WTO agreements regarding Agriculture Agreement on Agriculture Agreements on Standards Agreement on Intellectual Property Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

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

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

Market access: transparency tariffication: conversion of non tariffs barriers in custom duties (tariffs equivalents) binding principle : tariffs bound at a certain level. Cannot increase. Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

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

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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

Classification of agricultural policy tools Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 Example for China Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

Two case of dispute seton the AoA, initiated by Brazil US / cotton EU / sugar Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 The cotton case 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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

WTO agreements on standards Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 Modalities Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

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

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

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

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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

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

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

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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 Results of the implementation of WTO on agriculture in developing countries Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

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

Duties in some developed countries Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

Tariffs escalation (Japan) MFN rate GSP rate Cocoa beans 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 % Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005 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

Trends in agricultural exports Training session - Vietnamese agriculture and WTO - Hanoi - sept. 2005