The Doha Development The Doha Development Agenda:Agenda: Issues of Process Issues of Process and Substanceand Substance

Parr RossonTexas Cooperative ExtensionTexas A&M University System

American Agricultural Economics Association, Annual Meetings

ProcessSubstance-Not Much Progress

740+ Brackets in Text

Three Pillars of Policy ReformTrade Distorting Domestic Support

Market Access

Export Competition

Doha Development Agenda

Process: Doha Timeline

Initiated Negotiations in Agriculture, March 2000 (WTO Ag Committee)Doha ‘Round’ Began November 2001, Doha, QatarCancun, 2003-FailureGeneva, 2004-Work Program, Modest Success

Year 1, 20% Cut in Trade Distorting Domestic Support & Export Competition

Hong Kong, 2005-Faliure

Process (continued)April 2006, Modalities-Failure

June 2006, Modalities-Failure

July 2006-DG Lamy’s Shuttle Diplomacy, Results Pending, But ‘Crisis’ Acknowledged & G-8 Briefed

July 31, 2006-Modalities & Schedules: DG Lamy Suspends DDA, July 24, 2006

December 31, 2006-Negotiations Were to Conclude

July 1, 2007 Trade Promotion Authority Expires

Agricultural Trade Weighted Tariffs

Source: Jean, Laborde and Martin (2005a)

AverageBound tariff

%

MFN applied

Tariff%

Actual applied

Tariff%

Developed Countries 27 22 14

Developing Countries 48 27 21

Less Developed 78 14 13

WORLD 37 24 17

‘Binding Overhang’ is Problematic

Any Negotiated Reductions Start at Bound Rates

Impact of Proposals on Ag Tariffs

70%

30%

‘Negotiating Gap’ of 40%

Tariff Levels-Percent Percent Reduction

0 to < 20-30 20-65

20-30 to 40-60 30-75

40-60 to 60-90 35-85

> 60-90 42-90

Tariff Cuts, Developed Countries

Summary, EU, US & G-20 Proposals by WTO Chair, Ag Committee, June 22, 2006.

Tariff Levels-Percent (Max Bound Duty 150%)

Percent Reduction

0 to < 20-50 15 - < 65

20-50 to 40-100 20 - < 75

40-100 to 60-150 25 - < 85

> 60-150 30 - < 90

Reductions summarized by WTO Chair, Ag Committee, June 22, 2006.

Tariff Cuts, Developing Countries

Sensitive Product Designation-All Countries

1% vs. 15% of Tariff Lines, with 10,000+ Lines, 100 vs. 1,500 Protected Products20% Designated Sensitive, 90% of G-20 Ag Trade Protected, So No Real Increase in Market Access

Special Products-Developing & Less Developed Countries

Longer Time Period/Less ReductionSpecial Safeguards-AllIssue: Way Too Much Protection to Provide Significant Market Access

Other Market Access Issues

Food AidCash vs. In-Kind

Export Credits< 180 Most Cases

State Trading EnterprisesEliminate Monopoly Power

Differential Export Taxes-Little ProgressExport Subsidies

Eliminate by 2013Eliminate by 2013

Export Competition

Where Are We in Doha??

Negotiations Suspended Indefinitely

U.S. Under Pressure from EU & G-20 to Offer More in TDDS Cuts

U.S. Pressuring EU, Japan & G-20 to Cut Tariffs More

EU Resistant, Especially France

TPA Expiration LoomsVery Difficult Time in U.S. Congress

Might TPA Be Extended to Support Bilateral/Regional and MTN??

Implications of Doha Failure

Five Years Down the Drain

Continued Restrictions on ‘South-South’ Trade, Stifling Development

Protectionism & All that Accompanies It

Credibility & Future of WTO, Especially Related to Agriculture

More Litigation/Dispute Settlement?

SummarySuspension is a Setback, May Be Overcome

Market AccessSensitive Product Designation Possible Loophole

Deep Tariff Cuts for Developing Countries Difficult to Reconcile

Export CompetitionElimination of Subsidies is Significant

U.S. vs. EU/G-20 Very Far Apart on Reductions in Tariffs & TDDS

Who Really Loses from Failure?

G-20 Member Countries

Argentina, Bolivia, Brazil, Chile, China,

Cuba, Egypt, Guatemala, India, Indonesia,

Mexico, Nigeria, Pakistan, Paraguay, Philippines,

S. Africa, Tanzania, Thailand, Uruguay, Venezuela,

Zimbabwe

General Tariff Reduction Formulas

Proposed Developed Country Tariff Cuts, Bound Rates

Issue U.S. EU G-20 Formula Progressive Linear Linear

4 Tiers Cuts 4 Tiers Cuts 4 Tiers Cuts 0 - 20 55% - 65% 0 - 30 35% 0 - 20 45%

Tariff Reduction

20 - 40 65% - 75% 30 - 60 45% 20 - 50 55% 40 - 60 75% - 85% 60 - 90 50% 50 - 75 65%

60+ 85% - 90% 90+ 60% 75+ 75% Cap: 75 Cap: 100 Cap: 100

Avg. cut of 54%

General Tariff Reduction Formulas Proposed Developing Country Tariff Cuts, Bound Rates

Issue U.S. EU G-20 Formula Progressive Linear Linear

4 Tiers Cuts 4 Tiers Cuts 4 Tiers Cuts 0 - 20 <55% - 65% 0 - 30 25% 0 - 30 25%

Tariff Reduction

Flex 10% - 40%

20 - 40 <65% - 75% 30 - 80 30% 30 - 80 30% 40 - 60 <75% - 85% 80 - 130 35% 80 - 130 35%

60+ <85% - 90% 130+ 40% 130+ 40% Cap: Yes Cap: 150 Cap: 150

Max. Avg. cut of 36%; <2/3rd proportionality