What Is The Current Position of Agriculture of Products - Case Study Example

Agriculture products under WTO and GATT and DOHA Round Introduction Despite the perceived failure of the WTO Ministerial Meeting in Seattle in December 1999 due to street agitations and inability to begin a new Round focusing on multilateral trade talks, as per the mandate of the Uruguay Round Agreement on Agriculture’s Article 20, the agricultural trade negotiations were initiated in Geneva during March 2000. Thereafter, the WTO Ministerial Meeting was initiated for the fourth time during November 2001 in Qatar, where the Doha Development Agenda was inducted. This paper focuses especially on the outcome of the Doha Round negotiations highlighting the agricultural sector and the impact of the negotiations on this particular sector. Further, it discusses the role played by the current position of agriculture of products under WTO and GATT. Agriculture sector and the products mostly remain outside the purview of General Agreement on Tariffs and Trade (GATT), unlike industrial products. This came into effect with the entry in January 1995 and the Agreement on Agriculture with the World Trade Organization. The reasons being exceptional treatment in the GATT and also the position of countries like the European Communities and the United States on agriculture. This is largely influenced by international community; along with the traditional universal issues that are also known as non-trade concerns that are influenced by other geographies. WTO agreement on agriculture WTO Agreement with regards to Agriculture was on the move of establishing a Committee specifically on Agriculture. This committee has been meeting regularly in Geneva for monitoring implementation of the agreement in place. Agricultural negotiators involved were kept well versed of the happenings. And this was run smoothly in the early stages of the set up. It was a great contrast to the procrastinations in the Uruguay Round table negotiations. Being aware of the commitment in Article 20 and along with the suggestions given by Committee, Singapore WTO Ministerial Meeting which was held in November 1996 was able to establish an AIE (which was analysis and exchange board).  This was considered to be an informal part of the work done by the Committee (WTO 1999). Concerns and issues were brought to the fore in the non-papers. These discussions also constituted AIE process which was related to delegation were found to have a lot of information regarding the liberalization of agricultural trade. The process was concluded in order to be prepared with the Seattle Ministerial Meeting. The 1999 WTO Seattle Ministerial Meeting Various papers made rounds in front of the meeting in Seattle Ministerial Meeting which was scheduled in the month of November 1999. The negotiating group, which was under the chairmanship of George Yeo, Singapore trade minister, was able to make good progress and reconciled interests with the developed economies around the globe. However, while preparing the compromise papers, Yeo was quoted as one who was walking on a tightrope among the concerns brought up by WTO Members (Agra Europe 1999a). It also discussed some of the ‘substantial deduction in the export subsidies’ and also emphasized the significance of issues which was ‘non-trade’. One main important issue discussed, in the draft Seattle Declaration which was concerned with agriculture (Luke 2000), were not very healthy. The meeting was not prepared well and Seattle streets saw protestors. Also, President Clinton opinion on the WTO system was to make sure that to respect labor (Clinton 1999) which may antagonize various developing countries. The break-up of Seattle Ministerial Meeting on 3 December 1999, was profoundly unrest which was reported in the section of the Organisation for African Unity (OAU) (Agra Europe 1999b). OAU lodged a complaint which stated that African countries were ‘marginalised’ and were excluded on the basis of vital importance with regards to people and future. They also stated that under the current circumstances they will not be able to join the majority which was required for meeting the objectives of the ministerial conference. Also, the OAU expressed that the flexibility for pursuing adequate food policy which was for security and were binding commitments on the Differential and Special and treatment. A group of Caribbean and Latin American countries also were of the opinion that they might not be able to join the consensus as well. Seattle Ministerial Meeting was shut down by the Friday night. Ministerial Declaration which was a draft copy had no legal standing but indicated what the chairman of the agriculture was trying to negotiate. It may not be formally accepted by the participants and equally not by those excluded from ‘Green Room’ meetings. This is where the drafts were developed. In spite the multi-functionality was not able to survive in the session in Seattle. It remained as a potent concept around the debates, Article 20, negotiations although commenced. Some of the Seattle text pointed towards, huge reductions in domestic support and export subsidies, accessing the market improvement, which was particularly around developing countries. Recognizing the non-trade concerns and addressing it through WTO measures. The importance of the differential treatment was embodied through the schedules of commitments and concessions of Members. This might allow the developing countries for taking account the development needs which