DOHA Round

1
DOHA Round Agriculture

• Riho Kruuv
• Jennifer King
• Jennifer Lord Kouraichi
• Tome Tanevski

2
History of AG Negotiations

• Original GATT
• Did not apply to AG trade
• Allowed countries to use NTB-s such as import
  quotas and subsidies
• Export subsidies as a main evil
• Distortion of AG trade as a result
• Uruguay Round as a breakpoint
• Liberalization commitments implemented over a six
  year period (10 years for developing countries)
  starting in 1995.
• Least developed countries - no commitments to
  reduce tariffs or subsidies.
• Participants agreed to initiate negotiations for
  continuing the reform process one year before the
  end of the implementation period i.e. in 2000
  (The negotiations are now underway).

3
WTO AG Agreement

• Objectives
• To reform trade in the AG sector and to make
  policies more market-oriented.
• To improve predictability and security for
  importing and exporting countries
• Specific Targets
• Market access various trade restrictions
  confronting imports
• Domestic support subsidies and other programs,
  including those that raise or guarantee
  farmgate prices and farmers incomes
• Export subsidies and other methods used to make
  exports artificially competitive

4
WTO Compliance

• Uruguay Round Agreement on Agriculture (URRA)
  Commitments
• Policies that seriously distort trade were
  differentiated from those with minimal
• trade effects. The two respective categories were
  labeled "amber box" and
• "green box."
• AMBER Box trade distorting policies targeted for
  reductions under the URAA
• (e.g., price supports, marketing loans, payments
  based on acreage or of
• livestock, input subsidies, etc.) 
• GREEN Box  non-trade distorting policies
  acceptable under URA,
• including taxpayer-funded and non-transfers from
  consumers for research,
• extension, pest/disease control, crop insurance,
  marketing/promotion, natural
• disaster relief, conservation programs, public
  stockholding, decoupled income
• support, income safety nets, etc. 
• BLUE Box trade distorting policies BUT exempt
  from reductions under
• URAA (including direct payments linked to certain
  production-limiting policies)

5
Uruguay Round EU, Japanese, and U.S.
Agricultural Domestic Support, 1998 (US Dollars
in Billions)
6
Doha Agriculture

• The Doha Declaration commits WTO members
• -to negotiate substantial improvements in market
  access for agricultural products
• - reduce, with a view to phasing out, all forms
  of export subsidies
• - substantially reduce domestic support payments
  that distort trade.
• By the fifth ministerial conference in September
  2003, members must submit their tariff schedules
  detailing the specific concessions they are
  willing to make by tariff line, based on the
  modalities they agreed to 6 months earlier in
  March.
• Source www.gao.gov

7
Doha AG Issues

• Tariffs and quotas
• Domestic support (amber, blue and green boxes)
• Export subsidies and restrictions
• State trading
• Food security
• Food safety
• Rural Development
• Geographical indicators
• Safeguards
• Environment

• Trade preferences
• Food aid
• Consumer information and labeling
• Sectorial initiatives
• Development box, single commodity producers,
  small island developing states, special aid and
  differential treatment
• Additional issues (food aid, the Green Box,
  tariff quota expansion)

8
Key Events through the Fifth Ministerial
Conference
9
WTO AoA Participants

• European Union (15 members)
• USA
• Japan
• Groups of countries
• The Cairns Group (1/3 World AG exports 18
  members Argentina, Australia, Bolivia, Brazil,
  Canada, Chile, Colombia, Costa Rica, Fiji,
  Guatemala, Indonesia, Malaysia, New Zealand,
  Paraguay, the Philippines, South Africa, Thailand
  and Uruguay)
• African Group (41 African countries)
• ASEAN (members of WTO)
• Caricom (Caribbean Community countries)
• Mercosur ( Argentina, Brazil, Paraguay, Uruguay)
• Small Island Developing States (SIDS 9
  members)
• Developing Country Grouping
• Non-trade Concerns
• Transition (Mostly countries of CEE)
• Mixed groups (Common proposals of the countries
  from various groups)

10
Developing Countries and the Doha Round

• The World Bank classifies 105 current WTO
  members, or approximately 73 , as developing
  countries
• Agricultural products are often their primary
  exports
• Suffer from remoteness, vulnerability to natural
  hazards
• Lack of resources and lack of economies of scale

11
Cairns Group on Export Subsidies and Domestic
Support (September 2002)

• Developing and least-developed countries should
  not be compelled to compete with products
  receiving trade-distorting support which largely
  originate from developed countries.
• Real cuts to distorting support along with
  improved disciplines on domestic support will be
  fundamental to agricultural trade liberalization
  and a successful Doha Round outcome.
• Substantial reductions in distorting domestic
  support will lead to more open and efficient
  markets to the benefit of all Members, especially
  developing countries.

12
Top 15 agricultural exporters and importers in
the world, 2001
13
EU WTO

• EU has a non-agricultural applied tariff average
  of 4.1
• EU has an average tariff of 16.1 for
  agricultural products
• Doha Round requires EU to change its policies on
  textiles and agriculture
• Thus far EU has complied on textiles, but has
  failed to resolve CAP issues
• EU is the highest user of ag export subsidies in
  the world

14
The Cost of the CAP

• According to a recent article in the British
  newspaper The Guardian high tariffs and
  subsidies extol a huge price for third world
  agricultural producers. The article says that an
  average family in the EU pays higher food prices
  and an extra 16 pounds a week in taxes to support
  the CAP
• The CAP is, however, in a class of its own
  when it comes to damaging the interests of poor
  countries, because support is more concentrated
  on export subsidies which allow European farmers
  to dump their products on world markets. The EU
  exports wheat at two-thirds of what it actually
  costs to produce, its sugar at only 25 of the
  cost of production. At a time when a fifth of the
  world's population lives on a dollar a day, the
  average cow in the EU receives a Dollars 2.20
  daily handout from Brussels1.
• 1 Elliot, Larry. (2002, October 30). Analysis
  An EU cow is given Dollars 2.20 daily - the
  world's poor live on Dollars 1 a day. The
  Guardian. Pg. 4.

