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.
Ad valorem equivalents
Explanations and details: see Secretariat paper TN/AG/S/11, “Calculation of ad valorem equivalents (AVEs): data requirements and availability”
Tariffs expressed as dollars (euros, yen, etc) per tonne (litre, bushel, head, etc) are called “specific” duties. Some tariffs are more complex: for example, they combine specific rates with percentages of the price (“ad valorem”). All of these have to be converted to simple percentages of the value (“ad valorem”) if they are going to be reduced according to the type of formula (“tiered”) that was agreed in the 1 August 2004 framework. Without this calculation, it would not be possible to put products charged specific duties into their appropriate categories (the “tiers”).
The technical discussions include: methods of calculation for the tiered formula; data requirements; and verification procedures. For the method, many members prefer a “unit price” method, essentially a specific duty e.g. in dollars, compared with a reference price, e.g. also in dollars. The main alternative is the “revenue method”, total tax revenue over a period compared with total value of imports over the same period. However, the unit price method has a number of problems such as which price to use, over what period, whether the price is distorted for example by quotas, and whether appropriate data is available. Some countries say this would have to be examined closely, and that world market prices might be more suitable than the import price.
Because the conversion is an imprecise exercise, a number of countries want to minimize the amount of flexibility. They say they do not want a repeat of some of the manipulations that they say characterized various calculations in the 1986–94 Uruguay Round negotiations (particularly “tariffication”, the conversion of quantitative restrictions to tariffs). Others stress a degree of flexibility (avoiding a uniform, detailed and “excessively” rigid method). They say the key should be to minimize error. A number of details are discussed such as how detailed product categories should be, and which periods should be ued as the base. Many accept the need for at least some kind of multilateral verification of the calculation.
Initially, the technical discussion focuses on the method of conversion and postpones discussion of the more political question of whether the tariffs should all then be bound as ad valorem rates (“tariff simplification”, which the framework says is under negotiation).
Technical paper on ad valorem equivalents: G–10
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Tariff quota administration
Some members say that the “Harbinson text” (the March 2003 draft “modalities”) is a suitable starting point but it needs modification. Broadly, the membership continues to debate whether tariff quotas are an opportunity to trade or whether the way they are administered creates an obstacle — the latter complaining about low fill rates, one even proposing a formula that would require the quota to be replaced by a tariff-only method if the fill rate is low.
Various members support some or all of a list of principles, including using methods that do not discriminate, are simple and practical, are predictable and transparent, and do not hinder commercial transactions.back to top
The base for tariff quota expansion
This technical discussion focuses on using a percentage of domestic consumption as the base for expansion, with differences over whether expansion should be “by” or “to” the percentage or some more complex formula such as expanding “to” a percentage first, and then expanding further by an additional formula, in order to “harmonize” the expansion (i.e. bring the quota sizes closer together). Also discussed: how to measure domestic consumption. At this stage, the question of whether all quotas have to expand is largely sidestepped although some mentioned their view, either that expansion is compulsory under the 1 August framework, or that it is not mandatory.back to top
Tropical products and goods produced as substitutes for narcotics
Paragraph 43 of the framework refers to an “overdue” and “long-standing commitment” for the “fullest liberalization” for these products in importing developed countries. Many developing countries stress how important this is, and complain that decades of promises on tropical products had not borne fruit. Several say richer countries should give market access for these products, totally, permanently, without discrimination (i.e. giving most-favoured nation treatment) and as special and differential treatment. This would include eliminating all quantitative restrictions, not treating the goods as sensitive products, with a shorter timetable for liberalization. Some others react against the non-discrimination call by saying long-standing preferences have to be taken into account.
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