Agriculture in the July Framework Navin Dahal South Asia Watch on Trade, Economics and Environment (SAWTEE) 5/31/2019

Framework Agreement Reform in all three pillars form an interconnected whole and to be approached in balanced and equitable manner Operationally effective and meaningful provisions for SDT for developing country member 5/31/2019

Market Access Tiered Formula for tariff reduction Bound rates as starting points Progressivity – deeper cuts in higher tariffs Proportionality special and differential treatment for developing countries No reduction commitments for LDCs Special products Flexibility – Sensitive products 5/31/2019

Market Access Reduction or elimination of in-quota tariff rates Operationally effective improvement in tariff quota administration Tariff escalation to be addressed through a formula to be agreed 5/31/2019

Sensitive Products “Without undermining the overall objective of the tiered approach” appropriate number of tariff lines to be treated as sensitive Substantial improvement will apply to each product Substantial improvement to be achieved through Tariff quota commitments MFN-based tariff quota expansion for all such products 5/31/2019

To be Determined Structure of the tiered formula Selection criteria for sensitive products Selection criteria for special products Approach to Tariff Escalation Approach to tariff simplification Approach to SSM Approach to Preference Erosion 5/31/2019

Market Access Issues Ad-valorem equivalents Sensitive Products Number of Products Selection criteria Implications of tariff profiles SSM for developing countries Tariff line (six digit /eight digit level) 5/31/2019

Tariff Structures Bound Tariffs USA EU-15 INDIA Mean 12% 29% 117% Maximum 350% 277% 300% Minimum 0% 10% # Tariff lines 1,829 2,091 692 T = 0% 388 399 0% < T >30% 1,247 1,060 24 30%<T>100% 139 480 422 T >100% 28 152 246 5/31/2019

Products with High Tariffs USA EU-15 INDIA Dairy Meat of Bovine & Pork Nuts Grapes Pork Wheat Peanuts Vegetable oil Sugar Banana Beverages Tobacco Processed Cereal Grains Prepared vegetables…. 5/31/2019

South Asia Tariff only protection as non of the countries have TRQs (EU 87, US 54) SA countries do not have the right to use Special Safeguards SSGs (EU 539, US 189) Progress in other pillars also to be considered in the final discussion on the magnitude of tariff reductions 5/31/2019

Developing Countries Proportionality – tariff reduction/quota expansion Longer implementation periods Number and treatment of sensitive products Special products – self determination SSM 5/31/2019

LDCs Not required to reduce tariff Developed and developing country Members should provide duty free and quota-free access to markets for products originating from LDCs Key Goal – Maintain tariff preference levels 5/31/2019

Domestic Support Overall Support – To be reduced using a tiered formula Bound level as starting point Final bound total AMS – To be reduced using a tiered formula Blue Box – Expanded De Minimis – Reduced Green Box Measures – Reviewed 5/31/2019

Overall Reduction Tiered formula to be used to reduce overall sum of all trade distorting domestic support (AMS+permitted de minimis level + Blue Box) Harmonization – Higher levels to be reduced more 20 % reduction in year 1 5/31/2019

Final Bound AMS To be reduced substantially Harmonization Product-specific AMS to be capped Greater than formula reductions may be required to achieve required level of cut in overall support SDT – longer implementation period and lower reduction coefficients 5/31/2019

Blue Box Article 6.5 to be reviewed Additional measure inserted – Direct payments not related to production if unchanged fixed base and payments to 85% or less area Blue Box support not to exceed 5% of total VoAP Some flexibility to large current users 5/31/2019

The De Minimis Provision Reduction to be negotiated,taking into account SDT Support to LIRP in developing countries to be exempt Greater than formula reduction may be necessary to achieve required level of cut in overall support SDT – longer implementation period and lower reduction coefficients 5/31/2019

Green Box Measures Criteria to be reviewed The basic concepts, principles and effectiveness of Green Box to remain Take due account of non trade concerns 5/31/2019

Domestic Support Negotiation Dynamics No SA country has AMS reduction commitment EU 15 - high total De Minimis and Blue Box US – High AMS and De Minimis India – PS AMS Negative, 5.68% VoAP under Art. 6.2 (1997) Pakistan - PS AMS Negative - (1999) De Minimis – Future flexibility 5/31/2019

Export Competition Export subsidies Export credit Trade Monopolies – STEs Food Aid abuse 5/31/2019

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%, Sw’land –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 5/31/2019

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 5/31/2019

Export Credits EC, ECG or insurance programs with repayment periods of 180 days and below will be eliminated if their terms and conditions are not in accordance with disciplines to be agreed. These disciplines will cover, inter alia: Payment of interest Minimum interest rates Minimum premium requirements Other elements that can constitute subsidies or otherwise distort trade 5/31/2019

Export Credits SDT 1 – Longer implementation period SDT 2 – Disciplines on EC, ECG or IP to be agreed will make appropriate provisions for differential treatment in favour of LDCs and NFIDCs 5/31/2019

Exporting STEs Trade distorting practices with respect to exporting STEs, will be eliminated, including export subsidies provided to or by them, government financing,and underwriting of losses The issues of the future of monopoly powers will be subject to further negotiation SDT 1 – Longer implementation period SDT 2 – STEs in developing countries that enjoy special privileges to preserve domestic consumer price stability and ensure food security will receive special consideration for maintaining monopoly status 5/31/2019

Food Aid Elimination of food aid provision that is not in conformity with operationally effective discipline to be agreed.The objective of such disciplines will be to prevent commercial displacement. The role of international organisations as regards the provision of food aid by Members, including related humanitarian and developmental issues, will be addressed in the negotiations The question of providing food aid exclusively in fully grant form will also be addressed in the negotiations 5/31/2019

Export Competition Issues End date Parallel Elimination Transparency SDT 5/31/2019

Negotiation Dynamics US defensive interest on Domestic support and offensive interest on Market Access in developing countries EU defensive interest on Market Access EU-US interest on Export competition 5/31/2019

Consequence for SA Countries Minimal gain in export competition No or minimal gain in reduction in Domestic support No gain in market access in developed country markets Undermine their defensive position in Market Access Preference Erosion 5/31/2019