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AGRICULTURE NEGOTIATIONS: BACKGROUNDER
Phase 1: Market access: tariffs and tariff quotas

Nowadays, among WTO members, agricultural products are protected only by tariffs (> except ...). All non-tariff barriers had to be eliminated or converted to tariffs as a result of the Uruguay Round (the conversion was known as “tariffication”). In some cases, the calculated equivalent tariffs — like the original measures that were tariffied — were too high to allow any real opportunity for imports. So a system of tariff-rate quotas was created to maintain existing import access levels, and to provide minimum access opportunities. This means lower tariffs within the quotas, and higher rates for quantities outside the quotas.

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UPDATED 10 OCTOBER 2002

Contents
> In a nutshell
Proposals received in Phase 1
Proposals received in Phase 2
Alliances table
INTRODUCTION
Phase 1
Export subsidies, competition and restrictions
> Market access
Domestic support: amber, blue and green boxes
Developing countries
Transition economies
Non-trade concerns
Animal welfare and food quality
The peace clause
Phase 2
Tariffs and quotas
Domestic support: amber, blue and green boxes
Export subsidies and restrictions
State trading
Food security
Food safety
Rural development
Geographical indications
Safeguards
Environment
Trade preferences
Food aid
Consumer information and labelling
Sectoral initiatives
Development box, single commodity producers, small island developing states, special and differential treatment
Additional issues (food aid, the Green Box, tariff quota expansion)

Modalities 2002–2003
Exports
Market access
Domestic support


Data
Statistics


This briefing document explains current agricultural issues raised before and in the current negotiations. It has been prepared by the Information and Media Relations Division of the WTO Secretariat to help public understanding about the agriculture negotiations. It is not an official record of the negotiations.


The discussion since the Uruguay Round has focused broadly on two issues: the high levels of tariffs outside the quotas (with some countries pressing for larger cuts on the higher tariffs), and the quotas themselves — their size, the way they have been administered, and the tariffs charged on imports within the quotas.

 
 
The tariffs  back to top

The discussion of tariffs covers both tariffs on quantities within quotas and those outside. Traditionally, the tariff reductions that resulted from trade negotiations came from bilateral product-by-product bargaining, or they were based on formulas that applied over a broad range of products, or combinations of the two. How the reductions will be handled in the present negotiations is still undecided. Some countries — such as Canada and the US — are advocating that in addition, “sectoral liberalization” should be negotiated. In some sectors, in past negotiations these have sometimes meant “zero-for-zero” deals. It would include negotiating the complete elimination of tariffs (and possibly other measures such as export subsidies or subsidized export credits) by at least the key WTO members in specific sectors such as oilseeds, and barley and malt. Some countries — for example Japan — have said they do not support this.

One country, the US, has gone so far as to argue that because so many agricultural tariffs are high, the negotiations to reduce tariffs should start with “applied rates” (the tariffs governments actually charge on agricultural imports) and not the generally higher “bound rates” (the legally binding ceilings committed in the WTO as a result of previous negotiations). This has proved quite controversial because it would break a tradition of basing negotiations on bound rates. A number of countries have also countered that they should be given credit for unilaterally applying tariffs that are more liberal than the negotiated bound rates, instead of being forced to make even deeper cuts than countries that kept to their higher bound rates. Some countries that recently joined the WTO also feel that they accepted low tariffs in order to become members and therefore should not have to reduce them much further.

A number of developing countries also complain that they face difficulty if they try to increase their incomes by processing the agricultural raw materials that they produce. This is because the countries they see as potential export markets impose higher duties on processed imports than on the raw materials — known as tariff escalation — in order to protect their own processing industries.

Some countries see tariffs and other import barriers as necessary in order to protect domestic production and maintain food security. For this reason, some countries are linking lower import barriers with disciplines on other countries’ export restraints and export taxes — if producing countries do not restrict their exports, then importing countries can feel more secure about being able to obtaining food from them. Some developing countries say they need flexibility in deciding the level of import duties they charge to protect their farmers against competition from imports whose prices are low because of export subsidies.

 
 
The tariff quotas  back to top

Quota administration is a technical subject, but it has a real impact on trade — on whether a product exported from one country can gain access to the market of another country at the lower, within-quota tariff.

