Overview and Current Status of the Overview and Current Status of the Doha Work Program and NegotiationsDoha Work Program and Negotiations

Southern Agricultural Economics AssociationSouthern Agricultural Economics AssociationAnnual MeetingsAnnual Meetings

Orlando, FL, February 6, 2006Orlando, FL, February 6, 2006

Parr Rosson and Flynn AdcockCenter for North American Studies

Department of Agricultural EconomicsTexas A&M University

Overview

International Setting

WTO Doha Agenda Progress

U.S. Trade Strategy

Conclusions & Implications

World Average Agricultural Tariffs, 2002

Source: WTO & ERS/USDA

115

85

5540

30 2510

Asia

Carib

bean Is

lands

Centra

l Am

erica

South

Am

erica

Europea

n Union

North

Am

erica

United S

tates

0

20

40

60

80

100

120

140

Percent

Region Average

World Average

62%

Agricultural Producer Support By Country1986-88 and 2001-03

-Percent of Total Farm Receipts from Government-

Source: OECD's database (see www.oecd.org)

12%

33%26%

40%

62%

71%

2%

20% 20%

39%

60% 65%

New Zealand Canada United States EU Japan Korea0%

20%

40%

60%

80% 1986-1988

2001-2003

Doha Development Agenda in the World Trade Organization

Progress to Date

Progress onDoha Development Agenda

(2001-Present)

Work on Agriculture Began in 2000 Under Auspices of the WTO

Agriculture Committee

Mandated by the Uruguay Round Agreement on Agriculture, 1994

Doha Work Program:Three Pillars of Trade Reform

(August 1, 2004)

Market Access: Reductions in Tariffs

Export Competition: Elimination of Export Subsidies

Trade Distorting Domestic Support: Reductions Over Time

Market AccessCut Highest Tariffs the MostDesignation of Some ‘Sensitive’ SectorsSpecial & Differential Treatment for

Developing & Less Developed CountriesU.S. Pushing for Deep Tariff Cuts by

EU & Some Developing Countries (60-75%)

EU Reluctant to Cut Beyond 43%

Export Competition

Reduce & Eliminate Export Subsidies by Date Certain EU Export Subsidies, $2+ Billion/Year U.S. Export Credit Guarantees > 180 Days

• $4.7 Billion/year in Recent Years

Eliminate Trade Distorting Practices of State Traders, such as Canadian Wheat Board Subsidies, Govt. Financing, Increase Transparency

Food Aid that Displaces Commercial Sales to Be Eliminated

Trade Distorting Domestic SupportYear 1 Down Payment of 20%Subsequent Phased ReductionsCaps on Amber & Blue BoxesReductions from Allowable SupportEU Even Announced Its SupportU.S. Cuts Likely to Approach 60% of

Amber Box, to $7.64 Billion

Total Allowable Trade Distorting Domestic Support, 'The Big 3,‘ 2002

WTO, Trade Policy Review and calculations.

$128

$49 $48

European Union United States Japan$0

$20

$40

$60

$80

$100

$120

$140

Billion Dollars

Includes Amber + Blue Boxes, Product Specific + Non-product Specific De Minimis, Each Based on 5% of Total Value of Agricultural Production

Total Trade Distorting Domestic Support Remaining After Year 1 Down Payment

(calculated)

$100.2

$39.2 $38.4

European Union United States Japan$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

Billion Dollars

Total Trade Distorting Domestic SupportAssuming 50 Percent Reduction

Calculated

$50.1

$19.6 $19.2

European Union United States Japan$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

Billion Dollars

Hong Kong, December 2005Little Progress Made in Hong Kong

EU Trade Commissioner said state of negotiations was “serious but not desperate.”

Agreement to Eliminate Export Subsidies by 2013

Greater “Quota-Free, Duty-Free” Access Granted LDCs, Up to 97% of Products LDC’s want it above 99% and Prepared to Veto

While Many Fundamental Issues Remain Unresolved, Deadlines Have Been Set

Hong Kong, December 2005(continued)

Agreement on Degree of Tariff Cuts by April 30, 2006 EU Wants to Reduce by 39% (They Claim 46%) while U.S.

and Others Think EU Needs to Reduce by about 60% Each Country to Submit Tariff Schedules by July 30

While Export Subsidies Addressed, More work on STE’s and Export Credit Guarantees Needed

Agreement Still Needed on Degree of Trade Distorting Domestic Support (Amber/Blue) U.S. Wants about 53%, Pushing EU and Japan Towards 80% This Does Not Address Green Box Programs U.S. wants “New” Blue Box for CCPs

Other Negotiating/Related Issues The Cotton Initiative, Begun by Benin, Burkina Faso,

Chad and Mali, Claim Rich Country Subsidies Hurting Poor Countries Compensation Requested, Issue in Negotiation

Cotton Case Won by Brazil Against U.S. Will Impact U.S. Cotton Program and Could Spur Challenges Against Other Crop Programs U.S. Could Instead Decide Not to Comply, but Would face

Brazilian Tariffs and Undermine Doha

Tight Timeline for U.S. because of Expiration of TPA in Mid-2007 and Low Prospects for Renewal

U.S. Budget Situation and Dissension within EU

U.S. Trade Strategy

Multilateral World Trade Organization China Now a Member-Currency, Textiles Only Forum Where 148 Countries Are Present

Regional/Bilateral CAFTA-DR

Unilateral Generalized System of Preferences (GSP) CBI/CBERA African Growth Opportunities Act (AGOA)

Why Regional/Bilateral Agreements?

2nd Best After MTN WTO Has Been Slower than Desired Outcome is Uncertain

Economic Incentives Open Markets Increase Business Efficiency

Keep Pressure on MTN to Perform

Australia ‘05Australia ‘05

Bahrain ‘05Bahrain ‘05CAFTA-DR CAFTA-DR ‘05‘05

Chile ‘04Chile ‘04

FTAA ‘06FTAA ‘06

Morocco ‘04Morocco ‘04

Southern African Southern African Customs Union ‘06Customs Union ‘06

Singapore ‘03Singapore ‘03

Jordan ‘01Jordan ‘01

U.S. Trade AgreementsU.S. Trade Agreements

NAFTA ‘94NAFTA ‘94 Israel ‘85Israel ‘85

CUSTA, ‘89CUSTA, ‘89

Andean FTA Andean FTA ‘06‘06

Panama ‘06Panama ‘06

Thailand ‘05Thailand ‘05

MEFTA MEFTA ‘06‘06

Conclusions and Conclusions and ImplicationsImplications

Conclusions & ImplicationsAgricultural Trade Distorted by Tariffs,

Export Subsidies, Trade Distorting Domestic Support & Non-tariff Barriers

Deep Tariff Cuts by DCs/LDCs Will Allow More U.S. Exports, But TBN

But, What is the Trade-Off? Some Reduction in U.S. Trade Distorting Domestic

Support, Likely Substantial, TBN Internal Budget Pressure Likely Affects Outcome

Conclusions & ImplicationsAbsent WTO Progress, Trade & Economic

Growth Stifled, Especially in Agriculture-Not Good for the South

Cotton Case Impacts and Potential for Similar Cases Must be Considered

Internal Political Realities Cause for Concern

Trade Reform is at a Crossroads: Protectionism or Progress? If We Want to Open More Markets, Trade

Agreements Are Needed

Thank You!

Questions?