15
Agricultural Export Subsidies, 1998
16
A Political History of U.S. agriculture

• The development of farm subsidies
• Rooted in 1930s Depression Era USDA created as
  part of New Deal
• Introduction of mixed strategy
• Price Supports (loan rates target prices),
• Supply Control (set-asides conservation
  reserve)
• Trade Interventions (export subsidies, import
  quotas) with continual adjustments (new Farm Bill
  every 5 yrs)
• Crop Insurance, Commodities, Farm Loans,
  Commodity Purchase Donation
• Purposes Designed to provide emergency aid to
  maintain safe affordable food supply keep
  prices reasonable consistent for farmers
• Supplied some stability, but created many
  problems, including
• Market inefficiencies by holding prices
  artificially low
• Worked against small medium farmers because it
  tended to discourage diversification crop
  rotation
• Provided disproportionate benefits to large-scale
  agriculture
• 1970s Commodity boom, falling interest rates ?
  prosperity, spike in land value
• 1980s Commodity bust rising interest rates ?
  farm crisis

17
A Political History of U.S. agriculture

• 1990s Technical change, falling interest rates
  prosperity for those using new technologies
• 1995 - 1996 Commodity price spike
• Federal Agricultural Improvement Act of 1996
  designed to eliminate price support fixed
  payments (decoupling) and allow for market
  dictated prices after its expiration in 2002
• 1997 - 2002 Commodity prices decline
• 1998 - 2001 Emergency payments
• Farm Security Rural Investment Act of 2002 
• 180 billion farm bill signed into law by Pres.
  Bush on May 13, 2002
• Countercyclical payments restored
• Directs U.S. agriculture policy for next six
  years
• Included 9.2 billion in new funding for
  conservation programs

18
QUESTION Why is agricultural trade and
agricultural policy important for U.S.
agriculture?

• U.S. is worlds leading exporter of grains --
  accounts for 30 - 60 of the
• international market
• Major Export Crops corn, barley, oats, wheat,
  soybean, cotton, rice
• Domestic Food/Agricultural Sector
• Accounts for 1/5th of GNP
• Employs 20 of nations workforce
• Agricultural exports currently provide employment
  for
• 765,000 Americans
• Helps offset the trade deficit
• U.S. exports increased from 7.3 billion to in
  1970 to 53.5 billion in
• 2001

19
U.S. Export Policy

• American agriculture is currently twice as
  reliant on
• international markets as the U.S. economy as a
  whole,
• and by the year 2000 it will be 2.5 times as
  reliant.
• USDA Secretary Dan Glickman
  (1996)
• Aggressive pursuit of agro-export growth since
  1970s, when the U.S.
• experienced its first trade deficit of the
  century the international
• community suffered a widespread food crisis
• Food/Agriculture policy targeted at building new
  market share and
• promoting U.S. food exports
• Various Export Promotion Programs and Tools
• Commodity Credit Corporation's Facility Guarantee
  Program
• Export Enhancement Program
• Emerging Markets Program (authorized by the Food,
  Agriculture, Conservation, and Trade Act of 1990
• Import licensing
• Dairy Export Incentive Program

20
US Policy Recommendations

• US EU should cooperate at Doha and work
  together to represent the concerns of developed
  countries
• In accordance with the Doha Mandate export
  subsidies should be eliminated
• The US should keep crop and disaster insurance
  and gradually reduce price supports and shift
  funds to RD for alternate uses of agricultural
  products like ethanol
• Industrial countries should provide greater
  market access, and reduce their excessive use of
  domestic supports for agricultural products

21
Sources

• Babkina, A.M. (2000). World Trade Organization
  Issues and Bibliography, Huntington, New York
  Nova Science Publishers.
• Elliot, Larry. (2002, October 30). Analysis An
  EU cow is given Dollars 2.20 daily - the world's
  poor live on Dollars 1 a day. The Guardian. Pg.
  4.
• EU/WTO Supachai Urges Progress in Doha Talks.
  (2002, October 5). European Report.
• EU/WTO Bleak Prospects for Breaking Down Farm
  Trade Barriers. (2002, November 1). European
  Report.
• General Accounting Office. World Trade
  Organization Early Decisions Are Vital to
  Progress in Ongoing Negotiations. GAO-02-879, Sept
  ember 4, 2002.  
• Web site of the European Commission,
  www.europa.eu.int
• Web site of the Cairns Group, www.cairnsgroup.org
• Web site of WTO, www.wto.org
• EU/WTO Supachai Urges Progress in Doha Talks.
  (2002, October 5). European Report.
• EU/WTO Bleak Prospects for Breaking Down Farm
  Trade Barriers. (2002, November 1). European
  Report.
• World Trade Organization. (June 26, 2002). Trade
  Policy Review European Union Report by the
  Government. Retrieved from www.wto.gov on
  October 27, 2002.
• World Trade Organization. (June 26, 2002). Trade
  Policy Review European Union Report by the
  Secretariat. Retrieved from www.wto.gov on
  October 27, 2002.