible vulnerability index (VI) could be devised as being, directly proportional to the contribution of agriculture to the GDP and the percentage of population employed in the sector, and inversely proportional to the per capita income, i.e. VI = (Ag % in GDP) x (Employment % in Ag) (Per capita income in $)

7. Implementation Problems in Market Access • Market access barriers have remained high due to... • “dirty” tariffication, tariff peaks and tariff escalation • use of non ad-valorem rates • non-tariff barriers • Tariff preferences are being eroded & new conditionalities are often being applied to the existing preferences • Real market access opportunities have not resulted to developing country exporters, due to... • TRQ administration methods which are complex, non- transparent & not fair • High in-quota tariff rates and TRQ under-fill

8. Implementation Problems in Domestic Support World Prices of major agriculture remain depressed due to... • very little effective reduction in the level of domestic support in developed countries • 10 developed countries accounted for 95% of the total domestic support of US$103.7 billion • developed countries’ AMS remains higher than the 1994 level of domestic support. On the other hand developing countries are constrained by • restrictions because of having notified ‘zero’ base AMS • budgetary and ‘political’ constraints

9. WHAT THEN HAS THE IMPACT OF THE UR ON THE AGRICULTURE SECTOR BEEN The growth in agricultural exports of developing countries which was 5.25% during the period 1980-89 slipped to 0.63% in the period 1990-97 World prices of major agriculture products fell in the post UR period, and so did the export earnings of developing c’s However, at the same time their import bills rose from$65.9 billion in 1990-94 to $96.4 billion in 1995-98 The number of people living on less than $1 a day, only in Africa, went up from 218 million in 1987 to over 300 million in 2000

11. Status of the Agriculture Negotiations Negotiations so far Phase 1 (March 2000 - March 2001) - 114 Submissions from Members - 44 Proposals and technical papers from 125 Countries - 7 Meetings of 2 - 3 days each Proposals - Wide differences between Members - Wide participation (Year 1 Uruguay Round 5 proposals from 32 Members) - No simple classification possible, though some possible convergences amongst the food insecure developing countries

12. Market Access: Main issues (1) 1. Deep cuts to all tariffs, resulting in the removal and curtailment of tariff escalation and of tariff peaks - What should be the tariff reduction formula? Appropriate S&D provisions? 2. Expansion of market access opportunities for products of special interest to developing countries, including value-added products - Methods? Through multilateral commitments or unilateral commitments? 3. Issue of Tariff preferences - How to address the issue of preferences so that developing countries can improve their market access? 4. The removal of non-tariff barriers - specially those faced by developing countries exporters

13. Market Access: Main issues (2) 4. Expansion of trade volumes under TRQ; difference between ‘in’ and ‘out’ of quota rates; guidelines regarding TRQ administration - How to ensure that TRQs are universally accessible and that new and small suppliers can get allotment from these quotas? 5. How to provide flexibility to countries to address their non-trade concerns - Should countries be able to identify their sensitive or food security crops on which there should be no tariff reductions? Should this be in the form of S&D? 6. The issue of a Special Safeguard Measure - Should the existing SSG be abolished? What kind of a safety net should be provided to developing countries?

14. Domestic Support : Main issues 1. Reduction in domestic support and the creation of a level playing field - The support provided by all countries under the Amber box should be limited to a certain percentage of the total value of their agricultural production. Will this ensure a level playing field? 2. Sum of all domestic support (whether in the green, blue or amber box) should be capped - Does the green box support have some dynamic or static trade distorting effect ? If so, then should not this to be capped? 3. Strengthening of the Green Box - How to ensure that countries with unlimited resources are not able to transfer support from the amber and blue box to the green box?

15. Non Trade Concerns : Main Issues (1) 1. There must be a balance between trade and non trade concerns -Non trade concerns are an integral part of the negotiations and it should be recognised that developing countries have important ntc’s. 2. How to differentiate between the non trade concerns of developing and developed countries? For instance ‘food security’ means something very different for developed and developing countries. 3. There cannot be a ‘one size fit’ approach to the problem and food insecure developing countries should be provided a certain degree of additional and targeted flexibility to be able to address their ntc’s.

16. Non Trade Concerns : Main Issues (2) 4. Food Security - This has been identified as one of the most important ntc. It is important to recognise that food security can only be addressed through a combination of means, including flexibility in the means to enhance domestic production as well as to be able to take certain border measures 5. The linkage and impact of Food Security on other non trade concerns such as rural development, rural employment, poverty alleviation.

17. A DEVELOPMENT / FOOD SECURITY BOX ? A number of developing countries have proposed the creation of a ‘Development Box’ or a ‘Food Security Box’Can a box be devised which would allow these countries to address their non- trade concerns? Can we identify some basic objectives which the provisions of such a box should aim to address ? • increase productivity • enhance domestic production for domestic consumption • support subsistence and marginal farming practices • greater flexibility in product & non product specific support • protect domestic farmers from cheap import surges • alleviate poverty by improving farm incomes • help rural development