Topics handled by WTO committees and agreements
Issues covered by the WTO's committees and agreements

AGRICULTURE NEGOTIATIONS: BACKGROUNDER

Developing countries

Broadly, the discussion about developing countries boils down to three main questions: Should developing countries be given a large amount of special treatment or should the negotiations avoid setting separate rules for separate groups? Should the agricultural deal accept that there are distinctly different subcategories of countries within the developing country category? And should special and differential treatment allow developing countries to protect themselves against trade from other developing countries?

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UPDATED 1 DECEMBER 2004

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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.


Phase 1  back to top

Developing countries are active in agriculture negotiations and several groups have put their names to negotiating proposals. In general, they reflect a diverse range of interests in the debate, and the distinctions are not always clear.

For example, the Cairns Group — which favours much greater liberalization in agricultural trade — is an alliance that cuts across the developed-developing country boundaries. Fourteen of its 17 members are developing countries. Like most WTO members, the Cairns Group would also like to see developing countries given some kind of “special and differential” treatment to take account of their needs.

Several developing countries have submitted proposals that would lead to clearly separate rules for developed and developing countries. Some proposals are jointly sponsored, the one with the most sponsors coming from the African Group. Three proposals come from a group of 11 or 12 developing countries. Another is from WTO members from the Association of Southeast Asian Nations (ASEAN), four of whom are also in the Cairns Group. There are also proposals from small island developing states, Caricom, and individual member governments such as Swaziland, Mali, India, Morocco, Turkey, Egypt and Namibia.

Some countries say WTO arrangements should be more flexible so that developing countries can support and protect their agricultural and rural development and ensure the livelihoods of their large agrarian populations whose farming is quite different from the scale and methods in developing countries.

They argue, for example, that subsidies and protection are needed to ensure food security, to support small scale farming, to make up for a lack of capital, or to prevent the rural poor from migrating into already over-congested cities. India’s and Nigeria’s proposals are among those that emphasize food security issues for developing countries.

At the same time, some developing countries make a clear distinction between their needs and what they consider to be the desire of much richer countries to spend large amounts subsidizing agriculture at the expense of poorer countries.

Many developing countries complain that their exports still face high tariffs and other barriers in developed countries’ markets and that their attempts to develop processing industries are hampered by tariff escalation (higher import duties on processed products compared to raw materials). They want to see substantial cuts in these barriers.

On the other hand, some smaller developing countries have expressed concerns about import barriers in developed countries falling too fast. They say they depend on a few basic commodities that currently need preferential treatment (such as duty-free trade) in order to preserve the value of their access to richer countries’ markets. If normal tariffs fall too fast, their preferential treatment is eroded, they say. Some developing countries see this situation as almost permanent. Others, such as Caricom, view it as a transition, and are calling for binding commitments on technical and financial assistance to help them adjust, including the creation of a technical assistance fund for the purpose.

Some developed and developing countries have argued that all developing countries should participate in liberalization and integration into world markets, even if the terms are more relaxed. (In the 1986-94 Uruguay Round negotiations, participants agreed that the rules and disciplines to be negotiated would be equally applied to all member governments.)

WTO statistics show that developing countries as a whole have seen a significant increase in agricultural exports. Agricultural trade rose globally by nearly $100bn between 1993 and 1998. 2 Of this, developing countries’ exports rose by around $47bn — from $120bn to $167bn in the period. Their share of world agricultural exports increased from 40.1% to 42.4%. But within the group, some individual developing countries have seen their agricultural trade balance deteriorate — their imports have risen faster than their exports. (For more details, see WTO Secretariat background paper “Agricultural Trade Performance by Developing Countries, 1990-98” G/AG/NG/S/6 and Rev.1.

Proposals or proposals with significant sections specifically on developing countries submitted in Phase 1
(several other proposals also contain items on developing countries)

 

Development box, single commodity producers, small island developing states, special and differential treatment: Phase 2  back to top

These four closely-related subjects are discussed in the final informal meeting of Phase 2 (with some further comment on-the-record in the formal meeting). A number of comments under these headings are similar, with some differences, depending on the specific proposals contained in the non-papers. The relationship between the development box and special and differential treatment (S&D) is mentioned: e.g. one delegation describes the development box as a subset of S&D, another says it is an “operational extension” of S&D.

