A STUDY ON URUGUAY ROUND, DOHA ROUND AND ITS IMPACT ON AGRICULTURE

Presented to: - Dr. Y. C. JOSHI

Prepared By:Nayan Nadiyapara, 11F23 Hardik Purohit, 11F16 Samir Dave, 11M34 Div A, 4rd SEM GHPIBM

Introduction of Study
After 2nd world war the trade between countries was the key issue for their development. World was divided in two main groups: USSR and USA. So, there were trade barriers between countries. Year after year these barriers have been reduced through various agreements. Agriculture barriers reduced in these agreements. So, we have taken this topic to understand how these issues resolved in ITO, GATT through Uruguay round and WTO through Doha round.

Objectives of the study

To study different provisions of GATT. To study achievements and problems of GATT.

To study effect of Uruguay Round of GATT on Agriculture .

To study effect of Doha Round of agreement on Agriculture .

Research methodology

Sources of Data: In order to fulfill our objectives, we have used secondary sources for the purpose of information and data collection.
Type of Research: Exploratory Research Design

GATT principles
non-discrimination - countries cannot apply different trade barriers to different countries. Expressed in the principle of most favoured nation (MFN) treatment - the most favourable market access offered to any one country must be offered to all others (an important exception is free trade areas and customs unions) (Article I). national treatment - an imported product, once it has entered the country of import, should be treated as a national product (Article III) protection by tariffs - protection is not outlawed but should be provided solely by means of tariffs tariff reduction - over time attempts should be made to reduce tariffs through reciprocal concessions tariff bindings - any reductions would be bound in GATT and could only be raised against payment of compensation to affected parties, in order to promote security of trade

Introduction
Uruguay Round of GATT

The General Agreement on Tariffs and Trade came into force on 1 January 1948. This report contains the complete text of the General Agreement together with special reference to Uruguay Round. An Analytical Index, containing notes on the drafting, interpretation and application of the articles of the Agreement has been prepared. The principal objective of the GATT rules on non-tariff trade restrictions is to eliminate government interventions that promote the commercial interests of domestic producers and consumers in a way that discriminates against foreign producers and consumers in either domestic or international markets. This objective fundamentally does not conflict with protecting GATT members' domestic environment or the global environment. The GATT should explicitly recognize the objectives of environmental protection and natural resource conservation, either by an amendment to the GATT articles or by resolution of the GATT Council. The General Agreement on Tariffs and Trade (GATT) was originally created by the Bretton Woods Conference as part of a larger plan for economic recovery after World War II. The GATTs main purpose was to reduce barriers to international trade.

The role of GATT in integrating developing countries into an open multilateral trading system is also of major consequence. The increasing participation of developing countries in the GATT trading system and the pragmatic support provided to them through the flexible application of certain rules helped developing countries to both expand and diversify their trade. The task of helping to integrate further the least-developed countries is one of the challenges that lie ahead in the WTO. Similarly, the full integration of countries with economies in transition into the trading system must be achieved in order to strengthen economic interdependence as a basis for greater prosperity and world peace. These negotiations were critical to ensure the future health of the world economy and the trading system. The globalization of the world economy over the past decade has created a greater reliance than ever on an open multilateral trading system. Free trade has become the backbone of economic prosperity and development throughout the world. Partly as a result of this, there has been a shift in trade policy mechanisms from border measures to internal policy measures, substantially affecting the management of trade relations. The Uruguay Round sought to establish a new balance in rights and obligations among trading nations as a result of this phenomenon. We are gradually moving towards a global marketplace, and for that, we need a global system of rules for trade relations among partners in that market place.

