WTO Its not over yet

1
WTO Its not over yet?

• Mike Gifford
• Member, International Food and Agricultural Trade
  Policy Council

2
The Doha Round dead or alive?

• WTO mini-ministerial meeting collapsed in July
• Goals had been
• (1)framework agreements on agriculture and
  non-agricultural market access by summer break
• (2) complete negotiations by end of 2008, start
  implementing results early 2010
• July breakdown blamed on impasse (mainly between
  India and US) over special agricultural safeguard
  mechanism (SSM) for developing countries
• July breakdown latest in series of crises which
  have marked Doha Round from outset

3
However, negotiators continuing to work

• Chairs of negotiating groups trying to narrow
  remaining differences
• new goal to reach framework agreements by end of
  year
• Framework agreement would help to enshrine
  progress to-date, limit unravelling during any
  hiatus
• Pessimists doubt framework agreement possible in
  2008, believe negotiations will not conclude
  until 2011 or later
• Elections in US and India, changes in EU
  Commission members (EU Trade Commissioner just
  left), all cited as reasons for Doha negotiations
  going into hibernation for most of 2009

4
Agriculture the cornerstone of the negotiations

• No real progress in agricultural trade
  liberalization until Uruguay Round
• Agriculture very important to most developing
  countries, import sensitivities in most developed
  and developing countries
• Net food exporters (developed developing)
  recognize that most of future import growth in
  developing markets
• However, developing countries with large numbers
  of subsistence farmers ultra import sensitive,
  e.g. India, China, hence emphasis on easily
  triggered import safeguards

5
So close and yet so far

• Major progress made in lead-up to July
  ministerial
• In agriculture emerging deal would
• - eliminate export subsidies, new
  disciplines on food aid, export credit and export
  state trading enterprises
• - reduce all trade distorting domestic
  support in developed countries by 60-80 or more,
  placed caps on commodity specific support
• - reduce developed country tariffs by an
  average of nearly 60 (highest tariffs reduced by
  70)
• - reduce tariffs of more advanced developing
  countries by up to an average of up to 36

6
However, special treatment for sensitive products

• Market access component most difficult for
  developed and developing countries
• Sensitive products protected by very high
  tariffs, often well in excess of 100
• Instead of 70 reductions, developed country
  sensitive product tariffs reduced by only 23-24,
  tariff quotas expanded by up to 5 of consumption
• However, only 4-6 of tariff lines allowed to be
  designated sensitive

7
Substantial agricultural result relative to
Uruguay Round

• Uruguay Round first negotiation to bring
  agriculture under effective international
  discipline (domestic support as well as import
  and export measures)
• However, limited progress made in reducing
  tariffs (average of 36 for developed, minimum
  cut of 15) and trade distorting domestic support
  (20 reduction from record levels)

8
Doha would reinforce and deepen impacts of
Uruguay Round

• Remember Uruguay Round first time since GATT
  formed in 1948 agriculture was not pushed to one
  side as too politically sensitive
• Bottom line prospective Doha results for
  agriculture substantial but significant tariff
  peaks would remain for sensitive products
• Domestic agricultural support would be under
  pressure to become more trade friendly (more
  non-trade distorting green box income support,
  less price support)

9
Will and if so when will Doha conclude?

• Not clear, not dead but barely alive
• Many believe Doha hanging by fingernails and
  unlikely to conclude before 2011
• Others believe (hope) possible to agree on
  framework by end of 2008 and conclude in 2009
• Remaining differences relatively small, problem
  is lack of political will

10
Why lack of political will?

• Limited interest by private sector groups,
  particularly non-agricultural
• US agriculture more interested in energy policy
  than trade policy, US Congress would rather let
  domestic policy conform to Doha disciplines than
  initiate own reforms
• US and EU agreement necessary but no longer
  sufficient to conclude negotiations
• Growing influence of more advanced developing
  countries, i.e. India, Brazil, China
• Agriculture politically sensitive in all
  countries

11
Does Doha Matter for Agriculture?

• Growing proliferation of preferential trade
  agreements (PTAs) no substitute for multilateral
  agreement on agriculture
• PTAs can go deeper in cutting tariffs but
  rarely cover export subsidies and domestic
  support
• Most PTAs treat agriculture as special and
  rarely result in comprehensive free trade

12
Why does Doha matter for Canadian agriculture?

• As medium sized agricultural trader (80 of farm
  income dependent on international prices) Canada
  would benefit from substantial reform of
  multilateral trading system
• Supply management could continue, slightly
  modified, major concern - impact on production
  quota values
• Only way to get effective disciplines on US and
  EU agricultural policies

13
Shape of deal unlikely to change significantly

• No matter when Doha concludes (no multilateral
  negotiation has ever failed) emerging package on
  agriculture unlikely to change significantly
• Outside chance that current international
  financial crisis might precipitate renewed
  attempt to firm-up modalities by end of year (as
  part of multilateral effort to re-build economic
  confidence)