WTO agreements regarding Agriculture
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Transcript of WTO agreements regarding Agriculture
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 1
WTO agreements regarding Agriculture
Agreement on AgricultureAgreements on Standards
Agreement on Intellectual Property
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 2
General framework of the AoA
• Objective : to ensure a certain discipline in agricultural trade
• Means : restricting the use of agricultural policy tools having negative or distorting effects on trade.
• Came into force 1 July 1995– For 6 years (Developed countries)– For 10 years (Developing countries )
• Three pillars
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 3
Coverage of the AoA
• Relevant for agricultural products, raw and processed, including fibres (cotton, wool, silk, flax) and raw skins
• Fish products, wood, agricultural inputs are submitted to the GATT agreement (trade in goods)
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 4
General provisions for developing countries
• Developing countries : level of reduction are 2/3 level of reduction for Developed countries
• No reduction for LDCs
• More time for implementation
• Possible use of specific tools
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 5
Market access : relevant measures
• Restrict access to national markets– Tariffs barriers : custom duties
• ad valorem, or minimum custom value
– Non tariffs barriers• import quotas• variable entry levies• minimum import prices• import licenses
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 6
• Transparency– tariffication: conversion of non tariffs barriers in
custom duties (tariffs equivalents)– binding principle : tariffs bound at a certain level.
Cannot increase.
Market access: transparency
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 7
Market access : openness
• Reduction of tariffs– 36% in 6 years for developed countries– 24% in 10 years for developing countries
• Minimum import threshold for tariffied products
• 5% of the average of the internal consumption during the period of reference.
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 8
Market access exceptions• Special Safeguard clause : rapid surge in the
volume of imports, or strong fall in domestic prices, possible to add a tax of 30 % (max), for a limited period. For tariffied products only
• Other safeguard provisions in GATT – significant deterioration of the balance of payments– clearly established dumping (sale under the price in the
country of origin)– to protect a newly developing industry (infant industry)– to protect health and life of human, animals, plants
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 9
Domestic support (1)• Objective : reducing production supports with distorting
effects on trade• Classification of support into three boxes
– amber box: price support measures– blue box: aides partially discoupled and given to producers
within the framework of a production-limiting programme– green box : subsidies with minimal or no distorting effects
• government services programmes : research, extension, training, infrastructures, pest controls, food security stocks
• direct payment to producers non linked to production level or factor of production. Ex : insurance mechanism (market crisis, natural disasters)
• programmes for protection of the environment and support to less favoured areas
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 10
The Amber box• Calculation of the price support : the Aggregated measure of
support (AMS)– AMS = (Domestic price – world price) X volume of production
• Reduction of domestic support in the amber box :– minus 20% on 6 years
– minus 13,3% on 10 years for developing countries
• Exception : the “De minimis” Provision : no reduction– if the value of the support for a given products < 5 % of the total production
value of this product (10 % for DCs)– or– if the value of non product-specific support < 5% of the value of the whole
agricultural production (10% for DCs)
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 11
Other boxes (3)
• Blue box : for the EU and the US. Not compulsory to decrease, impossible to increase
• Green box : no limitation (can increase)
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 12
Exceptions for developing countries
• Following measures are not subject to reduction– agricultural investment incentives– subsidies for the input of low-income
producers– assistance to replace illicit crops
• Least developed countries are not subject to reduction commitments
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 13
Export competition• Objective : to limit export supports• Measures
– Type of support concerned by the AoA• direct export subsidies• stock sale under the domestic price• support to reduce marketing and transport costs
– AoA provided a cut in the budget and in the volume of subsidised export
• Volumes supported cut of 21% (14 % for developing countries)• Budget decreases of 36 % (24 % for developing countries)
– There is no commitment for LDCs
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 14
Classification of agricultural policy toolsMarket Export Domestic support access Competi-
tion Amber
box Blue box
Green box
Tariffs Variable entry lev-ies Mini-mum im-port price Import quotas SPS standards TBT re-quire-ments
Export sub-sidies State trad-ing company engaged in export and import Export cred-its Export of stocks under the price of domestic mar-ket Support for marketing and transport
Guaran-tee price Price added support to farmers, linked to products. Subsi-dies for inputs Support to invest-ment
Sup-port given to produc-ers within the frame-work of a produc-tion-limiting pro-gramme
Income guaranty mechanism, in case of special events (market crisis, natural disasters,…) Providing farm credit or subsiding it Inputs subsidies for poor farmers in DCs Crop insurance Expenditure on extension Expenditure on training Expenditure on research Expenditure on plant protection services Expenditure on animal health pro-tection services Expenditure on public infrastruc-ture (irrigation, drainage, slaughter house, ware house) Definition of standards Environment protection programme Food security stocks
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 15
Example for ChinaMarket Export Domestic support access Competi-