Broadly speaking, the debate is about how to treat developing countries’ problems in the negotiations’ outcome. Two or three strands feature in the discussion:

  • Market orientation v. protection: whether special protection and support (for example exempting certain products from all commitments) should be allowed for developing countries to address their particular situations, or whether liberalization with some flexibility is more effective
     
  • Unique v. shared concerns for developing and developed countries: whether issues such as food security and rural development should be handled uniquely for developing countries, or whether others such as transition economies and developed countries should also be covered 
     
  • Unique v. shared weaknesses among developing countries: whether provisions should apply generally to all developing countries, or whether specific groups of developing countries need extra provisions. Underlying this discussion is the question of whether a liberal trade regime would favour some developing countries with inherent advantages in agriculture, or whether other developing countries would be hurt by more liberal trade.
     

The debate develops into a discussion about whether the “enabling clause” might be revised. (The enabling clause is officially the “Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries”. It was adopted under GATT in 1979 and enables developed members to give differential and more favorable treatment to developing countries. Although it allows flexibility, including additional special treatment for least developed countries, the clause interpreted to require preferential treatment to be generally available to all developing countries. (See here.)

In the formal meeting, some developing countries (Malaysia, Paraguay) say they oppose reopening the enabling clause and stress that special and differential treatment should be available equally to all developing countries. Some others (Mauritius, Grenada) say that all subjects should be open for negotiation and members should not prejudge the result.

 

Development Box details: Phase 2  back to top

One proposal envisages provisions that would only apply to developing countries, and would consist of broad flexibilities rather than specific prescribed policies. The emphasis is on targeting low-income farmers lacking resources, and on secure supplies of staple foods. The means would be: exemptions from commitments on these staples, the possibility of negotiating higher tariffs, allowing developing countries to use simple safeguards to protect staples, a ban on developed countries “dumping” agricultural products, an international food security fund, and so on. Another agrees with the idea of flexibilities for developing countries, but raises questions about how these would be handled.

All who speak accept the need for special treatment for developing countries. A number of developing countries add their own ideas for the development box’s contents, including better market access to developed countries’ markets and binding commitments on technical assistance. However, views differ on what groups of countries should qualify for what kind of special treatment.

A lot of other developing countries (from several groupings) oppose this proposal. They say it would harm trade between developing countries, which should be encouraged instead. They also say some of the ideas are in the opposite direction to the one set in the Doha Ministerial Declaration — the objective of achieving a more market oriented agriculture trading system through reductions in support and protection applies to all WTO members.

Many countries oppose the idea of different sets of rules for developed and developing countries. They caution against adopting policies that increase trade distortion. Some also argue that instead of raising tariffs, developing countries should target low-priced subsidized exports through countervailing duty. Some countries say concerns such as food security and rural development apply to them as well. Many developing countries oppose extending development box provisions, such as those dealing with food security, to developed countries.

Phase 2 papers or “non-papers” from: 9 developing countries (Cuba, Dominican Rep, El Salvador, Honduras, Kenya, Nigeria, Pakistan, Sri Lanka and Zimbabwe), Switzerland, Mauritius, and Japan

 

Single commodity producers details: Phase 2  back to top

The proposal under this heading envisages special treatment for these countries and technical assistance to help them diversify. Among the specific ideas: transparency in the operations of multinational corporations, similar to those applying to state trading enterprises; improved market access (including removal of tariff peaks, tariff escalation and non-tariff barriers); price stabilization schemes; access to technology; diversification and capacity building.

Many developing countries support these points. Others pick points they agree with such as getting rid of tariff peaks and escalation. Some argue that dependency on single commodities can be the result of trade preferences in developed-country markets. Some argue that the question of multinational corporations is a good reason for having negotiations on competition policy. Some also point out that commodity agreements designed to stabilize prices have failed.

The discussion includes the question of domestic reform. Some developing countries say they no longer rely on a small number of commodities because they have successfully diversified into other agricultural products and into other economic sectors such as tourism and manufacturing. They say domestic reform is often needed for any country to make use of new trade opportunities. Some others say diversification is not always possible.

Phase 2 papers or “non-papers” from: African Group, Japan, and Mauritius

 

Small island developing states details: Phase 2  back to top

The proposals under this heading seek special treatment for small island developing states because these countries suffer from remoteness, vulnerability to natural hazards, lack of resources and lack of economies of scale. Among the detailed points are: continued trade preferences and numerous derogations or exemptions from commitments.

