the doha round, the future of the wto, and the role of india and china: implications for...

THE DOHA ROUND, THE FUTURE OF THE DOHA ROUND, THE FUTURE OF THE WTO, AND THE ROLE OF INDIA AND THE WTO, AND THE ROLE OF INDIA AND

CHINA: IMPLICATIONS FOR CHINA: IMPLICATIONS FOR AGRICULTURAL POLICYAGRICULTURAL POLICY

Razeen SallyRazeen SallyWorkshop on Liberalising Domestic Agricultural Workshop on Liberalising Domestic Agricultural Markets in India, Claridges Hotel, New Delhi, 10 Markets in India, Claridges Hotel, New Delhi, 10

February 2006February 2006

WTO DDA, INDIA, CHINA, WTO DDA, INDIA, CHINA, AGRICULTUREAGRICULTURE

1.1. The Doha Round and the future of the WTOThe Doha Round and the future of the WTO The Hong Kong MC: another failed eventThe Hong Kong MC: another failed event

A runt of a package: all major market-access decisions A runt of a package: all major market-access decisions postponed; leaving LDC market access, aid-for-trade, postponed; leaving LDC market access, aid-for-trade, TRIPS-and-public healthTRIPS-and-public health

What needs to be done: simultaneous movement by DC What needs to be done: simultaneous movement by DC and developing-country majors on Ag., NAMA and and developing-country majors on Ag., NAMA and GATS.; rules; G90GATS.; rules; G90


DDA prospects: three scenariosDDA prospects: three scenarios Scenario One: collapse Scenario One: collapse Scenario Two: a very modest package … but will Scenario Two: a very modest package … but will

it get through US Congress?it get through US Congress? Scenario Three: a substantial package … unlikely Scenario Three: a substantial package … unlikely

without a global crisiswithout a global crisis UN-isation: WTO drifting dangerously away from UN-isation: WTO drifting dangerously away from

non-discrimination and market access towards an non-discrimination and market access towards an aid agencyaid agency

Is a modest result really better than collapse??Is a modest result really better than collapse??


WTO prospects post-DDAWTO prospects post-DDA

Structural shifts from GATT to WTO: overloaded agenda; UN-isation; Structural shifts from GATT to WTO: overloaded agenda; UN-isation; lack of political glue after Cold Warlack of political glue after Cold War

Need to refocus on market access and restore effective decision Need to refocus on market access and restore effective decision makingmaking

Outer and inner cores … the vacuum of leadership in G5Outer and inner cores … the vacuum of leadership in G5 How to deal with the restHow to deal with the rest NGOs; rise of anti-liberal ideas; implications for Single UndertakingNGOs; rise of anti-liberal ideas; implications for Single Undertaking More modest goals in future; rules matter more than further significant More modest goals in future; rules matter more than further significant

multilateral liberalisationmultilateral liberalisation


The wider trading system:The wider trading system:

FTAs: illusion, distraction, complications, politicisation … FTAs: illusion, distraction, complications, politicisation … now in Asia-Pacificnow in Asia-Pacific

The silver lining: unilateral liberalisation, led by ChinaThe silver lining: unilateral liberalisation, led by China

Trade negotiations have diminishing returns; future Trade negotiations have diminishing returns; future liberalisation will come largely outside negotiationsliberalisation will come largely outside negotiations

But it leaves gaps, esp. in rules and agricultureBut it leaves gaps, esp. in rules and agriculture


2. Agriculture in the DDA2. Agriculture in the DDA HK MC:HK MC:

Export subsidies abolished by 2013 (parallel moves on export credits, Export subsidies abolished by 2013 (parallel moves on export credits, food aid and STEs)food aid and STEs)

Domestic support: three bands, but no figures or disciplines on boxesDomestic support: three bands, but no figures or disciplines on boxes

Market access: four bands but no figures; SSM; no specifics on Market access: four bands but no figures; SSM; no specifics on sensitive and special productssensitive and special products

Cotton: abolition of export subsidies and full market access for LDCs, Cotton: abolition of export subsidies and full market access for LDCs, but no agreement on domestic supportbut no agreement on domestic support

Related issues: GIs, trade-and-environment, implementation, S&DRelated issues: GIs, trade-and-environment, implementation, S&D


What needs to be done?What needs to be done?