can be rural development and food security. Bringing up the conclusion during the agriculture negotiations on 15 December 2002 was one of the decisions taken. In Seattle, India became a major player. Murasoli Maran, Minister of Commerce and Industry, had been mandated for resisting attempts for including core labour rights along with environmental standards in the WTO system. Concurrently, he made it ‘manageable’ and a Millennium Round by removing the non-trade issues from the agenda or index (Financial Times 2000). On the other hand, in the Doha meeting, India was not that impressive, although it was able to avhieve some of the gains that were obvious, excepting the dubious pleasure for delaying the meeting. The obstructive and negativity made it an isolated country in comparison to the other developing countries. (Financial Times 2001a). While Brazil was a star performer in the fray. The Work Programme for Agriculture After the setback in Seattle, it was agreed that Article 20 negotiations will be taken forward with the framework of existing Committee that was on Agriculture. That was to arrive at Special Sessions which was formally separated from the regular business. Also, this was held before, or after the regular meetings. However, the opening of these negotiations was obstructed by row of debates by EU and others for the appointment of a chairman from the Special Sessions. The EU had issues with the Brazil’s Ambassador for the WTO, who was seen taking the chair by the year 2000, on the basis of the fact that people from the Cairns group should not take an important role (Agra Europe 2000a). With this, the WTO’s General Council had to intervene, which was done by appointing, Jorge Voto-Bernales, Peruvian Ambassador, who was made the chairman of the Agriculture Committee. Jorge was given the responsibility of chairing Article 20 negotiation. While the Agriculture Committee was chaired by Yoichi Suzuki, Vice-Chairman, who was from Japan. (Agra Europe 2000b). In March 2000, when the first meeting of the Special Session was held, it was made sure that the Members should submit the negotiating proposals at the end of December 2000. However, the participants were not of the same vision as to when and how can the Article 20 negotiations can come to an end. A few opined that Article 20 only provided mandate for ‘stand-alone’ negotiation and was not holistic. While others said that they did not accept the deal at all. Effects to reform WTO/GATT in application to agriculture (DOHA) While negotiating international trade, the agriculture sector is again gaining attention and has been acting as a major hurdle in the Doha round of the WTO. The sector resulted in the failure of the Trade Ministerial Meeting of September 2003 in Cancun as the members were not able to agree on the process of the Doha round. Despite the decline in the importance of agricultural policies worldwide, the sector still remains contentious during the WTO meets. Due to this failing importance, various groups have been asking to sideline the sector during the trade negotiations which is resulting into various arguments and delay in taking concrete decisions (Winters 2004). Such an approach might be advantageous for the developed countries but would definitely cause problems for the under-developed and poor countries, due to their dependence on agriculture for survival (Anderson and Josling 2005). Further, it has also been witnessed that many developing countries were not happy with the deal they got during the Uruguay Round as the tariff cut agreed upon by the developing countries were found to be greater than that of high-income nations (Finger and Winters 2002). Further, these countries were also asked to commit themselves to expensive agreements such as TRIPS and SPS (Finger and Schuler 2001). Thus, these developing countries were looking at receiving more market access from the rich nations during the Doha round. Experts also point towards the fact that many countries support agriculture by providing subsidies and other such measures. However, with the increase in tariffs and inclusion of barriers to import agricultural products, it would become difficult for these countries to continue supporting the sector. Therefore, the prices of the agricultural products would also increase in the domestic market. Doha agenda The Fourth WTO Ministerial Meeting was slated to be held in Qatar in January 2001 at the time of the negotiations being undertaken regarding the Article 20 in Geneva. The Trade Commissioner of the European Union (EU) Pascal Lamy claimed that a new Round of WTO negotiations were required as “this approach offered the best prospect of reaching a deal on further liberalisation of agricultural trade” (Agra Europe 2001a). Despite pessimisms surrounding undertaking the negotiations due to the 9/11 attacks the Doha Round was launched under the name of the Doha Development Agenda (Financial Times 2001). The meeting initiated on February 1, 2002 and it was expected that the Round would be concluded by January 1, 2005. However, it was believed that it would become difficult to meet the deadline as there were too many aspects to be discussed during the meet and to reach to a consensus would take a longer period of time. Agriculture and the Doha Round The Doha Round has seven negotiating bodies that are focusing on different business and policy areas. The negotiating body on the agriculture sector was to be clubbed under the Special Sessions of the Agriculture Committee (WTO 2002). The agriculture