Market Access

The negotiation of improved market access in agriculture is crucial to the success of the Doha Round. The depth of tariff cuts will be the main indication of the level of ambition of the agricultural talks and hence the Round as a whole. Agricultural tariffs remain five times higher than tariffs in industrial goods, and account for the bulk of the distortions in agricultural trade. Recent analysis indicates that 92 percent of the global gains from trade liberalization in agriculture result from removing market access barriers. The July Framework reaffirmed the objective of substantial improvements in market access. This is to be accomplished by a single approach, a tiered (or banded) formula for tariff cuts, with the higher tariff rates being subject to the highest cuts. Negotiations have centered on how many bands to select, where to place the thresholds, and how progressive to make the band-specific reductions. The issue of whether to impose a tariff cap was left undecided in the Framework Agreement. Tariff caps have the advantage of reducing tariffs that are so high that they are little different from an import ban. If the cap is set at a low enough level, real trade improvements may follow. The Framework Agreement specifies that each Member may identify in the schedule a number of products as "Sensitive Products." However, analysis has shown that even exempting as little as two percent of tariff lines from formula based cuts would substantially reduce the expected gains from market access improvements. This points up the need for significant increases in TRQs for Sensitive Products to achieve significant improvements in market access. All tariff lines subject to TRQs, whether or not they are classified as Sensitive Products, should be subject to quota volume expansion. Improving the administration of TRQs and reducing in-quota tariffs are both important objectives for the Doha Round. There is considerable scope to improve the efficiency and transparency of quota regimes. The continued availability of the Special Safeguard for Agriculture by WTO members "remains under negotiation." But abuse of such a safeguard in order to protect domestic producers thwarts the objective of improved market access. Some limitations will need to be introduced if the safeguard is to be continued under the new agreement. The Framework Agreement emphasizes that Special and Differential Treatment is to be an integral part of the market access outcome. This can be ensured by several provisions. Developing countries can specify a number of products as Special Products, based on criteria of food security, livelihood security and rural development needs. The difficulty is in devising concrete criteria for selecting these products. The Framework Agreement also endorses the creation of a Special Safeguard Mechanism for developing countries. Tariff cuts in the Doha Round can erode the value of preferences and can have important consequences for some countries. Preference-granting countries could offset the declining value of those preferences either through financial transfers or additional market access for all products from the current preferred exporters. Least Developed Countries (LDCs) should not be required to undertake any reduction commitments, though they might wish to do so for their own economic advantage. Developed countries should provide duty- and quota-free access to LDCs to encourage full integration into the trade system.

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Trade Policy Issues Paper 2

 Record created 2017-04-01, last modified 2017-05-12

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