Export subsidiesExport subsidies Domestic support: size of cuts in bands; Domestic support: size of cuts in bands; de minimis de minimis

support; blue box/green box disciplines; S&Dsupport; blue box/green box disciplines; S&D Market access: size of cuts in bands; tariff caps; sensitive Market access: size of cuts in bands; tariff caps; sensitive

and special products; SSM; S&Dand special products; SSM; S&D


World Bank estimates:World Bank estimates:

Ag. liberalisation 2/3rds of overall gain from goods liberalisationAg. liberalisation 2/3rds of overall gain from goods liberalisation

93% of ag. liberalisation gain from market access93% of ag. liberalisation gain from market access

>50% of developing countries’ gain from own liberalisation>50% of developing countries’ gain from own liberalisation

Significant gains require huge cuts in bound AMS and bound tariffs; Significant gains require huge cuts in bound AMS and bound tariffs; must include developing countries; narrow limits on sensitive and must include developing countries; narrow limits on sensitive and special productsspecial products

Large developing countries gain; some LDCs lose slightly (can be Large developing countries gain; some LDCs lose slightly (can be compensated, e.g. for preference erosion) compensated, e.g. for preference erosion)

Table 1. Effects on developing country economic welfare of full trade liberalization by groups of countries and products, 2015 (%)

From full liberalization of: Agriculture

and foodTextiles and

clothingOther

manufacturersAll goods

Percentage due to:Developed country policiesDeveloping countries’ policiesAll countries’ policies

303363

171027

37

10

5050

100

Note: Developed countries include the transition economies that joined the European Union in April 2004. The definition of developing countries used here is that adopted by the WTO. Thus it includes the four East Asian tigers: Hong King (China), Korea, Rep., Singapore and Taiwan (China).Source: Anderson and Martin (2005, Table 4)

Table 2. Distribution of global welfare effects of removing all agricultural tariffs and subsidies, 2001 (%)

Beneficiary region

Agricultural liberalization component

High-income

countriesª

Developing countries

World

Import market accessExport SubsidiesDomestic supportAll measures

6654

75

27-31

25

9325

100

ª High income countries include the newly industrialized East Asian economies of Hong Kong (China), Korea, Rep., Singapore, and Taiwan (China) as well as the transition economies that joined the European Union in April 2004.Source: Anderson and Martin (2005, Table 5); Anderson, Martin and Valanzuela (2005).

Table 3. Agricultural weighted average import tariffs, by region, 2001 (%, ad valorem equivalent, weights based on imports)

Bound tariff Applied tariffª

Developed countriesDeveloping countries of which: LDCsWorld

27487837

14211317

a. Includes preferences and in-quota Trade Quota (TRQ) rates where relevant, as well as the ad valorem equivalent of specific tariffs.b. Developed countries include the transition economies that joined the European Union in May 2004. The definition of developing countries used here is that adopted by the WTO. Thus is includes the four East Asian tigers: Hong Kong (China), Korea, Rep., Singapore, and Taiwan (China).

Source: Anderson and Martin (2005, Table 2).


3. China and India: trade-policy comparisons3. China and India: trade-policy comparisons

Trade-policy differences reflect differences in market-Trade-policy differences reflect differences in market-based economic reforms, global integration and economic based economic reforms, global integration and economic performance; China significantly ahead on most countsperformance; China significantly ahead on most counts

China: massive external liberalisation from early ’90s, i.e. China: massive external liberalisation from early ’90s, i.e. before before WTO accession; India: smaller but still significant WTO accession; India: smaller but still significant external liberalisationexternal liberalisation


Trade-policy comparisons (cont.)Trade-policy comparisons (cont.)

China: extremely strong WTO commitments (tariffs, China: extremely strong WTO commitments (tariffs, NTBs, goods, services, transparency, domestic regulation, NTBs, goods, services, transparency, domestic regulation, administrative/judicial review procedures); India: weak administrative/judicial review procedures); India: weak WTO commitmentsWTO commitments

China in DDA: low-key, pragmatic, flexible, mix of China in DDA: low-key, pragmatic, flexible, mix of offensive/defensive positions, good alignment of domestic offensive/defensive positions, good alignment of domestic and WTO policies; India in DDA: better than before; but and WTO policies; India in DDA: better than before; but still too defensive and adversarial, too much rhetorical still too defensive and adversarial, too much rhetorical posturing, disconnect with policies at homeposturing, disconnect with policies at home


Trade-policy comparisons (cont.)Trade-policy comparisons (cont.)

