UNDERSTANDING TRQ

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UNDERSTANDING TRQ

• The Beginning the world as a trading nation
• The need to move forward in liberalization of
  world trade beyond GATT
• Negotiations known as the Uruguay Rounds of
  Negotiations started in 1986
• Difficulties in reaching Agreement particularly
  in Agriculture

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UNDERSTANDING TRQ

• Difficulties to reach agreement
• Agriculture
• Rich countries subsidies agriculture for food
  security reasons
• Poor countries have no capital to modernize
  agriculture
• Rich countries export subsidized surplus
  commodities to poor countries
• Income of farmers in Poor countries affected

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UNDERSTANDING TRQ

• Most of the WTO agreements are the result of the
  198694 Uruguay Round negotiations, signed at the
  Marrakech Ministerial meeting in April 1994.
• There are about 60 agreements and decisions
  totaling 550 pages.

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UNDERSTANDING TRQ

• Nontariff barrier
• A border measure, regulation, or other government
  action other than a tariff used by governments to
  restrict imports from, and exports to, other
  countries. Examples embargoes, import quotas,
  quantitative restriction (quotas), licensing,
  domestic support programs, labeling and health
  standards, technical barriers to trade, and
  exclusive business practices

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UNDERSTANDING TRQ

• Tariffication
• The process of converting nontariff trade
  barriers to bound tariffs. This is done under the
  UR agreement in order to improve the transparency
  of existing agricultural trade barriers and
  facilitate their proposed reduction. In the
  future, countries will not be able to use
  nontariff measures to restrict trade.

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UNDERSTANDING TRQ

• Tariff-rate quota (TRQ)
• A two-leveled tariff where the tariff rate
  charged depends on the volume of imports.  A
  lower (in-quota) tariff is charged on imports
  within the quota volume.   A higher (over-quota)
  tariff is charged on imports in excess of the
  quota volume.

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UNDERSTANDING TRQ

• Compromise Agreed on
• Apply over 10 Years - 1995 - 2004
• All countries remove Non Tariff barriers
• All Countries Use Tariffs to protect local
  industries from Imports
• Rich Countries maintain subsidies to a large
  extent
• Poor countries allowed higher tariff bound rates
• To promote trade liberalization allow a
  percentage (3-5 ) of consumption to come from
  imports

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UNDERSTANDING TRQ

• Binding in the agreement
• All countries declare the highest tariff for each
  commodity Bound Rate
• 3-5 to be imported to promote trade
• In quota volume declared based on 1985
  consumption data
• In quota volume to have a lower tariff
• Special safeguard measures can be applied to
  prevent damage to local industry

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UNDERSTANDING TRQ

• Binding in the agreement
• Special tariff for In Quota Volume Tariff Rate
  Quota (TRQ)
• Tariff must be low enough to facilitate Imports
  (profitable for importers)
• If In Quota Volume Import (quota fill) is not met
  the TRQ must be lowered
• Agreement binding 1995 to 2004 and further
  negotiations to take place beyond that

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UNDERSTANDING TRQ

• Binding in the agreement
• Out of Quota volume cannot be stopped
• Out of Quota Tariff can only be as high as the
  bound rate
• Trade is subject to SPS Code
• Cannot discriminate against countries sharing the
  same diseases

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UNDERSTANDING TRQ

• Current Status
• The Negotiations in Cancun and Doha Failed
• Failure due to the same issues of subsidies by
  rich countries and lack of market access for poor
  countries
• The 2004 position remains status quo
• Led to Free Trade Agreements (FTA) on bilateral
  basis

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UNDERSTANDING TRQ

• Malaysias Position
• A signatory to the Agreement WTO
• Submitted a schedule of Tariff bound rates and In
  quota volumes to WTO

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UNDERSTANDING TRQ

• Malaysias Position
• In 1993? removed all tariffs on poultry Products
• Has not put in place the Tarrification commitment
  until now
• Continue to use import licensing to regulate
  imports

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UNDERSTANDING TRQ

• Malaysias Position
• Quantity of Imports of frozen chickens vary from
  year to year
• Government under pressure from non-farm further
  processors to allow imports
• Farmers raises issues of tarrification when
  imports increases

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UNDERSTANDING TRQ

• Malaysias Position on tarrification
• Advantages to farmers
• Customs will work harder to catch smugglers since
  there is revenue to collect
• Smuggling of day old chicks becomes more
  difficult
• Smuggling of hatching eggs as salted eggs can be
  reduced

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UNDERSTANDING TRQ

• Malaysias Position on tarrification
• Disadvantages to farmers
• Can supply only 95 percent of consumption
• Tariff may not be high enough to prevent out of
  quota imports
• May have to depend on safeguard measures

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UNDERSTANDING TRQ

• Malaysias Position on Tarrification
• Engaged in FTA Negotiations with the USA
• Most industries in favor of FTA with USA
• Poultry industry fear Chicken Leg Quarter (CLQ)
  imports from USA

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UNDERSTANDING TRQ

• Malaysias Position on tarrification
• Industry recently Informed of intention to
  Implement TRQ by June 2007
• Briefing very short with no documents issued
• Unclear about the level of TRQs, In quota Volumes
  and out of quota tariffs

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UNDERSTANDING TRQ

• Malaysias Position on tarrification
• What we believe we know
• In quota volumes
• Whole Birds Chilled frozen 4666 Metric Tons
• Chicken parts 4666 Metric Tons
• DOCs 2,300,000 Nos
• Live Chicken below 2 Kilograms 1,900,000 birds
• Hatching,cooked,salted eggs 78,500,000 pieces
• Live pigs 28,783 heads
• Frozen Pigs 1,727 Metric Tons

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UNDERSTANDING TRQ

• What we are not clear
• Will GPS and PS DOCs imports be taxed?
• Who gets the in quota volume import permits?
• Are the bound rates stated for chicken parts the
  same as we declared to the WTO

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UNDERSTANDING TRQ

• From Agriculture and Agri-food Canada
• TRQ administration
• Practices and methods by which a country
  determines how imports subject to tariff rate
  quotas enter the market, and are assessed at the
  appropriate tariff rate.
• These methods include applied tariffs,
  first-come first-served, licenses on demand,
  auctioning, historical imports, imports
  undertaken by state-trading entities, producer
  groups or association, and a variety of other,
  non-specified import allocation methods.

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UNDERSTANDING TRQ

• There is an urgent need for the industry
  representatives to seek further clarifications
  from the Authorities concerned
• THANK YOU