Boris Situmorang Directorate of Bilateral Cooperation Directorate General of International Trade Cooperation
PRESENTATION OUTLINE Background Agricultural Trade Negotiations in WTO/DDA Key Issues : Three Pillars (Market Access, Domestic Support, Export Competition) State of Play of Agricultural Trade Negotiations Progress/Timeline of the Negotiations Post-Bali Work Program Main negotiating issues that led to MC10, Nairobi Export Competition, Public Stockholding (PSH), Special Safeguard Mechanism (SSM), and Cotton Implications for Indonesia/What’s next?
Agriculture in DDA: Background Agriculture remains an important and controversial trade negotiating issue since DDA was launched in Doha, Qatar in 2001. Different positions of WTO members on DDA negotiations slowed down the negotiating progress until the last MC9 in Bali MC9 was very fruitful as the Trade Facilitation Agreement (TFA) was reached in Bali. However, there was no agreement on agriculture.
Key Negotiating Issues on Agriculture Three Pillars Market Access Domestic Support Export Subsidies and Competition Other Issues : Food Security Special Safeguard Mechanism S&D Treatment Cotton
Market Access The most difficult negotiating issue in agricultural trade negotiations. Tariff to be reduced by an average 36% in the case of developed countries and 24% in the case of developing countries during the Uruguay Round Most of the developed countries apply higher tariffs than developing countries on agricultural trade U.S. Agricultural Bound Tariff: 30.2% Australia Agricultural Bound Tariff: 31.3% Japan Agricultural Bound Tariff: 34.1%
Domestic Support Protecting agricultural sectors through the use of subsidies. Subsidies for food products by developed countries distort trade of developing countries and LDCs. E.g.: NAFTA and Mexican farmers; dairy imports from EU. Three qualifications for domestic support policies (Amber Box, Blue Box, Green Box) categorized by the impact measurement on trade. US domestic supports are qualified for green box subsidies (minimal trade distortion) – increasing: 1995: US$ 46.04 Billion 2010: US$ 120.53 Billion Food aid policy contribute the most in US domestic supports (78% in 2014)
Export Competition 16 WTO Members are allowed to subsidize exports of certain agricultural products. Three elements of Export Competition: Export Subsidies (no commitments on subsidies to reduce the costs of marketing exports of agricultural products or internal transport and freight charges on export shipments); Export Financing Supports (Export Credits, Export Credit Insurance Programs); Agricultural Export State Trade Enterprises (STEs). US, Australia, and Canada are making reductions in their equivalents of export assistance.
State of Play In Agri. Negotiations Market Access 1. Some discussions on tier reduction formula aimed at reducing overall tariff, tariff peaks and tariff escalation Alternative approaches suggested : simplification, recalibration, a hybrid simplified formula and request- offer approach (proposed by Paraguay), request-offer across major DDA issues (by Argentina) Other proposals already on the table: SP & SSM – by G-33 Tropical Products – by Tropical Products Group
State of Play in Agri. Negotiations 2. Domestic Support • Many support OTDS, some prefer UR disciplines (AMS and de minimis) • US is unwilling to do reduction and demand commercially meaningful market access and contribution by emerging economies • Recently Acceded members (RAMs) including China are unwilling to provide more concessions – arguing that they have already accepted commitments upon their WTO accessions • Some developing countries view that imposing reduction on de minimis (product specific and non product specific) without addressing AMS disciplines is going to the opposite direction of their reform process • “Green Box” discipline is a red line for the EU - not doable.
State of Play in Agri. Negotiations 3. Export Competition • Chair of CoA-SS views some possible landing zones • Major subsidizers indicate willingness to gradually reduce or eliminate export subsidies (with certain time frame) Ambition for reductions or elimination in other areas of ES (export credits, export credit guarantees) Ambition in other two pillars of agriculture A new proposal based on Rev 4 text, submitted by the Cairns group, is now on the table.