China’s FTAs: more politics than economics, but still China’s FTAs: more politics than economics, but still better than other Asian powersbetter than other Asian powers

India’s FTAs: unserious, trade-liteIndia’s FTAs: unserious, trade-lite

Table 4. Changes in average statutory tariff rates in ChinaTable 4. Changes in average statutory tariff rates in China

Simple Weighted Simple Weighted Simple Weighted1992 42.9 40.6 36.2 22.3 44.9 46.5

1993 39.9 38.4 33.3 20.9 41.8 44

1994 36.3 35.5 32.1 19.6 37.6 40.6

1996 23.6 22.6 25.4 20 23.1 23.2

1997 17.6 18.2 17.9 20 17.5 17.8

1998 17.5 18.7 17.9 20 17.4 18.5

1999 17.2 14.2 21.8 21.8 16.8 13.4

2000 17 14.1 22.4 19.5 16.6 13.3

2001 16.6 12 21.6 17.7 16.2 13

Post-Accession 9.8 6.8 13.2 3.6 9.5 6.9

ManufacturesPrimary productsAll products

Source: Elene Ianchovichina and William Martin, “Economic impacts of China’s accession to the World Trade Organisation,” World Bank Policy Research Working Paper 3053, May 2003.

Table 5. Coverage of specific commitments (%)Table 5. Coverage of specific commitments (%)

Market access

National treatment

No restrictions as a share of maximum possible 30.8 9.4 20.2 36.5

Memo item

293 100 239 356

Unweighted average count (sector-modes listed as a share of maximum possible)Average coverage (sector-modes listed as a share of maximum possible, weighted by openness or binding factors)Coverage/count (average coverage as a share of the average count)No restrictions as a share of total offer (unweighted count)

No restrictions as a share of maximum possible

Unweighted average count (sector-modes listed as a share of maximum possible)Average coverage (sector-modes listed as a share of maximum possible, weighted by openness or binding factors)Coverage/count (average coverage as a share of average count)No restrictions as a share of total offer (unweighted count)

No restrictions on market access and national treatment as a share of maximum possibleNumber of sectors committed

High-income countries

35.9

75.9

57.3

27.1

47.3

37.2

Low-and-middle-income countries

Large developing countries China

47.3 16.2

78.6

65.1

24.8

10.3

63.6

45.5

7.3

16.2

11.2

58

6.9

38.6

22.9

59.3

38.7

14.9

38.8

25.5

23.1

57.4

45

69.1

57.4

38.1

66.4

40.2

78.4

63.5

29.8

66.1

52.3

14.3

Source: Mattoo, “China’s accession to the WTO”, p. 303. The breadth and depth of commitments by other countries are understated because their more recent commitments in telecommunications and financial services have not been taken fully into account.

Table 6: Tariff ProfilesTable 6: Tariff ProfilesFinal MFN bound tariffsFinal MFN bound tariffs