WTO And DOHA round

The role of WTO in developing countries like India has held central importance in negotiation and the design of development of Doha Development Agenda which was approved at WTO Ministerial Meeting. Membership will bring higher growth and accelerated export expansion and a better living standard to the people in India The impact of WTO on agriculture was severely felt by India as cheap imports have frequently hit the Indian market

Before Doha
Before the Doha ministerial, negotiations had already been under way on trade in agriculture and trade in services. These ongoing negotiations had been required under the last round of multilateral trade negotiations (the Uruguay Round, 19861994). However, some countries, including the United States, wanted to expand the agriculture and services talks to allow trade-offs and thus achieve greater trade liberalization. The first WTO ministerial conference, which was held in Singapore in 1996, established permanent working groups on four issues: transparency in government procurement, trade facilitation(customs issues), trade and investment, and trade and competition. These became known as the Singapore issues. These issues were pushed at successive ministerials by the European Union, Japan and Korea, and opposed by most developing countries. Since no agreement was reached, the developed nations pushed that any new trade negotiations must include these issues. The negotiations were intended to start at the ministerial conference of 1999 in Seattle, USA, and be called the Millennium Round but, due to several different events including protest activityoutside the conference (the so-called "Battle of Seattle"), the negotiations were never started. Due to the failure of the Millennium Round, it was decided that negotiations would not start again until the next ministerial conference in 2001 in Doha, Qatar. Just months before the Doha ministerial, the United States had been attacked by terrorists on 11 September 2001. Some government officials called for greater political cohesion and saw the trade negotiations as a means toward that end. Some officials thought that a new round of multilateral trade negotiations could help a world economy weakened by recession and terrorism-related uncertainty. According to the WTO, the year 2001 showed "...the lowest growth in output in more than two decades, and world trade contracted that year.

The most significant differences are between developed nations led by the European Union (EU), the United States (USA), and Japan and the major developing countries led and represented mainly by Brazil, China, India, South Korea, and South Africa. There is also considerable contention against and between the EU and the USA over their maintenance of agricultural subsidies seen to operate effectively as trade barriers. The Doha Round began with a ministerial-level meeting in Doha, Qatar in 2001. Subsequent ministerial meetings took place in Cancn, Mexico (2003), and Hong Kong (2005). Related negotiations took place in Paris, France (2005), Potsdam, Germany (2007), and Geneva, Switzerland (2004, 2006, 2008); The July 2008 negotiations broke down after failing to reach a compromise on agricultural import rules. After the breakdown, major negotiations were not expected to resume until 2009. Nevertheless, intense negotiations, mostly between the USA, China, and India, were held in the end of 2008 in order to agree on negotiation modalities. The impasse was not resolved and, in April 2011, director-general Pascal Lamy "asked members to think hard about 'the consequences of throwing away ten years of solid multilateral work'."Though no significant progress has eventuated from the negotiations, the WTO seems determined to persist with them. As of May 2012, the future of the Doha Round remains uncertain. A report to the WTO General Council by Lamy in May 2012 advocated "small steps, gradually moving forward the parts of the Doha Round which were mature, and re-thinking those where greater differences remained."

The Doha Problem

Bello (2002) claims Doha represented a new low point for intimidation, threats, bribary and non-transparency. E.g. USA threatened Haiti & Dominican Rep about preferential trade agreements Chimni (2004): Third world countries are under pressure to liberalize, without fully knowing the consequences of doing so

Review of Literature
GATT Uruguay Round Trade Agreement and the Environment: A need for Vigilance David Blackwell (World Federalist of Canada Issues Action Briefing Paper No. 23, May 1995) David Blackwell covered the topics like introduction about GATT & WTO, provisions of the Uruguay Round Agreement, concerns about environment in the Uruguay Round Agreement and finally recommendations about the positive action on the environment.

The GATT Uruguay Round and the World Trade Organisations: Opportunities and Impacts for US Agriculture. (By Larrry D. Sanders, Oklahoma state University of California Berkeley Mechel Paggi Food & Agriculture Organisation, UN Barry Goodwin, North Carolina State University)
In the article they have given the information about what is GATT, the Uruguay Round Agreement issues in the implementation etc. in detail. According to their research, the major accomplishment was in enlarging the scope of the negotiations to include many areas of trade not covered in the previous eight rounds. These include barriers to trade in agriculture, textiles and services, protection of intellectual property rights and international investment.