Methods used for giving exporters access to quotas include first-come, first-served allocations, import licensing according to historical shares and other criteria, administering through state trading enterprise, bilateral agreements, and auctioning. The terms can also specify time periods for using the quotas, for example periods of time for applying for licences, or for delivering the products to the importing countries. Exporters are sometimes concerned that their ability to take advantage of tariff quotas can be handicapped because of the way the quotas are administered. Sometimes they also complain that the licensing timetables put them at a disadvantage when production is seasonal and the products have to be transported over long distances.

Each method has advantages and disadvantages, and many WTO members acknowledge that it can be difficult to say conclusively whether one method is better than another. Several countries want the negotiations to deal with tariff quotas: to replace them with low tariffs, to increase their size, to sort out what they consider to be restricting and non-transparent allocation methods, or to clarify which methods are legal or illegal under WTO rules in order to provide legal certainty.

 
 
Who has tariff quotas?  back to top

43 WTO members currently have a combined total of 1,425 tariff quotas in their commitments. The numbers in brackets show how many quotas each country has.

Australia (2)
Barbados (36)
Brazil (2)
Bulgaria (73)
Canada (21)
Chile (1)
China (10)
Chinese Taipei (10)
Colombia (67)
Costa Rica (27)
Croatia (9)
Czech Rep (24)
Dominican Rep (8)
Ecuador (14)
El Salvador (11)
EU (87)
Guatemala (22)
Hungary (70)
Iceland (90)
Indonesia (2)
Israel (12)
Japan (20)
Korea (67)
Latvia (4)
Lithuania (4)
Malaysia (19)
Mexico (11)
Morocco (16)
New Zealand (3)
Nicaragua (9)
Norway (232)
Panama (19)
Philippines (14)
Poland (109)
Romania (12)
Slovak Republic (24)
Slovenia (20)
South Africa (53)
Switzerland (28)
Thailand (23)
Tunisia (13)
United States (54)
Venezuela (61)

For more details, see WTO Secretariat background paper “Tariff and other Quotas” TN/AG/S/5, downloadable here

 
 
Proposals containing positions on market access submitted in Phase 1  back to top
(see also proposals on developing countries and on non-trade concerns)

  • Canada: market access G/AG/NG/W/12
  • 11 developing countries: special and differential treatment and a development box G/AG/NG/W/13
  • US: a comprehensive proposal G/AG/NG/W/15
  • EU: Food quality: improvement of market access opportunities G/AG/NG/W/18
  • 12 developing countries: market access G/AG/NG/W/37 + Corr.1
  • Cairns Group: market access G/AG/NG/W/54
  • ASEAN: special and differential treatment for developing countries in world agricultural trade G/AG/NG/W/55
  • 11 transition economies: market access G/AG/NG/W/57
  • US: tariff rate quota reform G/AG/NG/W/58
  • EU: comprehensive negotiating proposal G/AG/NG/W/90
  • Japan: proposal G/AG/NG/W/91
  • Switzerland: proposal G/AG/NG/W/94
  • Swaziland: market access under special and differential treatment for small developing countries G/AG/NG/W/95
  • Mauritius: proposal G/AG/NG/W96
  • Small island developing states: (part of) proposal G/AG/NG/W/97
  • Rep of Korea: proposal G/AG/NG/W/98
  • Mali: proposal G/AG/NG/W/99
  • Caricom: proposal G/AG/NG/W/100
  • Norway: proposal G/AG/NG/W/101
  • India: proposal G/AG/NG/W/102
  • Poland: proposal G/AG/NG/W/103
  • “Mercosur+”: state trading enterprises G/AG/NG/W/104
  • Morocco: proposal G/AG/NG/W/105
  • Turkey: proposal G/AG/NG/W/106
  • Egypt: proposal G/AG/NG/W/107
  • Nigeria: proposal G/AG/NG/W/130
  • Congo, Dem Rep: proposal G/NG/W/135
  • Kenya: proposal G/AG/NG/W/136
  • Senegal: preliminary positions G/AG/NG/W/137
  • Mexico: proposal G/AG/NG/W/138
  • Jordan: proposal G/AG/NG/W/140
  • African Group: joint proposal G/AG/NG/W/142
  • Namibia: proposal G/AG/NG/W/143
  • Croatia included market access in its discussion paper G/AG/NG/W/141

Special agricultural safeguards  back to top

Safeguards are contingency restrictions on imports taken temporarily to deal with special circumstances such as a sudden surge in imports. They normally come under the Safeguards Agreement, but the Agriculture Agreement has special provisions (Article 5) on safeguards.