sector caused the maximum issues during the Round with countries fighting over inclusion of various words and clauses. For instance, in the below instance, the Paragraph 13 of the Ministers’ Doha Declaration on agriculture stated: “We recognize the work already undertaken in the negotiations initiated in early 2000 under Article 20 of the Agreement on Agriculture, including the large number of negotiating proposals submitted on behalf of a total of 121 Members. We recall the long-term objective referred to in the Agreement to establish a fair and market-oriented trading system through a programme of fundamental reform encompassing strengthened rules and specific commitments on support and protection in order to correct and prevent restrictions and distortions in world agricultural markets. We reconfirm our commitment to this programme. Building on the work carried out to date and without prejudging the outcome of the negotiations we commit ourselves to comprehensive negotiations aimed at: substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support. We agree that special and differential treatment for developing countries shall be an integral part of all elements of the negotiations and shall be embodied in the Schedules of concessions and commitments and as appropriate in the rules and disciplines to be negotiated, so as to be operationally effective and to enable developing countries to effectively take account of their development needs, including food security and rural development. We take note of the non-trade concerns reflected in the negotiating proposals submitted by Members and confirm that non-trade concerns will be taken into account in the negotiations as provided for in the Agreement on Agriculture.” (WTO 2001) Many countries disagreed with various words and clauses in the declaration. For instance, France and Cairns Group fought to insert phrases such as ‘without prejudging the outcome of the negotiations’ and ‘reductions of, with a view to phasing out, all forms of export subsidies’, respectively in the declaration. However, the EU regarded that the inclusion of all forms of export subsidies would help all the countries equivocally (Agra Europe 2001b). Due to so many disagreements, the negotiations on agricultural sector continued throughout 2003 and even by September 2003, wherein the draft schedule should have been submitted, the countries were still discussing the clauses. Although, the US and the EU submitted a joint paper on the agricultural aspect of the negotiation in August 2003, many were suspicious of the real motives of the paper and did not trust them due to the omission of the Harbinson text. Despite so many issues, the Doha Ministerial Declaration stated that the WTO Members are intent on completing the agricultural negotiations. Issues with Agriculture negotiations The agricultural sector has a special importance in the WTO Rounds and the agenda around this sector is being defined implicitly or explicitly during the Doha Development Round as well. However, it has been also witnessed that the agendas that were perceived to be missed in the Uruguay Round still does not feature in the Doha Round as well. Some of the neglected aspects in the Doha Round include the following: Differential or special treatment to the net food-importing and least-developed nations Experts believe that the Uruguay Round was dominated mostly but the US and the EU and were looking after the interest of these countries along with the corporation, Cairns Group, which also played a major part during this Round. Even the round at Seattle was marred by many controversies. First and foremost, the demonstrations outside the meeting venue captured more attention than the meets. Further, it also exposed the fact that the processes of these Rounds were not democratic in a nature and it instead provided upper edge to the rich and developed nations (Josling et al. 2001). Many of the developing countries were also of the opinion that they were being marginalized and were being dominated by the stronger nations like the US and the EU. However, experts believe that during the Doha Round such concerns would be addressed, however, it was still found that the members of WTO failed to address these issues again in the latest Round. Most developing nations were of the view that the Agreement on the Application of Sanitary and Phytosanitary Measures or the SPS Agreement and the Agreement on Agriculture were not up to the mark. The least-developed nations were not made to increase their commitments as per the Agreement on Agriculture and were provided with a grace period of five-years to abide by the SPS Agreement. However, with regards to the developing countries, the Agreement on Agriculture had lesser benefits as they were provided with lower reductions in their commitments (Kerr 2002). The SPS Agreement also stated that the members of the developed country were being asked to take care of the special needs of the least-developed as well as the developing nations and help them in establishing their SPS. These developed nations were to ‘encourage and facilitate the active participation of developing country Members in the relevant international organizations’. However, it has been found that most of the developed countries failed to deliver as per their promises (Henson and Loader 2001). Further, many expected that the reform programs that were being established through the Agreement on Agriculture would help in increasing the market prices of the agricultural products