 Agriculture and GATT: How the compromise was reached. By Joanna ORiordan It talks about the information of GATT and the Uruguay Round Agreement in detail. It also the aim & background implications of GATT and the Uruguay Round Agreement from the US perspective and the EU perspective. It gives information about the comparison between US & EU.

Background to the Uruguay Round

World agriculture in disarray - growing US-EU tension on farm subsidies The growing costs of agricultural protectionism Launch of Uruguay Round 1986 "to achieve greater liberalisation of trade in agriculture and bring all measures affecting import access and export competition under strengthened and more operationally effective GATT rules and disciplines" Significance of the Uruguay Round
the most comprehensive coverage of all negotiating rounds to date included the participation of more than 100 countries

Players in the Uruguay Round

The US : moving away from dependent agriculture paradigm to a competitive agriculture paradigm, and see access to export markets The EU: anxious to avoid escalating budget cost of farm support and wanting a deal as compatible with the CAP as possible Cairns Group: consisting of 14 agricultural exporters from both the developed and developing world keen on liberalisation Other developing countries concerned about the cost of food imports Other high-income countries anxious to avoid liberalisation

Progress of Uruguay Round negotiations

The opening negotiating positions
US proposed the zero option all agricultural subsidies and quantitative restrictions be phased out over ten years EU wanted to negotiate on commodity by commodity basis (e.g. rebalancing) Cairns Group walked away from tentative agreements in other areas because no serious engagement on agriculture

the stalled Montreal Mid-Term Review in December 1988

Geneva Accord April 1989 : US dropped zero option and agreed negotiations should proceed along three pillars Heysel meeting December 1990: breakdown because of EU unwillingness to limit export subsidies

Progress of Uruguay Round negotiations

Dunkel draft Final Act in end-1991
Covered all aspects of the negotiations First text with quantitative proposals in each of the three pillars

[MacSharry CAP reform May 1992] Blair House I agreement November 1992

Lessened extent of export subsidy cuts, protected EU and US compensation payments under production limiting programmes (blue box) and introduced peace clause
Made some concessions to EU to mollify France

Blair House II agreement December 1993 Geneva Agreement, December 1993 Marrakesh Final Act, April 1994
Single undertaking

Following which verification process of country schedules

Tariff reduction
For developed countries, an unweighted average of 36 percent, subject to a minimum reduction of 15 percent in each tariff line over a six year implementation period. For developing countries the commitments are 24 percent and 10 percent respectively, and the implementation period extends to ten years. For least-developed countries there were no reduction commitments. Special Safeguards provisions, that enable a country which has used tariffication to apply additional tariffs to certain specified commodities, where import prices are particularly low, or where there is a sudden surge in imports.

Market access commitments

Countries are required to maintain current levels of access, for each individual product, where the current level is based upon the volume of imports during the base period (1986-88). For commodities subject to tariffication, a minimum access should be established at not less than 3 percent of domestic consumption during the base period. This minimum level is to rise to 5 percent by the year 2000 in the case of developed countries, and by 2004 in the case of developing countries.

Domestic support commitments

Divided domestic support policies into three types: Policies deemed to have a substantial impact on the patterns and flow of trade are classified in what is called the 'amber box and are subject to reduction commitments; policies that are not deemed to have a major effect on production and trade are placed in the 'green box'; policies that fall into neither of these categories, but are, perhaps, somewhere in between, are known as 'blue box' policies.

Disciplining amber box policies

All domestic support deemed to have a distortionary effect on trade is summed and included in a measure called the Aggregate Measure of Support (AMS); AMS includes

De minimis exemptions 5% for product specific and 5% for non-product specific support Progressive reduction in AMS levels by 20% over 6 years.

Market price support where support provided by administrative support prices e.g. intervention (but not if provided by tariff protection alone) Calculated on the basis of world reference prices in 1986-88 Coupled direct payments

The blue box

Direct payments under production-limiting programmes are exempted from AMS reduction if: such payments are based on fixed area and yields; or such payments are made on 85 percent or less of the base level of production; or livestock payments are made on a fixed number of head.