Many other countries sympathize with the problems these countries face. Some add that the Doha Development Agenda includes work on small economies. Several caution against having too many categories of countries. Again the debate hinges on whether additional protection and support is the best solution, or whether it would be better to increase technical assistance and help these countries to integrate into a more market-oriented world economy.

And again, the discussion includes the question of whether diversification is always possible with domestic reform.

Paper or “non-paper” from: 9 countries (Dominica, Fiji, Jamaica, Madagascar, Mauritius, Papua New Guinea, St Lucia, St Vincent and the Grenadines and Trinidad and Tobago), Japan, and Mauritius

 

Special and differential treatment details: Phase 2  back to top

This debate is similar to the one on the development box, with the added dimension of two papers on programmes to grow crops as substitutes for illicit narcotics. Again, the debate hinges on whether protection and support is needed or whether market orientation (and the reduction of protection and support in developed countries) is the solution; and on whether some proposals might affect trade among developing countries.

Among the specific proposals are: better access to export markets; protecting domestic markets for some products by re-evaluating current tariff bindings; and flexibility to support and encourage domestic production. Some developing countries want to be able to use special safeguards in response to import surges. Others advocate using countervailing duty instead — to react to imports of subsidized products.

Many countries note that special and differential treatment has a high priority in the Doha Development Agenda and is an integral part of the negotiations. Some note that the Ministerial Declaration sets special and differential treatment within the overall objective of achieving a fair and market orientated agricultural trading system, meaning that all members would have to participate in reform. Special and differential treatment would be reflected in flexibilities.

Phase 2 papers or “non-papers” from: Colombia, a group of developing countries (African Group, Cuba, Dominican Rep, El Salvador, Honduras, Kenya, Pakistan and Sri Lanka), India, Bolivia, Mauritius, and CARICOM

 

Rural development: Phase 2  back to top

(See also non-trade concerns)

Discussion on this topic has been one of the lengthiest in Phase 2. All papers and comments say this is important, particularly in developing countries. But is it also important for developed countries? Broadly, participants give one of three answers: yes, even if details are different; yes, specially for transition economies; no, or yes but there is a significant difference.

Several developing countries advocate various special provisions for dealing with their problems of food security, rural poverty, etc. These include additional transition periods, and a “development box” of measures that would be added to the Green Box.

One proposal is for the development box to incorporate a “positive list” approach, i.e. each member would list the agricultural products it is ready to discipline under the Agriculture Agreement.

Several developed and developing countries emphasize the need for market orientation and the removal of distortions, even if flexibility is allowed to deal with rural poverty. Some warn that each country’s measures should not hurt others — they should be targeted, decoupled and transparent, and should move away from border and production measures.

Others argue that some price/production intervention is necessary to deal with rural development problems even in developed countries.

Phase 2 papers or “non-papers” from: Cyprus, nine developing countries (Cuba, Dominican Republic, El Salvador, Honduras, Kenya, Nicaragua, Pakistan, Sri Lanka, Zimbabwe), Norway, and Japan

 

Trade preferences: Phase 2  back to top

Most countries, both developed and developing, say trade preferences are important for poorer countries, and therefore the preferences should not be removed abruptly. But most also acknowledge that preferences will be eroded as tariffs in general are reduced, and so countries enjoying preferential treatment may need help to adjust.

One or two countries argue that they may have to depend on preferences over the longer term because they see little chance of becoming competitive. A few argue that their exports are such a small proportion of world trade that they have little impact on other countries — therefore others should not be concerned about the preferences remaining in force.

On the other hand, some countries doubt whether preferences are truly beneficial because they encourage small countries to be dependent on a small number of uncompetitive products, discourage diversification and prevent other countries from supplying those products. The countries currently depending on preferences would be better off when major markets liberalize and eliminate subsidies, according to this argument.

A number of developing countries say that the trade preferences cover non-agricultural products as well. Because the subject is now mandated more broadly under the declaration of the Doha Ministerial Conference, these countries say it should be discussed outside the agriculture committee.

