Agreement on Agriculture: Three pillars Edinburgh 1-4 October 2017 Edwini Kessie Director Agriculture and Commodities Division edwini.kessie@wto.org
OUTLINE Chronology of development of multilateral rules in the area of agriculture: Historical/pre-WTO situation Successful Uruguay Round (1986-94) and creation of the WTO (1995): Agreement on Agriculture (AoA) AoA and its three pillars: Basic thrust of disciplines in the 3 areas Export prohibitions and restrictions AoA s relationship with other agreements; principle of hierarchy
Agriculture is sensitive! Sector of strategic importance: produces food! Special role of the sector in domestic economy: Both in developed (multi-functionality, cultural and environmental considerations etc.) and developing countries (income parity between rural and urban populations, poverty reduction strategies, food security etc.) Greater governmental intervention in agriculture: Greater uncertainties in agricultural production and marketing Political considerations in the domestic policy making Thus politically difficult to accept very stringent multilateral disciplines
Historical/pre-WTO situation History of GATT (1948) creation: Provisional agreement (Protocol of Provisional Application) Executive s agreement (not expected to be routed in Parliaments) Existing legislation /grandfathering clause (i.e. GATT Part II subject to the legislations existing on the date of the Protocol) Was agriculture out of GATT rules? NO But, minimal willingness among countries to subject agriculture to multilateral disciplines in 1948 Limited tariff bindings subject to GATT Art II: Less ambitious for agricultural products, often negotiated through request/offer basis (and not formula-based) Often protection offered through governmental measures other than tariffs (quotas, licensing, minimum pricing etc.); Use of so-called grey-area measures (e.g. voluntary export restraints (VERs), variable levies etc.) 4
Historical/pre-WTO situation Additionally, carefully crafted, important exemptions for agriculture existed in GATT: Quantitative restrictions: On imports (GATT Article XI:2(c)): for products subject to supply control On exports (GATT Article XI:2(a)): to prevent or relieve critical shortage of foodstuffs Export subsidies (GATT Article XVI:3) ( to avoid more than an equitable share of world exports trade) [domestic subsidies were in any case subject to very limited disciplines] Use of waivers, exceptions in protocols of accessions 5
Multilateral disciplines in Agriculture: chronology Pre-Uruguay Round (1948-1986) unsuccessful attempts to bring agriculture to multilateral rules, trade tensions and increased trade disputes, analytical work showing the inefficiency of the then existing agricultural policies, 1986 GATT Members converge on Punta del Este, Uruguay and launch the Uruguay Round of trade negotiations Uruguay Round Negotiations Complex negotiations, agriculture played a critical role for the success, takes 7.5 years to conclude, but results in, inter alia... Agreement on Agriculture (AoA) Agriculture-specificity in trade disciplines remained! 6
Successful Uruguay Round WTO Agreement 1A Multilateral agreements on trade in goods 1B GATS 1C TRIPS 2 Dispute Settlement Understanding 3 Trade Policy Review Mecanism 4 Plurilateral trade agreements Annex 1A Multilateral agreements on trade in Goods
Annex 1A Multilateral agreements on trade in Goods GATT 1994 (General Agreement on Tariffs and Trade) Understandings Marrakech Protocol 1A Goods Multilateral trade agreement on trade in goods Agreements on: Agriculture Sanitary and phytosanitary measures Textiles and clothing Technical barriers to trade Trade-related investment measures (TRIMS) Antidumping Customs valuation Preshipment inspection Rules of origin Import licensing Subsidies and countervailing measures Safeguards
Agreement on Agriculture (AoA) Came into effect in 1995 Covers broadly three areas/pillars: Market access (border measures) Domestic support (production subsidies) Export competition Prescribes the scope of agricultural products: Agreement on Agriculture applies to these products only Framework for continuing reforms (Continuation clause in Article 20)
What is an agricultural product?... in the WTO sense 10
Pre-WTO situation Market access Limited tariff binding coverage for Agricultural products Preponderance of non-tariff measures Use of so-called grey-area measures (variable duties, voluntary export restraints etc.) 11
Market Access rules Deals with commitment on protection against imports at the border Two fundamental aspects: Comprehensive product scope: bindings on all agricultural products (level of tariff bindings to be negotiated and included in the Schedule) Tarrification modality (conversion of non-tariff measures into equivalent tariff): Protection to be offered only through tariffs: tariff-only regime Clarify some of the so-called grey-area measures
Tariff-only regime How to deal with the then prevalent use of non-tariff measures? Convert the then existing non-tariff border tariffs into tariff equivalents* (tarrification) and bind those in the Schedule after required reduction How to ensure that there is no recourse to such measures in future? Article 4.2 prohibits Members to maintain, resort to or revert to such measures that have been required to be converted Article 4.2 also includes an illustrative list of such measures that can t be applied: quantitative restrictions, variable levies, minimum import prices, discretionary import licensing, Similar border measures [...] * Tariff equivalents of the relevant products to be calculated using the difference between the internal/domestic price and the external price at the border.