All Agr Non-agr All Agr Non-agr All Agr Non-agr All Agr Non-agr All Agr Non-agr All Agr Non-agrBangladesh 15.8 100 3 163.8 188.5 35.7 0.1 0 0.8 0 0 0 200 200 200 0 0 3.1Brazil 100 100 100 31.4 35.5 30.8 0.6 2.2 0.3 0 0 0 55 55 35 0 0 0China 100 100 100 10 15.8 9.1 5.8 2.8 6.2 0 0 0 65 65 50 1.3 3.1 1.3Egypt 99.1 99.7 99 36.6 95.3 27.7 1.9 0 2.2 0.2 1.3 0 3000 3000 160 0.4 2.2 0.2EC 100 100 100 4.1 3.9 24.3 26.7 23.9 6 40.8 0.7 75 75 26 3.1 5.2 7.1India 73.8 100 69.8 49.8 114.5 34.3 2.9 0 3.5 7.2 0.3 8.8 300 300 150 6.5 0 0.2Indonesia 96.6 100 96.1 37.1 47 35.6 2 0 2.3 0.1 0.4 0 210 210 150 0.5 2.8 0Japan 99.6 100 99.5 2.9 6.9 2.3 53.6 28.7 57.4 6.2 22.7 3.6 62 62 30 8.5 8.4 10.4Malaysia 83.7 99.9 81.2 14.5 12.2 14.9 6.2 12.1 5.1 4.5 27.4 0.2 68 168 40 0.6 4.1 0Nigeria 19.3 100 6.9 118.4 150 48.8 0 0 0 0 0 0 150 150 150 0 0 0.3Pakistan 44.3 92.6 37 52.4 97.1 35.3 0 0 0 0 0 0 200 200 100 0 0 0Philippines 66.8 99.4 61.8 25.6 34.7 23.4 3 0 3.8 0 0 0 80 80 50 0.1 0 0South Africa 96.5 99.5 96 19.1 39.8 15.8 15.1 22.4 13.9 0 0 0 597 597 60 3.1 1.5 2.7Sri Lanka 37.8 100 28.3 29.8 49.7 19.3 0.5 0 0.7 1.7 2.7 1.1 100 60 100 0.1 0 1.6Thailand 74.7 100 70.9 25.7 24.2 3 0.7 3.5 25.4 45.6 21.1 226 226 80 1 2.1 0.5United States 100 100 100 3.6 3.2 37.2 28.7 38.5 10.8 49.6 4.8 350 350 48 7.1 1.9 8.2

Import marketsBinding coverage

(%)Simple average

Duty-free HS subheadings

Non ad valorem duties

Maximum ad valorem duty

National peaks (%)

Source: WTO - CTS

Table 7: Tariff ProfilesTable 7: Tariff ProfilesMFN applied tariffsMFN applied tariffs

All Agr Non-agr All Agr Non-agr All Agr Non-agr All Agr Non-agr All Agr Non-agrBangladesh 2004 18.6 20.6 18.3 6.6 10.3 6 0 0 0 30 30 30 0 0 0Brazil 2004 12.4 10.3 12.7 2.9 2.6 3 0 0 0 55 55 35 0 0.4 0China 2004 10.4 16.2 9.5 4.8 2.6 5.1 0.5 0.4 0.5 65 65 50 1.5 3 1.5Egypt 2002 19.9 22.5 19.5 0.3 0 0.3 6.1 0.9 6.9 600 600 135 0.5 2.5 0.2EC 2005 4.2 5.9 4 24.3 25.9 24 5.9 39.9 0.7 75 75 26 3.1 4.1 7.1India 2004 29.1 37.4 27.9 1 2.5 0.7 0 0.3 0 182 182 160 1.4 1.3 0.4Indonesia 2002 6.9 8.2 6.7 19.3 10.4 20.6 0.2 0.7 0.1 170 170 170 0.9 2.9 0.6Japan 2004 3.1 7.3 2.5 50.4 29.2 53.7 6.2 22.7 3.7 50 50 30 8.3 9 9Malaysia 2003 8.4 3.3 9.1 51.3 66.2 49 0.9 4.9 0.3 300 114 300 7.1 9 7.6Nigeria 2002 29.1 50.4 25.8 0 0 0 0.4 0 0.5 150 150 100 5.2 0 1.2Pakistan 2004 16.5 18.7 16.2 0.7 4.9 0 0 0.3 0 200 200 200 0.9 2.3 0.6Philippines 2004 6.3 9.5 5.8 2.1 0.1 2.4 0 0 0 65 65 30 3.1 9.1 1.5South Africa 2002 5.8 9.1 5.3 50.7 40.4 52.3 14.4 13.3 14.6 55 55 43 11.2 5.8 10.4Sri Lanka 2004 10.1 22.5 8.3 11.6 4.1 12.8 0.7 5.2 0 250 250 28 0.2 1.2 10.4Thailand 2003 15.4 29.6 13.3 3.4 2.9 3.5 1.6 7.5 0.7 80 65 80 2.5 0 0.8United States 204 3.7 3.3 37.3 26.2 39 10.7 49.9 4.8 350 350 48 6.7 1.9 8.4