Export subsidy commitments

No new export subsidies can be introduced Developed countries committed to reducing the volume of subsidised exports by 21 percent and the expenditure on subsidies by 36 percent, both over a six-year implementation period (1995-2000). For export subsidies the base period is generally taken to be the period 1986-1990. However, an exception to this was negotiated between the US and the EC, under what was called the "front loading" accord, which was part of Blair House II in December 1993, just before the conclusion of the Round. This allowed that the starting level of export subsidy reduction commitments could be the level of subsidies prevailing in 1991-92, providing that the level of subsidies at this time exceeded those in the base period.

Other aspects of the URAA

Sanitary and phytosanitary provisions addressed in the SPS Agreement Peace clause Special and differential treatment for developing countries Among developing countries, concerns that net food-importing countries would lose out because of terms of trade effects. Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least Developed and Net Food Importing Developing Countries included to meet their concerns. Agreement to reopen negotiations in 2000

Agreements on Sanitary and Phytosanitary measures and on Technical Barriers to Trade

Ensure country specific technical regulations, product standards and safe food AND at the same time ensure that strict health and safety regulations are not used as an excuse for protecting domestic producers In 1997 developed countries imposed restrictions on fish imports from some African countries because they were considered to have inadequate hygiene standards International standards, guidelines and recommendations shall be used

Marrakesh Decision for least developed and netfood-importing developing countries

Recognised that LDCs and Net Food Importing Developing Countries may experience negative effects in terms of food availablity from external sources on reasonable terms and conditions during the reform programme Mechanisms to ensure that UR agreement does not adversly affect availablity of food-aid - Review of food aid level by Committee on Food Aid - Increase proportion of basic foodstuff provided in fully grant form - Technical and financial assistance to improve agricultural productivity and infrastructure Export credits in favour of LDCs and NFIDCs

Achievements of the URAA

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

Achievements of the URAA

Export subsidy commitments binding despite complaints of front-loading Domestic support disciplines limited because of agreement on Blue Box AMS discipline was established at an aggregate level, not on a commodity by commodity basis But despite the criticisms, the URAA established a framework for further disciplines The dispute settlement mechanism has been surprisingly effective in allowing countries to challenge policies of other countries

The concept of special and differential treatment

SDT began with respect to trade in manufactures Defined as preferential access to IC country markets and ability to protect domestic industry Justified by an economic philosophy and system - infant industry industrialisation Subsequently undermined by the Washington consensus

The concept of special and differential treatment

SDT changed in the Uruguay Round
In Tokyo round, developing countries could opt out of negotiated codes UR was negotiated as a single undertaking Implies all GATT/WTO members should adopt the same rules SDT moved towards proportional commitments, implementation flexibilities, longer transition periods, technical assistance

The legal status of SDT in the WTO

The 1979 Enabling Clause
Acknowledges two categories eligible for SDT: developing countries and least developed countries Developing country is a self-declared status LDCs are a UN-defined list revised every 3 years

Special and differential treatment in agriculture

July 2004 Framework Agreement Agriculture is of critical importance to the economic development of developing country Members and they must be able to pursue agricultural policies that are supportive of their development goals, poverty reduction strategies, food security and livelihood concerns. SDT now justified to enable developing countries to address their food security and rural development objectives

Why SDT in agriculture?

Underlying the Development Box is the belief that indiscriminate trade liberalisation adversely affects food security, undermines the rural poor and increases inequality Difficulty is that there is much less agreement about the validity of this paradigm, and in particular, the role of government in agricultural development Global models suggest the biggest gains to developing countries come from their own liberalisation efforts, not those of OECD countries

Developing country demands in the Doha Round

Developing countries felt the URAA represented an unbalanced set of obligations and failed to address marginalisation especially of LDCs in world trade Got commitment to strengthened SDT as condition for launching Doha Round negotiations Conflicting views on how to progress the SDT agenda between developed countries promoting a crosscutting conceptual approach and developing countries tabling specific changes to SDT provisions adopted during UR

