BRIEFING NOTES

Agriculture: negotiating modalities

The agriculture negotiations began in 2000, under a commitment members made in the 1986–94 Uruguay Round to continue reform in the trade. They were brought into the Doha Round when it was launched in 2001. Broadly, the objective is to reduce distortions in agricultural trade caused by high tariffs and other barriers, export subsidies, and some kinds of domestic support. The negotiations also take into account social and political sensitivities in the sector and the needs of developing countries.


Other briefing notes:
> Agriculture
Non-agricultural market access (NAMA)
Services
Rules
Intellectual property: geographical indications and biodiversity
Trade and environment
Trade facilitation
Special and differential treatment
Dispute settlement
E-commerce
Jargon buster
Country groupings
Briefing note on intellectual property: non-violation complaints

 

See also:
Agriculture negotiations
Doha declaration
Doha declaration explained
 


‘Modalities’

The way or method of doing something — in the Doha Round these are blueprints for the final deal, eg, how to cut tariffs, and reduce agricultural subsidies and support, along with flexibilities to deal with various sensitivities. Once the modalities have been agreed, countries can apply the formulas to tariffs on thousands of products and to various support programmes.

The negotiations aim to reform agricultural trade principally in three areas: market access, domestic support and export subsidies. The modalities spell out how to achieve this.

 

What does this mean for... ?

Market access: tariffs, tariff quotas and safeguards

For wheat, rice, beef, sugar, cheese, potatoes, pineapples, etc - how deep the cuts on tariffs would be for these depends on:

  • how high the current tariff is: higher tariffs have higher cuts, ranging from 50% to 66-73% subject to a 54% minimum average for developed countries; 33.3% to 44-48% for developing
      
  • whether the product is “sensitive” (all countries) or “special” (developing): sensitive products would have cuts of only 1/3, 1/2 or 2/3 of the normal cut but with a quantity allowed in at a lower quota; special products would also have smaller cuts, and some might be exempt completely
      
  • whether the applied tariffs are lower than the bound tariffs. Cuts are made from legally bound rates. Tariffs actually charged can be lower. If a developing country has a bound tariff of 100% but only charges 25%, the bound tariff would be cut by 42.7% ie, cut to 57.3%. That means no change in the 25% tariff actually charged, with room to more than double the tariff.
      
  • the country's status: least-developed countries would make no cuts on any products, developing countries in general would make smaller cuts and have more flexibilities than developed, small and vulnerable economies would make even smaller cuts with even more flexibilities, and countries that recently joined the WTO would also have special terms.

 

Support for farmers and for agriculture

Support for prices, or for earnings according to how much is produced or sold, would be substantially cut but not eliminated. Countries providing large amounts of this “distorting” support would cut it the most, many are already reforming their programmes. They and the rest would still be allowed a conceptually small or “de minimis” amount limited to 2.5% of the value of production for developed countries, 6.7% for developing. For individual products this type of support would also be limited to avoid concentration.

But a wide range of support for agriculture as a whole would be allowed without limit under the “Green Box”, considered non-trade distorting, i.e., for development, infrastructure, research, agricultural extension, structural adjustment, etc. Conditions would be tightened to prevent direct income supports, etc, from stimulating production.

 

Export subsidies

These would be eliminated by 2013, including subsidies hidden in export credit, disciplines on state trading enterprises and non-emergency food aid.

 

July 2008 negotiations and after

When ministers came to negotiate “modalities” in Geneva in July 2008, Director-General Pascal Lamy said they had agreed tentatively on a number of issues but were stuck on the “special safeguard mechanism” for developing countries. This is described here. Summaries of the July talks (and more) can be found here.

 

Now on the table

Then in December 2008, the chairperson of the agriculture negotiations circulated the latest version of his draft “modalities”. This is the version currently on the table.

 

HIGHLIGHTS DECEMBER 2008 DRAFT

Terms used here and more details are explained in the longer summary.

DOMESTIC SUPPORT

(Explanation of the “boxes”)

  • Overall trade distorting domestic support (Amber + de minimis + Blue). EU to cut by 80%; US/Japan to cut by 70%; the rest to cut by 55%. “Downpayment” (immediate cut) of 33% for US, EU, Japan, 25% for the rest. Bigger cuts from some other developed countries, such as Japan, whose overall support is a larger % of production value. Cuts made over 5 years (developed countries) or 8 years (developing).
      
  • Amber Box (AMS). Overall, EU to cut by 70%; US/Japan to cut by 60%; the rest to cut by 45%. Bigger cuts from some other developed countries whose AMS is larger % of production value. Also has downpayment.
      
  • Per product Amber Box support: capped at average for notified support in 1995-2000 with some variation for the US and others. Countries' caps to be annexed to these “modalities”
      
  • De minimis. Developed countries cut to 2.5% of production. Developing countries to make two-thirds of the cut over three years to 6-7% (no cuts if mainly for subsistence/resource-poor farmers, etc). (Applies to product-specific and non-product specific de minimis payments)
      
  • Blue Box (including “new” type). Limited to 2.5% of production (developed), 5% (developing) with caps per product.
      
  • Green Box. Revisions — particularly on income support, to ensure it really is “decoupled” (ie, separated) from production levels, and on developing countries’ food stockpiling —  and tighter monitoring and surveillance.

 

MARKET ACCESS

  • Tariffs would mainly be cut according to a formula, which prescribes steeper cuts on higher tariffs. For developed countries the cuts would rise from 50% for tariffs below 20%, to 70% for tariffs above 75%, subject to a 54 % minimum average, with constraints on tariffs above 100%. (For developing countries the cuts in each tier would be two thirds of the equivalent tier for developed countries, subject to a maximum average of 36%.)
      
  • Some products would have smaller cuts via a number of flexibilities designed to take into account various concerns. These include: sensitive products (available to all countries), the smaller cuts offset by tariff quotas allowing more access at lower tariffs; Special Products (SP, for developing countries, for specific vulnerabilities).
      
  • Contingencies. Developed countries will scrap the old “special safeguard” (available for “tariffied” products). The option for them to keep some has been removed. More proposed details of the new “special safeguard mechanism” for developing countries are in an additional paper.

 

EXPORT COMPETITION

  • Export subsidies to be eliminated by end of 2013 (longer for developing countries). Half of this by end of 2010.
      
  • Revised provisions on export credit, guarantees and insurance, international food aid (with a “safe box” for emergencies), and exporting state trading enterprises.
      

 

Since then …

The new agriculture negotiations chairperson, Ambassador David Walker of New Zealand, has been holding talks on unsettled issues arising from the December 2008 draft, and on the technical task of creating “templates” — blank forms prepared for members’ “schedules” (or lists) of commitments, and for data used to calculate the commitments, some of the data to be in “supporting tables” attached to the schedules of commitments. The commitments themselves will be prepared after “modalities” are agreed — the “modalities” contain formulas for calculating the new commitments on tariffs, tariff quotas and support. But the forms and data needs will be identified with the “modalities”, which is why the work is being undertaken now.

 

Find out more …

… about the agriculture negotiations, and follow news of the farm talks

  THE STORY SO FAR

 
• 2000: Agriculture negotiations launched (March). See backgrounder

• 2001: Doha Development Agenda launched. Agriculture included (November)

• 2004: “Framework” agreed (August)

• 2005: Further agreements in Hong Kong Ministerial Conference (December)

 2006: Draft modalities (June)

 2007: Revised draft modalities (July)

• 2007-2008: Intensive negotiations with working documents (September-January)

• 2008: The July 2008 package full coverage and the chair’s report

• 2008: Revised draft modalities (February, May, July and December)