Nepals WTO Membership and the Agriculture Sector

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Nepals WTO Membership and the Agriculture Sector

• Navin Dahal
• South Asia Watch on Trade Economics and
  Environment

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Content of the Presentation

• Introduction to WTO
• Nepalese Agriculture Sector
• Agreement on Agriculture
• Nepals Commitments and Concerns
• Other Agreements that impact the Agriculture
  Sector

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WTO

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

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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

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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

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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)

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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

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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

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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

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Market Access

• Binding of tariff
• Reduction of tariff
• Developed countries 36 6 years
• Developing countries 24 10 years

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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

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Tariff Structures Bound Tariffs
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Products with High Tariffs
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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

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Export Subsidies

• Prohibited unless specified in Members
  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

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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

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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, Swland 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

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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

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Agriculture in WTO (contd..)

• Nepals 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

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Nepals 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

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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

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Nepals Concern

• Guiding Principles
• Policy flexibility
• Enlarged markets
• Protection of small farmers
• Import Bill

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Import

• 19 of total
• Crude palm oil 24.3
• Rice 2.6

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Direction of Imports

• India -35.4
• Singapore 15
• Malaysia 11
• Indonesia 10

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Export

• 26 of total
• 30 - Vegetable fats and oils
• 17.5 wheat
• 8 lentils

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Direction of Exports

• India 84
• Tibet 7
• EU 3

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Nepals 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

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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

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Other Agreements

• SPS
• TBT
• TRIPS

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Thank you for your kind attention