Among the details developed in the new proposals and the Phase 2 discussion are:

  • Criteria for deciding which countries should be eligible for preferences, e.g. those currently enjoying preferences, with some additions, but perhaps only small players
     
  • Clearer criteria for “graduation” (determining that a country’s products have progressed enough to continue without preferential treatment)
     
  • Ensuring preferences are predictable (including longer or better defined time periods), stable, and have no “reciprocal” conditions attached.
     

One developed country currently giving trade preferences extensively says that in the long run, free trade agreements would provide more stability, predictability and transparency.

Phase 2 papers or “non-papers” from: the African Group, EU, Namibia, Paraguay and Swaziland

 

Preparations for ‘Modalities’  back to top

In the preparations for “modalities”, developing country issues are not discussed as a separate item. Instead, they are part of the discussions on each of the three “pillars”: export subsidies and competition, market access, and domestic support.

 

The revised first draft ‘modalities’  back to top

Special products: Under the draft, developing countries would be able to identify some products as “special products” (SP). They would be able to make lower tariff reductions on these products — a simple average reduction of 10%, with a minimum of 5% per product — and tariff quotas on these products would not have to be expanded.

Preferences: this is for “long-standing preferences” that developed countries give to developing countries — and it would apply for products accounting for at least 20% of the developing country’s total merchandise exports. In these cases, developed countries would:

  • maintain to the maximum extent technically feasible, nominal margins (i.e. the difference between preferential and normal tariff rates)
  • eliminate of all in-quota duties
  • apply tariff cuts over 8 years instead of 5 years, with the first instalment deferred until the third year.

In addition, countries giving preferences would also provide technical assistance to help the developing country diversify.

Least-developed countries: this group would not have to make reduction commitments, but are encouraged to think about making some commitments “commensurate with their development needs” and in response to requests.

Specific groups of countries: The draft simply says participants would continue to consider proposals on these groups (for example, small island developing states, vulnerable economies, and transition economies).

 

The draft frameworks  back to top

(see Cancún ‘framework’ proposals)

Before Cancún: Many proposals are already included under the three pillars, for example: longer time periods, gentler reductions, possible exemptions from some types of formulas, exemptions from expanding tariff quotas, the use of a new special safeguards mechanism and designated special products that would be exempt tariff reductions or be allowed much smaller reductions (see also relevant sections under each of the three pillars).

In addition some drafts envisage maintaining or enhancing criteria for export subsidies and domestic supports that developing countries are allowed (the Agriculture Agreement’s Articles 6.2 on domestic support for such purposes as replacing narcotics crops and 9.4 on certain export subsidies). Most drafts support duty-free imports for products from least-developed countries. The G-20, Norway and Kenya call for the concerns new members to be taken into account, for example by giving them longer time periods for reductions. And the G-20 and Kenyan drafts propose means of dealing with preference erosion.

In Cancún: Israel says references to special and differential treatment under each of the three pillars should use the same wording, which should be taken from the Doha Declaration. This says special treatment “... shall be an integral part of their development needs including food security and rural development ...”. Caricom proposes that an unspecified number of products representing a small percentage of a country’s imports can be treated as “import sensitive”, and have gentler or no tariff reductions. It also proposes in detail how slower tariff reductions would be implemented by developed countries in order to slow down preference erosion. This is linked to technical assistance for the developing countries concerned. The African Union/ACP/least-developed countries call for no tariff ceilings for developing countries, for preferences to be handled under relevant parts of the revised “modalities” draft, and for a “compensatory mechanism” to be developed.

Chairs’ drafts: The Pérez del Castillo and Derbez drafts reflect these points. They also propose that the Article 9.4 special allowances for developing countries’ export subsidies should continue until export subsidies are phased out. They envisage that concerns of recent new members should be taken into account — the Derbez paper proposes longer time periods and gentler tariff reductions. And they reflect the calls for preference erosion to be addressed, Derbez adopting Kenya’s call for work on this to build on the revised “modalities” draft.

 

August 2004 framework: developing countries  back to top

Special and differential treatment and other issues raised by developing countries are spread through all the subjects in the August 2004 framework. A short paragraph on least-developed countries says they won’t have to make reduction commitments. Developed countries should provide duty-free and quota-free market access for LDCs’ exports, and so should developing countries “in a position to do so”. Cotton is important to some LDCs and this will be reflected in work on all pillars — members agree to achieve ambitious and quick results. They also agree to set up a sub-committee to work specifically on this topic.

 

Note:
2. Excluding trade within the European Union. back to text



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