tion Amber
box Blue box
Green box
Tariffs Import quotas
State trad-ing company engaged in export and import VAT refund for exports (export under domestic price) Support for marketing and transport
De minimis provision : 8.5 ¨of the value of the produc-tion Pur-chase and storage of products
Providing farm credit or subsiding it support to poor farmers Expenditure on extension Expenditure on training Expenditure on research Expenditure on plant protection services Expenditure on animal health pro-tection services Expenditure on public infrastruc-ture (irrigation, drainage, slaughter house, ware house) Definition of standards
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 16
The Peace clause
• Most of AoA clauses are not in conformity with GATT
• The Peace clause protects this exception
• Covers a period of nine years (1995 - 2003)
• End on July 2004
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 17
Two case of dispute seton the AoA, initiated by Brazil
US / cotton
EU / sugar
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 18
The cotton case
US Notification DSB decision Export credits No notified Export susbsidies Step 2 Amber box Export susbsidies Compensatory payment
Amber box Amber box
Counter cyclical Amber box Amber box Direct aid Green box Amber box
Initiated in october 2002 - won in march 2005 (appeal)
Direct aid = 617 M$; Export credits = 1,6 B$ (several products); Step 2 = 415 M$
Total = 3 billions $ in 2002
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 19
The sugar case• EU sugar policy:
– Production quota, high price– Part of the producer price is take off, to fund
export support– Preferential import of ACP countries, refined in the
EU and re-exported with export subsidies
• According to the EU: no export subsidies• Decision of the appellate body: they are
export subsidies
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 20
WTO agreements on standards
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 21
Introduction• WTO agreements on standards : prevent
them from being used as protection tools.• Two agreements:
– TBT : Technical barriers to trade– SPS : Sanitary and Phytosanitary
• TBT existed before the WTO : Tokyo round standards code (1979). Uruguay round : strengthening and clarifying.
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 22
SPS agreement• Rules of procedure which define formulation and
implementation of SPS measures in international trade
• Set of measures to protect life and health of human / animals, and to protect plants.
• But : does not define the measure.– Definition in under the responsibility of relevant
international organisations ( Codex alimentarius, Office international des épizooties, International plant protection convention) or member states
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 23
Two key principles
• National treatment : non-discrimination between foreign and national products
• Scientific justification : member states have to establish risk assessment, to scientifically justify the relation between a SPS measure and level of sanitary protection.
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 24
Modalities International standards
already ratified
Harmonisation on thebasis of internationalstandards
International standardsno ratified
Individual countrymeasures allowed basedon risk assessment
If a country wants toapply a higher level ofsanitary protection
Possible, with respect tothe two principles : non-discrimination andrelevant risk assessment
If scientific proofs areinsufficient
Implementation oftemporary measures isauthorised
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 25
Transparency and equivalence
• All measures have to be notified to WTO SPS Committee, before their implementation
• Other members may be allowed to contest scientific proofs
• Members have to accept equivalent SPS measures implemented by other members, if they provide the same level of protection
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 26
TBT agreement
• Technical regulations : specific characteristics of a product :– size, design, functions, performance– the way it its labelled or packaged– the way it is produced : more appropriate to
draft technical regulations on the production methods rather than the characteristics per se (case of organic products)
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 27
The objectives of the TBT agreement
• Protection of human safety or health
• Protection of animal and plant life or health
• Protection of the environment
• Protection of deceptive practices: to protect consumers through information (labelling requirement)
• Other: quality, trade facilitation.(ex: size of vegetables)
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 28
Principles of the TBT agreement• Avoidance of unnecessary obstacles to trade• Non-discrimination and national treatment• Harmonisation: encourage members to use existing
international standards• Equivalence• Mutual recognition of conformity assessment results• Transparency
– notifications– national enquiry point
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 29
Distinction between technical regulations and SPS measures
• A measure is SPS if its objective is to protect– human life from risks arising from additives, toxins, plant /
animal disease– animal life from risks arising from additives, toxins, pests,
diseases, disease carrying organisms– plant life from risks arising from pests, diseases, disease
carrying organisms– a country from the risks arising from damage caused by
the entry, establishment or spread of pests
• Measures adopted for other purpose are TBT measures
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 30
Special treatment for DCs• Recognition that developing countries may face
difficulties– to conform to developed countries SPS/TBT
measures (access to market)– to implement into their countries SPS measures
• Special treatment (market access)– provide technical assistance to developing countries– in case of implementation of new measures which
may hardly reduce market access, the member have to provide technical assistance
– more time to implement new measures
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 31
But• Technical assistance is insufficient
• Restrictive implementation of equivalence:– developed countries look for similarity more than for
equivalence
– loss of flexibility.
