Issues covered by the WTO’s committees and agreements
AGRICULTURE NEGOTIATIONS: BACKGROUNDER

Update Phase 2:

Introduction, and tariffs

The second phase consists of detailed discussions on the many issues raised in the first phase, organized topic by topic. The meetings are largely “informal”, meaning that there is no official record except for chairperson’s summaries presented at the formal meetings. Papers presented so far have not been official WTO documents. They are usually off-the-record “non-papers”. Despite the increased complexity, developing countries continue to participate actively.

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Tariff quota administration  

See also Phase 1. Participants in the negotiations generally accept that there is no single “best” method of administering quotas. Some want the negotiations to sort out which allocation methods should be allowed and which should not. Others are looking for broad principles such as transparency and access for all-comers (at least for part of the quota allocation).

Some countries say that if part of a quota is unused (“underfill”), this is often a problem caused by the administration method. They propose various solutions to reduce underfill, including carrying unused portions over to subsequent periods, preventing imports at out-of-quota tariff rates until the quotas are filled, and closer monitoring. Others say underfill is often caused by supply and demand conditions, and should not be considered a problem.

Auctioning quotas is one method that has aroused a lot of discussion. One view is that the money governments raise from auctioning is equivalent to an additional tax and could violate tariff commitments (“bindings”). Another is that auctioning simply makes the additional value created by a quota (“quota rent”) more transparent, and shifts it to the government instead of to private companies. Supporters add that it meets the objectives of transparency and simplicity, while giving all importing companies the chance to participate.

A number of other methods were also examined and their pros and cons debated. These included first-come-first-served, historical allocation, etc.

Papers or off-the-record “non-papers” from: The EU, Australia, Switzerland and Japan.



Tariffs

See also Phase 1. Two proposals have emerged for tariff reductions in general. One would copy the formula of the 1986–94 Uruguay Round negotiations which used an average reduction over all products, allowing some variation for individual products provided a minimum reduction was met. This would be “simpler” to implement, advocates said. Another, known as a “cocktail” approach envisages a flat rate percentage reduction for all products (the percentage so far unspecified), with additional “non-linear” reductions on higher tariffs, expanding quotas, and special treatment for developing countries. Advocates have described this as “fairer”. Other methods were also discussed, but these two were the most popular.

Part of the discussion has focused on special treatment for developing countries, countries that recently joined the WTO, and countries in transition to market economies. Some developing countries say their tariff cuts would have to depend on developed countries reducing trade-distorting domestic supports and export subsidies. Smaller island or land-locked countries depending on few export commodities are calling for their trade preferences in developed countries to be preserved, and given greater legal certainty. But other countries say that certain preference schemes cause discrimination against other developing countries. Participants generally recognize, however, that preferences cannot be eroded or removed suddenly, and that transition periods might be needed.

Other points discussed include: whether or not to balance disciplines on import tariffs and restraints with export taxes and restraint; whether or not to give special treatment for specially sensitive products; and how to take account of non-trade concerns.

Papers or “non-papers” from: Australia, Mercosur (plus Chile and Bolivia), and Japan.

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Phase 2 meetings so far

21–23 May 2001 informal meeting (tariff quota administration, tariffs, amber box)

23–25 July 2001 informal meeting (export subsidies, export credits, state trading enterprises, export taxes and restrictions, food security, food safety)

24–26 September 2001 informal meeting (rural development, geographical indications, green box, blue box, agricultural safeguards); 28 September formal meeting

Next meetings:

2001: 3–5 December (informal) and 7 December (formal).

2002: February (informal), March (informal with formal, and review of progress) — dates to be announced


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