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Tariff Negotiations in Agriculture: Seeking a Compromise

June 1, 2004

Market access and specifically the tariff cut formula in agriculture is admittedly the make or break issue in the current round of negotiations. According to the Chairman of the Special Session of the Committee on Agriculture (SSCoA), as of the second negotiating meeting in April 2004 following the setback in Cancun, there was no indication of any emerging convergence on the blended formula contained in the Derbez text, nor was there a consensus on any other alternative. The Chairman also stated that at that stage no conclusions could be drawn on whether or not the negotiations would achieve an agreement on a framework on agriculture by July 2004, which would include all three pillars of the Agreement on Agriculture (AoA). If this is to be interpreted as implying that a framework text on the two other pillars of the AoA would be possible by July 2004, this is likely also unattainable, given the explicit and implicit linkages between the three pillars that have been made all along by several WTO members who are prepared to make concessions in one of the pillars contingent upon concessions being made by others in another pillar. Hence it is imperative that a compromise is found on market access in order to increase the likelihood of an overall framework agreement by the set date of July 2004.

One of the basic problems of all approaches that have been put on the negotiating table so far is that a formula is proposed without spelling out in concrete terms what would be achieved by that formula and how it may affect different members. All of that has been left to interpretation. The latest attempt, the blended formula contained in the Derbez text2, had a number of important compromising elements, however, it had the same fate as earlier formulae, basically because questions as to how it would be applied and what its final outcome would be, were left to interpretation. An infinite number of final outcomes were possible and it is understandable that members differed in their interpretations of how the formula would be used and were it would lead. The same formula can be interpreted as overly ambitious or as too flexible, depending on the assumptions made on how it may be applied in practice.

This has not been conducive to convergence on market access. Too much emphasis has been placed by members on the formula (the “tool”) to be used in market access, leading to inflexible positions on including or avoiding a particular “tool”, and too little on defining in concrete terms the basic principles of what is to be achieved and the general shape of the final outcome.

 What are the generally understood expectations on market access reform during this round of negotiations? Paragraph 13 of the Doha Declaration recalled the long-term objective referred to in Article 20 of the AoA to establish a fair and market-oriented trading system through a programme of fundamental reform. Specifically, on market access, it called for “substantial improvements in market access”. The Declaration went on to recognise the need for special and differential treatment for developing countries and also confirmed that non-trade concerns (NTCs) will be taken into account in the negotiations.

The above general language on market access has been the subject of continuous debate during the long negotiating process since Doha and while interpretations vary, there is a general understanding on the operational meaning of the broadly stated objectives in the Doha Declaration. In operational terms, the concrete objectives on market access are understood to include the following:

1. substantial reduction of the average level of tariffs

2. reduction of tariff peaks (and tariff escalation)

3. accommodation of country-specific concerns on particular products; for developing countries this has been expressed in the form of Special Products (SPs) on the basis of food security and rural development considerations, while for developed countries in the form of “sensitive” products, inter alia on NTC grounds.

4. special and differential treatment (SDT) for developing country members, implying less onerous commitments compared to those of developed country members.

It is clear from the above that the Doha Declaration and what is understood to imply in operational terms contain an important contradiction. Specifically, to the extent that countryspecific concerns are to be taken into account (third objective) that limits the degree to which substantial improvement in market access could be achieved (the first and especially the second objective). Hence, a compromise on what is to be achieved on market access was already embedded in what was agreed in the Doha Declaration. Essentially, the Doha text limits the set of possible acceptable solutions on market access during this Round of negotiations and a compromise between these contradictory objectives had to be found. The remaining of the paper describes in general terms the various approaches that have been proposed on market access up to now and identifies the extend to which they meet the above objectives. The final part of the paper proposes a way forward by focussing on the basic principles of how the objectives enumerated above could be effectively addressed.

By Panos Konandreas

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