Developing country demands in the Doha Round

Within the agricultural negotiations, demands crystallised in the proposals for a Development Box (Food Security Box) Justified as necessary to support food security, rural development and poverty alleviation objectives Designed to increase the policy space available to developing countries

Some Development Box proposals

Market access
Exempt (food security) products from tariff reductions or from tariff disciplines Allow (food security) products to be defined on a positive or negative list approach Allow special safeguards for (food security) products Exempt developing countries from obligation to provide minimum market access

More Development Box proposals

Domestic support
Expand Article 6.2 exemptions for Green Box policies Increase de minimis product- and non-productspecific support thresholds Protect domestic subsidies from challenge

Export measures
Allow greater flexibility to developing countries to provide export subsidies in certain circumstances

Market access tariffs

Four distinct justifications
The idea of development tariffs, to provide incentives to encourage agric growth The idea of food security tariffs, to maintain high food self-sufficiency as a food security measure The idea of stabilisation tariffs, to allow applied tariffs to vary to offset world market price volatility The idea of compensatory tariffs, as a form of countervailing measure

Market access - tariffs

Allow more gradual tariff reduction commitments for food security products but do not exempt from reduction commitments altogether.. except for tariffs already below a minimum threshold as long as world markets remain distorted Leave renegotiation of existing low bound tariffs to existing GATT procedures

Market access - safeguards

If tariff disciplines are retained, there is a stronger case for flexibility on safeguards Justification is:
The vulnerability of low-income food-insecure households The absence of alternative risk management and safety net instruments Unworkability of other WTO options

Market access - safeguards

Make available a special safeguard clause to developing countries for food security products
Avoid requirement for proof of injury Be time limited No compensation should be required Permanent mechanism

Domestic subsidy commitments

Note interdependence between exempting Amber Box policies under Art. 6.2 and raising the de minimis threshold for Amber Box policies Amber Box
Retain and broaden Article 6.2 exemptions where justified Maintain but do not increase the de minimis thresholds though permit crediting of negative non-product specific support against positive product-specific support

The role of cotton

C-4 Sectoral Initiative in favour of cotton
Eliminate all trade-distorting cotton subsidies Compensation for economic losses while subsidies were being phased out

Cotton a specific issue or to be handled within the agricultural negotiations?

Framework Agreement cotton will be addressed ambitiously, expeditiously, and specifically, within the agriculture negotiations.

SDT progress in the Doha Round

The Framework Agreement and HK Declaration has the potential to represent a significant step towards operationally effective and meaningful provisions for SDT Market access issues treatment of SPs and SSM still outstandinig Important that developing countries do not lose sight of their principal objective in these negotiations Lower IC protection still the most important potential contributor to development.

Conclusion
Few agricultural tariffs were bound and agriculture remained outside the general tariff-cutting process in GATT negotiations Import quotas prohibited for other sectors were permitted in agricultural trade provided domestic supply controls were in place. Export subsidies prohibited for other sectors were permitted in agricultural trade provided such subsidies are not applied "in a manner which results in contracting party having more than an equitable share of world trade in that product". Imports of both agricultural and non-agricultural products were limited by so-called "grey area" measures

 Agricultural trade particularly affected by non-tariff barriers implemented to protect food safety There were effectively no restrictions on agricultural policy and world agricultural markets by the mid1980s were in a state of disarray

Cuts in agric tariffs and domestic support bindings need to be large to get beyond binding overhang Even large cuts in agric tariffs do little if sensitive and special products are subjected to lesser cuts
Unless a tariff cap of, say, 100% is enforced or theres a large expansion in TRQs of sensitive products

 DCs would have to make few cuts because of their huge binding overhang
So can afford to tone down their demands for lesser cuts (and special products) and exchange it for greater access to OECD agric markets including sensitive products

Adding non-agric market access to Doha package could double the welfare gains to DCs even with their lesser cuts, and it helps balance the NorthSouth exchange of concessions

Thank you