1. WTO Agriculture Negotiations Outstanding Issues for Developing Countries Tim Ruffer Oxford Policy Management tim.ruffer@opml.co.uk

2. 1 Presentation Outline Background Key issues, what has been agreed and what remains to be negotiated –Market access –Domestic support –Export competition Key issues for developing countries Timing and requirements for agreement

3. 2 Background to the negotiations Under ‘built in agenda’, negotiations began in 2000 New mandate under DDA 2001 Work on technicalities of modalities began October 2003 Framework agreed July 2004 Deadline of 1 January 2005 postponed No new deadline, but unofficial target of agreement at Hong Kong in December 2005. But behind schedule – failed to reach deal on “first approximations” in July However some progress made in Dalian – agreement to use G20 framework (which focused on market access) as a starting point for future negotiation

4. 3 Market Access Most important part of modalities and most difficult to negotiate Key issues: Tariff reduction formula (precondition for setting modalities in other market access areas) Sensitive & special products Special safeguards How to address preference erosion Quota size, administration and in-quota tariffs

5. 4 Market Access What has been agreed Ad valorem equivalents (agreement reached in May) Tariff reductions –Tiered formula – steeper cuts for higher tariffs –Single approach – improved market access by all (except LDCs) –Reductions from bound rates –S&DT integral TRQs. Expansion required Sensitive products. Lower tariff reductions for an “appropriate number” of tariff lines. But “substantial improvements” in market access still required through tariff reductions and TRQ commitments Special products. More moderate treatment for an “appropriate number” of products designated by developing countries SSM. To be established for developing countries Preference erosion. Will be addressed

6. 5 Market Access What remains to be negotiated Tariff reduction under the tiered formula –Number of bands (Dalian proposed 5/4 for developed/ developing) –Thresholds for defining bands (Dalian proposed 20, 40, 60, 80% for developed and 30, 80, 130% for developing) –Type of tariff reduction for each band (Dalian proposed linear with cuts by developing countries at 2/3 of developed. EU has proposed flexibility on the level of cut around an average). Level of reduction not agreed –Dalian also proposes tariffs capped at 100%/150% for developed/ developing – fiercely opposed by G10 and ACP –Timeframe for tariff reduction Tariff simplification?

7. 6 TRQ expansion and administration –TRQ expansion if product shielded from major tariff cuts? –Ceiling on out-of-quota tariffs? –Improvements in TRQ administration Sensitive and Special Products –Number of products and criteria for selection –Market-opening obligations (tariff reduction or TRQ expansion?) SSG & Special safeguard mechanism –Little discussion of details Preference erosion –Little discussion of details –Africa Group has proposed establishment of adequate timeframe and support mechanism for adjustment to erosion

8. 7 Domestic Support Key issues Formula and timeframe for reductions Methodology for establishing Amber Box caps Future disciplines for Blue Box and Green Box

9. 8 Domestic Support What has been agreed Tiered formula for overall level of support (amber box, de minimis and blue box). Downpayment. Ceiling of overall support cut by 20% in first year. Amber Box. Tiered formula and limits on supports for specific products. De Minimis. Reduced by amount to be negotiated. Developing countries exempt if most allocated for subsistence and resource poor farmers. Blue Box. Capped at 5% country’s agric production. Definition changed to include direct payments that do not require production. Green Box. Review and clarification of supports. S&DT. Longer implementation periods and lower reduction coefficients. Continued access to Article 6.2.

10. 9 Domestic Support What remains to be negotiated Formula for reductions. Bands. Methodology for establishing Amber Box caps. Base period and whether approach should be uniform Green Box. Review and clarification of criteria. New disciplines? Blue Box. How to measure BB component for cut and new measures (especially for US counter-cyclical payments)

11. 10 Export Subsidies and Competition What has been agreed All export subsidies eliminated by annual instalments Developing countries provided longer implementation period Continuation of Article 9.4 (subsidies for transportation and marketing) for a ‘reasonable period'

12. 11 Export Subsidies and Competition What remains to be negotiated Date for elimination of export subsidies Disciplines for export credit, guarantees and insurance of 180 days or less Food aid: role of international organisations, whether fully in grant form, monetisation, prohibition of tied food aid, transparency, binding commitments on supply from donors. State Trading Enterprises. Approach to disciplines, definition of entities covered, S&DT, etc

13. 12 Groser – key elements for progress Market access –Number of tiers –Description of nature of tariff reduction formula –Further elaboration of flexibilities (SPs & sensitive products) Domestic support –Structure of reduction commitments –Convergence on green box criteria Export competition –Further elaboration of parallel commitments – particularly STEs & food aid

14. 13 Key issues for developing countries OFFENSIVEDEFENSIVE Tariff Reduction Formula Tariff Simplification Sensitive Products Special Products SSG SSM Domestic Support Export Competition

15. 14 Timing and Requirements for Agreement Urgency to complete by end 2006 – expiry of US ‘Trade Promotion Authority’. Requires agreement on modalities at Hong Kong Intensive negotiations in September – 11 weeks before ministerial Need to narrow negotiations to areas where a few political decisions required

16. 15 Main blockages are currently tariff reduction formula (EU) and domestic support (US) – agreement required for progress in other areas. How can DCs influence? Will require significant acceleration in negotiation pace and readiness by members to move away from entrenched positions Concessions need to be provided for agreement  developing countries must weigh up priorities and consider where their key interests lie –At what cost are they willing to compromise to enable agreement?