The special safeguards provisions for agriculture differ from normal safeguards (see details in “Trading into the Future”). In agriculture, unlike with normal safeguards:

  • higher safeguards duties can be triggered automatically when import volumes rise above a certain level, or if prices fall below a certain level; and
  • it is not necessary to demonstrate that serious injury is being caused to the domestic industry.

The special agricultural safeguard can only be used on products that were tariffied — which amount to less than 20% of all agricultural products (as defined by “tariff lines”). But they cannot be used on imports within the tariff quotas, and they can only be used if the government reserved the right to do so in its schedule of commitments on agriculture. In practice, the special agricultural safeguard has been used in relatively few cases.

Proposals range from continuing with the provision in its current form, to its abolition, or its revision to prevent its use on products from developing countries. Some developing countries have proposed that only they would be allowed to use special safeguards — developed countries would not be allowed to do so.

Japan and Rep of Korea propose a new form of special safeguard that would apply to perishable and seasonal products. A number of countries have objected to this.

The right to use the special agricultural safeguard would lapse if there is no agreement in the negotiations to continue the “reform process” initiated in the Uruguay Round (see Articles 5.9 and 20 of the Agriculture Agreement).

 
 
Special safeguards: who has reserved the right?  back to top

38 WTO members currently have reserved the right to use a combined total of 6,072 special safeguards on agricultural products. The numbers in brackets show how many products are involved in each case, although the definition of what is a single product varies.

Australia (10)
Barbados (37)
Botswana (161)
Bulgaria (21)
Canada (150)
Colombia (56)
Costa Rica (87)
Czech Republic (236)
Ecuador (7)
El Salvador (84)
EU (539)
Guatemala (107)
Hungary (117)
Iceland (462)
Indonesia (13)
Israel (41)
Japan (121)
Korea (111)
Malaysia (72)
Mexico (293)
Morocco (374)
Namibia (166)
New Zealand (4)
Nicaragua (21)
Norway (581)
Panama (6)
Philippines (118)
Poland (144)
Romania (175)
Slovak Republic (114)
South Africa (166)
Swaziland (166)
Switzerland-Liechtenstein (961)
Thailand (52)
Tunisia (32)
United States (189)
Uruguay (2)
Venezuela (76)

For more details, see WTO Secretariat background paper “Special Agricultural Safeguard” G/AG/NG/S/9, downloadable here

 
 
Proposals containing positions on special safeguards submitted in Phase 1  back to top
(see also proposals on developing countries and on non-trade concerns)

  • 11 developing countries: special and differential treatment and a development box G/AG/NG/W/13
  • US: a comprehensive proposal G/AG/NG/W/15
  • Cairns Group: market access G/AG/NG/W/54
  • ASEAN: special and differential treatment for developing countries in world agricultural trade G/AG/NG/W/55
  • EU: comprehensive negotiating proposal G/AG/NG/W/90
  • Japan: proposal G/AG/NG/W/91
  • Swaziland: market access under special and differential treatment for small developing countries G/AG/NG/W/95
  • Mauritius: proposal G/AG/NG/W96
  • Rep of Korea: proposal G/AG/NG/W/98
  • Norway: proposal G/AG/NG/W/101
  • India: proposal G/AG/NG/W/102
  • Poland: proposal G/AG/NG/W/103
  • Morocco: proposal G/AG/NG/W/105
  • Turkey: proposal G/AG/NG/W/106
  • Egypt: proposal G/AG/NG/W/107
  • Congo, Dem Rep: proposal G/NG/W/135
  • Senegal: preliminary positions G/AG/NG/W/137
  • Jordan: proposal G/AG/NG/W/140
  • African Group: joint proposal G/AG/NG/W/142
  • Croatia included special safeguards in its discussion paper G/AG/NG/W/141

 
 
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Footnote: Except for Chinese Taipei, Rep of Korea, and the Philippines for rice; and except when other WTO rules apply, for example sanitary and phytosanitary measures, technical barriers to trade, balance-of-payments conditions, general safeguards, etc.
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