globally. Thus, the WTO Ministers also adopted various reform measures that can help in lessening the impact of the reform programme on the Net-Food Importing Developing and Least-Developed nations. However, despite so many measures, the developing countries are still feeling neglected and believe that the developed nations have not kept their promises (McQueen 2002). Export Credits The Agreement on Agriculture has also given certain commitments regarding subsidy and guidelines on how to prevent countries from circumventing these commitments as well. However, members believed that the only impact of such export credits was showcasing the intent of the members for working towards developing ‘internationally agreed disciplines’. Although, such negotiations were being undertaken during the OECD, they are still to be closed. In fact the EU believes that the export subsidy provisions being implemented by the union are transparent in nature and therefore, according to the guidelines laid in the Agreement on Agriculture. However, it has been found also that the subsidized export credit schemes are being misused for circumventing the Agreement. Further, despite Canada, Australia and the EU making usage of export credits, it has been generally found that most of the subsidy has been given by the US to various OECD countries (McCorriston and MacLaren 2002). Single Desk Buyers and Sellers Such kinds of concerns are also being expressed by the single desk sellers and export marketing boards. The US in particular has been concerned about the various practices being implemented by Canada in this respect. Further, the US along with other states wants to establish various guidelines and disciplines regarding single desk buyers. As per McCorriston and MacLaren (2002), the issue regarding this aspect is various entry arrangements being signed, which results in creating duplicity and multiple tariff rates. This is a major characteristic of the agriculture sector, which distorts the sector as well as impedes import growth due to MFN tariff. Conclusion The paper therefore provides comprehensive discussion on the impact of the Doha round on the agricultural sector and its implications in the coming years. It was found that the dominance of the developed countries such as the EU and the US have been vehemently opposed by the developing and least-developed countries. The developing countries believe that these developed nations are impeding their growth by putting hurdles in the development of the agricultural sector. The dominance and the undemocratic nature of the stronger nations were exposed through the way the Doha Round has been conducted, wherein the nations are still struggling to come in terms of agreeing on set parameters regarding the agriculture sector. Therefore, the need of the hour is to reach towards a consensus wherein the influence of the developed and rich nations in such organisations are reduced and the overall development of the least-developed and developing countries are also being initiated through the promotion of the agricultural sector. Reference Anderson, K. and Josling, T. E. (eds.) 2005, The WTO and Agriculture, London: Edward Elgar Publishers. Agra Europe (2001a), 5 January, EP/3. Agra Europe (1999b), 3 December, EP/3-4. Agra Europe (2000a), 24 March, EP/4. Agra Europe (2000b), 12 May, EP/3. Agra Europe (2001b), 16 November, EP/1. Agra Europe (1999a), 3 December, EP/1. Clinton, W.J. 1999, ‘Remarks by The President to the Luncheon in Honor of the Ministers Attending the Meetings of the World Trade Organization’, The Four Seasons Hotel Seattle, Washington, 1 December, Washington D.C.: The White House, Office of the Press Secretary. Financial Times (2001a), 15 November, p. 11. Financial Times (2000), 2 February, p. 6. Finger, J. M. and Schuler, P. 2001, 'Implementation of Uruguay Round Commitments: The Development Challenge,' Ch. 7 in Developing Countries and the WTO: A Pro-Active Agenda, edited by B. Hoekman and W. Martin, Oxford: Blackwell. Josling, T., Dixit, P., and Blandford, D. 2001, The Current WTO Agricultural Negotiations: Options for Progress, Commissioned Paper No. 18, International Agricultural Trade Research Consortium: Minnesota. Kerr, W.A. 2002, ‘A club no more – the WTO after Doha’, The Estey Centre Journal of International Law and Trade Policy, vol. 3 (1), pp. 1-9. McCorriston, S, and MacLaren, D. 2002, ‘State trading, agriculture and the WTO’, in Milner, C.R., and Read, R. Trade Liberalisation, Competition and the WTO, Cheltenham: Edward Elgar, pp. 207-23. McQueen, M. 2002, ‘EU preferential market access conditions for the least developed countries’, Intereconomics, vol. 37, no. 2, pp. 101-9. Henson, S., and Loader, R. 2001, ‘Barriers to agricultural exports from developing countries: the role of sanitary and phytosanitary requirements’, World Development, vol. 29, no. 1, pp. 85-102. Luke, D.F. 2000, ‘OAU/AEC Member States, the Seattle preparatory process and Seattle. a personal reflection’, Journal of World Trade, vol. 34 (3), pp. 39-46. Winters, L.A. 2004, 'Trade Liberalization and Economic Performance: An Overview,' Economic Journal 114: F4-F21, February. WTO 1999, General Council Overview of WTO Activities, Report by the Chairman, Committee on Agriculture, G/L/322, Geneva: WTO. WTO 2002, ‘Governments set negotiating guidelines; WTO DG to chair TNC’, Press Releases, Press/271, 1 February, Geneva: WTO. WTO 2001, Ministerial Declaration, Ministerial Conference, Fourth Session, Doha, 9-14 November, WT/MIN(01)/DEC/W/1, Geneva: WTO. Read More