Implementation of the Uruguay Round Agreement

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Implementation of the Uruguay Round Agreement

• Lecture 20. Economics of Food Markets
• Alan Matthews

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The legal framework

• Commitments entered into Schedules attached to
  the final WTO Agreements
• Monitored by a WTO Committee on Agriculture which
  meets every 6 months
• Attempts to settle complaints should first be
  made bilaterally, but countries have recourse to
  the WTOs Dispute Settlement Mechanism

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Market access

• Tariffication a major achievement
• Now 100 coverage of tariff bindings

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Pre- and post-Uruguay Round scope of bindings for
agricultural products (Number of lines, billions
of US dollars and percentages)
x                                               
                                         ltgt
5
Market access how much liberalisation?

• Effectiveness of the agriculture agreement in
  cutting protection was less impressive than the
  nominal cuts suggest, because
• tariff cuts took place from base levels that were
  frequently inflated through the choice of base
  year,
• through the methods used to measure protection
  existing prior to the round (dirty
  tariffication),
• Through use of unweighted average of 36
• through the use of ceiling bindings in
  developing countries
• Uneven tariff reduction many sensitive products
  still protected by high tariffs
• Minimum access commitments counted imports under
  existing special arrangements, despite MFN
  requirement

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Tariff rate quotas
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Reductions in Domestic Support to Agricultural
Producers (Millions of US dollars)
                                                  
                                     ltgt
8
Domestic support

• various types of supports excluded from the AMS
  disciplines, e.g. de minimis, Blue Box, Green Box
• AMS discipline established at an aggregate level,
  not on a commodity by commodity basis.

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Export subsidy reduction commitments by country
(Millions of US)
                                                  
                                     ltgt
10
Export subsidy commitments

• Front-loading
• Credit for unused commitments could be brought
  forward to later year
• Concerns about the behaviour of State Trading
  Enterprises in agricultural marketing

1995
2000
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Assessing the impact of the URAA

• overall gains in world welfare though of a
  relatively small magnitude
• Tangermann puzzle why so little change in OECD
  PSE figures despite the mandated UR reductions?
• Water in the bindings
• Distinction between implicit and explicit policy
  change
• UR established a framework for further
  disciplines
• UR framework is shaping domestic policy
  discussions

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Adjusting CAP to the URA

• What changes were necessary to the CAP
  mechanisms?
• the implementation of tariffication
• other market access provisions
• no real effect of AMS provision
• more active management of export refund system to
  stay within subsidised export targets
• Were the GATT disciplines consistent with the
  MacSharry 1992 reforms?

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Some specifics of CAP adaptation to WTO
disciplines

• Examples of how tariff for wheat was set
• Variable levy system retained for cereals and
  fruits and vegetables
• (Ab)use of special safeguard provision
• Removal of domestic support to Blue Box
• But export subsidy restrictions have had some
  effect

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Reading

• Tangermann two articles
• OECD 2001 report
• Ingco paper
• Swinbank and Tangermann articles on adaptation of
  the CAP