• Lack of human resources or expertise to participate to the international organisations :– lack of ownership on SPS measures
– difficulties to harmonise and implement standards.
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 32
The TRIPS Agreement• Trade related intellectual property rights
• Obligation to protect inventions and processes . Covers all intellectual property rights
• Defines the areas that should be protected– pesticides, plant varieties, geographical
indications, trademarks,…
• And the means to protect them
• Strong opposition on this agreement
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 33
Plant variety protection
• The TRIPS agreement– allows members to exclude living being
from patentability– but a plant variety protection system is
compulsory– for instance the UPOV system– difference between patent and UPOV :
farmers’ right to save seeds.
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 34
Geographical indications• Used to identify a good
– as originating of a geographical area– which gives it its characteristic
• Obligation to provide the legal means to prevent inappropriate use of geographical terms
• Art 22 : defines a standard level of protection, all products– GI have to be protected to avoid misleading the public
an prevent unfair competition
• Art 23: higher level of protection for wine and spirits
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 35
Geographical indications (cont’d)
• Two issues are debated in the WTO– Creation of a multilateral register for winne
and spirits– Extension of the higher protection to others
products (food and handicrafts), beyond wines and spirits (China, EU, Thailand)
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 36
Results of the implementation of WTO on agriculture in
developing countries
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 37
Expected results
• More export opportunities due to better access to developed countries markets
• More stable and reliable international markets, due to the reduction of distortion
• Improvement of supply conditions of world market
• BUT
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 38
Tariffs obstacles remain
• Still high tariffs in OECD countries – tariffs for agricultural products around 35 %– tariffs for industrial products around 4 %– peak tariffs : up to 300 % (some temperate
products).
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 39
Duties in some developed countriesEU
beforeUR
EUafter UR
Japanbefore
Japanafter
USAbefore
UR
USAafterUR
Greencoffee
5 0 0 0 0 0
Cocoabeans
3 0 0 0 0 0
Freshtropicalfruits
9 5 17 4 7 5
Sugar 297 152 126 58 197 91
Wheat 170 82 240 152 6 4
Dairyproducts
289 178 489 326 144 93
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 40
Tariffs escalation (Japan)
MFN rate GSP rate
Cocoa beans 0 % 0 %
Cocoa paste not defatted 5.0 % 3.5 %
Cocoa paste defatted 10.0 % 7.0 %
Cocoa powder without sugar
12.9 % 10.5 %
Cocoa powder sugar added 15.0 % 12.5 %
Chocolate 21.3 % 12.5 %
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 41
The main obstacles• Standards and quality requirements
• Most of developed countries have strengthened their SPS and TBT measures
• For instance, in the EU– implementation of traceability– review of authorised pesticides : most of
them suppressed
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 42
Market prices
• Increasing of amount spent to supporting farmers by developed countries: shift from Amber box and Blue Box to Green Box
• Export support decreased but are still used
• WTO definition of dumping : not the common sense (sell under the cost of production)
• No regulations of trans national corporate
Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 43
Trends in agricultural exports
0
100
200
300
400
500
1990
1992
1994
1996
1998
2000
Bill
ion
do
llars
World
Developing countries