Agricultural Trade and Food Security

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• Agricultural Trade and Food Security
• Implications for
• ECOWAS Member Countries
• Miho Shirotori

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TRADE BARRIERS IN THE AGRICULTURAL SECTOR

• Agricultural tariffs Tariff peaks and tariff
  escalation, especially in sensitive and
  processed product sectors
• Anti-competitive practice Export subsidies and
  massive government support provided by developed
  countries create an unfair trading environment
• Product-quality and standards Increasing
  consumer concerns (in developed countries) on
  food safety and fair trade initiatives, leading
  to more onerous sanitary, phytosanitary or
  technical standards

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MARKET ACCESS

• Agricultural tariffs
• Agricultural tariffs are on average substantially
  higher than industrial tariffs

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• ( continued)
• In developed countries, tariffs on "sensitive"
  products (i.e. products that receive high
  protection and support from the government) and
  processed products are affected by tariff peaks
  and tariff escalation.
• Bound agricultural tariffs in developing
  countries could be as high as 230 (Nigeria),
  but applied tariffs are generally much lower
  (e.g. 5 plus TCI of 10 for UEMOA countries).

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Interests of ECOWAS Members in Negotiations on
Market Access

• Eliminate Tariff Escalation and Tariff Peaks
• Tariff escalation has been a discouraging factor
  to DCs efforts to diversify agricultural exports
  from primary commodities to processed products

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EU - Applied Tariffs in selected product groups
(2000)
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Tariff Cut Modalities (examples)
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Example - the degree of tariff cuts
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Sectoral Approach

• Originally - a request/offer system in which the
  parties involved aim at reducucing/eliminating
  tariffs in complete sectors on a reciprocal basis
  
• Could be adopted to achieve speedy and
  substantial tariff cuts by developed countries in
  sectors of interests to DCs (e.g. in the case of
  tropical products during the UR)
• e.g. An immediate tariff cut in the processed
  product sectors by X (e.g. 50)
• Followed by across-the board formula tariff cut

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Special Differential (SD) Treatment

• SD under the current AoA
• Longer implementation period and a lower rate of
  reductions
• Exemption for LDCs from reduction commitments
• New SD proposed
• Re-binding or exemption from tariff cuts of
  products linked to food security
• Positive list approach to tariff cuts
• Improved market access for products of interests
  to DCs

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Other Interests of ECOWAS Members

• Maintaining and improving the overall market
  access conditions (e.g. into the EU) to ECOWAS
  members
• Tariff-free and quota-free access to exports from
  LDCs (and surrounding DCs?)
• Minimizing the effect from the erosion of
  preferences (ACP-EU, GSP, AGOA, etc.)

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EXPORT SUBSIDIES

• Export subsidies the most trade-distorting
  element in the AoA - as it provides exporters
  with direct price/cost advantage(s)
• Export subsidies are illegal according to the
  WTO rules applying to non-agricultural products.
• The use of export subsidies under the current AoA
  is concentrated on a limited number of countries.

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Which Countries Subsidizes What?
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Products under Reduction Commitments

• Final bound level, in values (US million)

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Case of Direct Export Subsidy

• Size of ES is counter-cyclical (low WP, high ES)
  
• Large ES could depress the world price
• Reductions in export subsidies is likely to
  necessitate cuts in tariffs and domestic support

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Export Subsidies as Barriers to DCs
DiversificationCase of West Africa
EU Tomato producers (receiving the minimum
price above the world price)
Imports in 1996/97 ? 4571 tons Local production
fell from 73,000 (in 1990/91) to 20,000 tons
EU Tomato Concntrate Processors (receiving
export subsidies - 300 million in 1997)
In Senegal, imports of EU Tomato concentrate in
1993/94 221 tons
20 of exports go to West Africa
Senegal opened up the domestic market in 1994
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New Disciplines - Proposals 1

• Phasing out ES
• in how many years?
• With which reduction technique
• Same reduction formula across products?
• With a downpayment (e.g. 50 cut in the first
  implementation year)?
• Immediate elimination of ES on products of
  interests to DCs
• Continuation of the UR reduction modality
• Reduction rates in values and in volumes?
• With the roll-over flexibility?
• With product disaggregation?

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New Disciplines - Proposals 2

• WTO discipline to other export competition policy
  measures, e.g. export credit, export credit
  guarantee, food aid with concessional purchase
  rate, state trading enterprises.
• the same reduction/elimination commitments as
  export subsidies?
• Independent guideline for export credits,
  guarantee and insurance?
• Negotiated at WTO or OECD?

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SD for Developing Countries

• SD under the current AoA
• Exemption from reduction commitments of marketing
  costs and internal freight and transport costs.
• New SD proposed
• Expansion of the list of exempted measures.
• Which type of ES?

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Officially-supported Export Credits

• Provision by an official Export Credit Agency of
• Supplier credit - trade-related credit provided
  to exporters through a commercial bank or buyer
  credit - credit extended to the foreign buyers
  via a commercial bank (both could be a direct
  loan or interest rate support)
• Export credit guarantee reimbursement to
  exporters in case of default payment
• Export credit insurance insurance against
  payment delay or non-payment

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Subsidy element of Export Credits

• More favorable terms of credit conditions than
  private financing facilities in terms of
• Premium rate and/or interest rate
• Length of credit
• Required downpayment, etc
• OECD study showed that
• In 1998, around 5 of the total OECD
  agricultural exports received export credits
• 62 of exports facilitated by credits went to
  importers in OECD, 9 to NFIDCs, and less than 1
  to LDCs
• Can be trade-distorting through cost-advantage
  and tying of importers to a particular supplier
  country

OECD An Analysis of Officially Supported Export
Credits in Agriculture (2000)
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The EndThank you