Timelines of Agricultural Trade Negotiations 2000 Agriculture Talks Start – Built in Agenda (Art 20 of the AoA) 2001 DOHA Negotiations Launched (DDA) Mar. 2003 Modalities Deadline Missed 2002 Cancun Ministerial – failure to conclude modalities. 2004 “July Framework” Draft Modalities (W-3) – modalities suspended July 2006 Aug 2007 Revised Draft Modalities (W/4) Revised draft Modalities (W/4 Rev 1, Rev 2, Rev 3) Feb – May 2008 Fall 2008 Failure to Conclude Modalities W/4/Rev 4 draft modalities Dec 2008 Bali Package (Additional Subsidies, Public Stockholding, Tariff Rate Quota 2013 Administration, Export Competition. Nairobi Package ( Ministerial Decision on Export Competition, Public 2015 Stockholding, Special Safeguard Mechanism, and Cotton).
POST-BALI WORK PROGRAM Public Stockholding for Food Security Purposes (PSH) Export Competition (EC) Tariff Rate Quota (TRQ)
Public Stockholding for Food Security Purposes (PSH) Output Legal Text on Permanent Solution is resolved Pending Issues No member has submitted the “Peace Clause” for Interim Solution as the result of MC9 in terms of subsidies exception for >10% of the de minimis . Indonesia’s positions: Indonesia is considering the “Peace Clause” submission. Different information about Indonesia’s de minimis and interpretation about the “market price” support.
Export Competition (EC) Output Legal Text on Export Competition is resolved Pending issues Developed countries’ commitments in notifying immediate export subsidies reduction. WTO will establish a Dedicated Session on Export Competition. Indonesia’s positions Emphasizing and suggesting for credible and concrete outcome in export competition by modifying paragraph 8 of draft text on modality of Agricultural Trade Negotiation in DDA (Rev.4 2008). Supporting and seeking for developed countries’ commitments in exercising restraint with regard to all forms of export subsidies and all export measures with equivalent effects.
Tariff Rate Quota (TRQ) Output Legal Text on Tariff Rate Quota is resolved. TRQ notification will cover TRQ enforcement and Import License provision for products under the scheme of TRQ. Pending issues Bali Package agreed the renegotiation of TRQ under the Draft Ministerial Decision All members are required to notify their commitments on TRQ. Indonesia’s position Reviewing the transparency in TRQ administration.
MINISTERIAL CONFERENCE X NAIROBI 2015
Main Agricultural Issues Negotiated in Nairobi Agriculture was one of major and politically sensitive issues in the MC10 negotiations in Nairobi. There are 4 main issues in agriculture that were negotiated in Nairobi and brought forth Ministerial Decisions: Export Competition (EC) Public Stockholding (PSH) Special Safeguard Mechanism (SSM) Cotton
Export Competition Export Subsidies Elimination of export Subsidies 16 WTO members are allowed to subsidize export of certain agricultural products, but only for products on which they have commitments to reduce subsidies. Ministerial Decision on Export Competition (WT/MIN(15)/W/47) Developed Members shall immediately eliminate their remaining scheduled export subsidy entitlements as of the date of Ministerial Decision on Export Competition issued. On the other hand, Developing Members shall eliminate their export subsidy entitlements by the end of 2018. Export Credits, Export Credits Guarantees or Insurance Programmes Ministerial Decision on Export Competition (WT/MIN(15)/W/47) The Decision set out terms and conditions for export financing support such as Maximum Repayment Term: Shall be no more than 18 months. Self-Financing : Premiums shall be charged and be risk-based.
Export Competition (Cont’d) State Trading Enterprises (STEs) Definition: Governmental and non-governmental enterprises, including marketing boards, which have been granted privileges, including statutory, or constitutional powers, in the exercise of which they influence through their purchases or sales the level or direction of imports or exports. Ministerial Decision on Export Competition (WT/MIN(15)/W/47) Members shall ensure that agricultural exporting state trading enterprises do not operate in a manner that circumvents any other disciplines contained in the Decision. The use of export monopoly by agricultural STEs shall not result in displacing or impeding the exports of another Member in order to minimizes trade distorting effects.
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