If tarrification was indeed carried out on relevant products Members were required to offer tariff-quota (TRQ) based current and minimum access commitments: Systematic use of TRQs in the UR MA commitments TRQs also resulted from request-offer negotiations in accessions as well as in GATT Art XXVIII negotiations. Right to use Special agricultural safeguards (SSG) as included in the Schedule
Special Safeguard (SSG) Article 5 Additional import duty on imports, temporarily, if: Product was subject to tariffication SSG right reserved in Schedule 33 Members have reserved the right Volume-based SSG Trigger: import surges Extra duty: 1/3 of the applicable customs duty Duration: until the end of the year Price-based SSG Trigger: price falls Extra duty depends on price Application on a consignment basis Strict notification requirements 15
Domestic Support: towards a level-playing field One of the most innovative aspects of AoA Rules in the form of binding self-disciplines on subsidizing governments so as to contain the scope of trade-distorting policies: an approach different from ASCM that offers remedies to a Member against subsidies of another Member; effect-based trade remedies available to affected Members Broad distinction between support policies that are recognized as non/minimally distorting ( exempt ) and those that are deemed as trade-distorting ( non-exempt subject to reduction commitment ) Categorization of a support measure depends on policy designs/implementation criteria Detailed policy criteria were agreed for exempt policies Numerical annual limit on non-exempt domestic agricultural subsidies (nominal Total AMS limit in Schedule or de minimis) 16
Domestic Support: Classification of domestic support policies EXEMPT MEASURES (Detailed Criteria for policy makers) Offering scope for governments for policies whose potential distorting effect on trade and production is minimal or less: NON-EXEMPT MEASURES Residual category (no criteria) subject to annual monetary limit (i.e. Total AMS commitment level in the Schedule or de minimis limit) Encouraging a reform process towards exempt support measures
Export subsidies: existing rules Members committed to reduce the then existing export subsidies (1986-90) and not to introduce any new export subsidy: product-specific reduction commitments in the Schedule monetary as well as quantitative limits Countries who were not using export subsidies could not introduce those subsidies. Most WTO Members fall in that category. Some flexibilities for developing countries for a limited time period. (Article 9.4)
Export Subsidies This is an area where accession negotiations have been very strongly influenced by the objectives in the ongoing agriculture negotiations: to eliminate all forms of export subsidies Almost all acceded Members have committed to bind export subsidies at zero. This remains a systemic issue; more so after Nairobi
Historic decision at Nairobi (December 2015) in the context of the ongoing agriculture negotiations 20
Nairobi Decision on Export Competition Elimination of export subsidies Developed Members: Scheduled export subsidy entitlements eliminated immediately Limited temporal exception (till 2020) for some specific products Developing Members Scheduled export subsidy entitlements eliminated by end-2018 Limited temporal exceptions (till 2022) for some products Continue to benefit from Article 9.4 subsidies until 2023 (LDCs and NFIDCs until 2030) Establishment of disciplines on other export measures with equivalent effect: Export finance, Exporting STEs and international food aid 21
Export Prohibitions and Restrictions Fundamental rule in GATT Article XI.2(a) Allows temporary application of export prohibitions or restrictions to prevent or relieve critical shortage of foodstuffs: No change in UR as negotiating thrust remained on addressing protectionist measures Fighting protectionism vs assured access to supplies AoA (Article 12) includes additional transparency and consultation obligations for countries imposing export limitations: Give consideration to effects of export prohibition or restriction on importing Members food security; Notify the measure before it is applied and be prepared to consult with interested importing countries 22
WTO Rules in the area of Agriculture Rule-based commitments Included in the legal text (principally, Agreement on Agriculture (AoA)), applicable to all Members Primarily cover the three pillars namely market access, domestic support and export competition Examples: non-use of quantitative restrictions on imports, criteria for various types/categories of domestic support, calculation methodologies for support, rules on export subsidies etc. Quantitative/numerical commitments: Member-specific: inscribed in individual Schedules Such commitments cover all 3 areas or pillars Examples: tariff bindings, limits on domestic support etc.
AoA and other WTO agreements: principle of hierarchy WTO obligations in various agreements are cumulative subject to a simultaneous application and are accordingly interpreted harmoniously Established hierarchies in the event of a potential conflict between provisions in various agreements: AoA and other multilateral goods agreements: Article 21 of the AoA establishes a hierarchy so that the provisions of GATT 1994 and other multilateral Trade Agreements in Annex IA to the WTO Agreement shall apply subject to the AoA Schedules vis-à-vis obligations contained in WTO agreements: Schedule may clarify and qualify concessions but may not reduce or conflict with the obligations under the GATT or the WTO Agreement; consistent jurisprudence on that.
CoA s Review Process AoA commitments are complex numerous yearly commitments Review process of the Committee on Agriculture (CoA): Collective assessment by Members of the implementation of AoA commitments Notification requirements for all Members : Means to demonstrate compliance with AoA commitments Important source of transparency Commonly agreed notification formats and timelines: G/AG/2
Regular Committee on Agriculture (CoA) All 164 WTO Members; Observer governments (acceding members); and IOs with observer status New WTO Members: 2012: Montenegro, Samoa, Russian Federation and Vanuatu 2013: Lao PDR and Tajikistan 2014: Yemen 2015: Kazakhstan, Seychelles 2016: Liberia, Afghanistan 26
Agriculture Information Management System (AG-IMS)
How to access Ag-IMS? http://agims.wto.org Or Google WTO AG-IMS or http://www.wto.org Trade topics Agriculture Agriculture Information Management System 28
What can you do with the AG-IMS? Notifications* Search and download yours or other Members notifications Compliance with notification obligations Reports on notified information Comparative reports on notified measures: say use of SSG over a period of time Review process Record of CoA s discussions since 1995 Online submission of questions and answers * Upcoming: online submission of agriculture notifications 29
30
THANK YOU 31