Non ad valorem duties

Maximum ad valorem duty

National peaks (%)Import markets

Simple averageYear

Duty-free HS subheadings

Source: WTO-IDB and UN Tariff and Market Access Database

Cross country comparison of average tariff ratesCross country comparison of average tariff rates

05

10

15

20

25

30

35

India Bangl. Thailand China Mexico Brazil Argent. Venez. Colomb. Malays. Korea Indonesia


4. China and India: agricultural trade-policy comparisons4. China and India: agricultural trade-policy comparisons

China: Very strong external liberalisation after internal market reform China: Very strong external liberalisation after internal market reform phase; very strong WTO commitments on tariffs, NTBs and subsidiesphase; very strong WTO commitments on tariffs, NTBs and subsidies

Result: economic structure shifting in line with with comparative Result: economic structure shifting in line with with comparative advantage (unlike rest of e. Asia); release of resources to non-ag. advantage (unlike rest of e. Asia); release of resources to non-ag. sectors; emerging powerhouse in labour-intensive exportssectors; emerging powerhouse in labour-intensive exports

Mixed positions in DDA agricultural negotiations, but in context of Mixed positions in DDA agricultural negotiations, but in context of all-round flexibility; keeping head down in G20all-round flexibility; keeping head down in G20

Now need to prioritise internal-market/domestic-trade reforms (e.g. Now need to prioritise internal-market/domestic-trade reforms (e.g. land tenure, price liberalisation, labour mobility, infrastructure)land tenure, price liberalisation, labour mobility, infrastructure)


India: India: No significant external liberalisation; No significant external liberalisation; mismatch with manufacturing; very weak WTO mismatch with manufacturing; very weak WTO commitmentscommitments

Stagnant economic structure; drag on non-ag. Stagnant economic structure; drag on non-ag. sectors; not exploiting comparative advantagesectors; not exploiting comparative advantage

Defensive in DDA ag. negotiations; the major Defensive in DDA ag. negotiations; the major obstacle to more credible G20 positionobstacle to more credible G20 position

Need for external liberalisation Need for external liberalisation and and internal-internal-market/domestic-trade reforms: much worse market/domestic-trade reforms: much worse starting position than Chinastarting position than China

Table 8: Bound and Applied Agricultural Tariff Rates, by Table 8: Bound and Applied Agricultural Tariff Rates, by selected Countries and Regions, 2001 (%, trade-weighted selected Countries and Regions, 2001 (%, trade-weighted

average)average)

Australia 5.9 3.6 3 1.9 1.6Bangladesh 156.7 14.4 14.4 8.8 3.4Canada 19.6 19.3 9.7 23.6 23.7China 16.2 51.3 38.9 11 18.7Japan 62.1 52.1 34.6 81.1 90.1Korea, Rep. Of 103.5 119.8 93.9 43.3 57.5Mexico 49.4 31.9 10.7 17.7 25Pakistan 107.7 30 30.4 3.3 5.2India 153.4 55.4 55.1 23.3 12.9Turkey 50.1 16.1 14 12.5 7.1United States 6.2 6 2.7 14 14Mercosur 34 12.9 12.9 1.8 1.2EFTA 70.8 48.2 28.6 21.7 23.6ASEAN 59.7 12.1 11.2 25.2 10.1Sub-Saharan LDC's 62.8 14.8 13.1 1.8 1.3Other SSA 104.4 26.5 25.6 1 6.7Maghreb 38 18.9 17.6 10.9 5.2SACU 51.5 13.8 13 11.7 4.7EU 20.5 17.2 11.8 40.6 36.4Developed 27 22.1 14.2 37.3 37.7Developing 48.1 26.7 20.6 13.9 15.1LDCs 77.6 14.3 13.4 3.7 1.8World 37.4 24 17 26.2 26.9

CV Bound

CV MFN applied

Country/regionBound tariff

MFN tariffApplied

tariff

Source: MAcMap-HS6 Database, CEPII, Paris (see Bouet and others, 2004).Note: CV is the weighted coefficient of variation for the power of the tariff (1+t). The bound average duty reported for China takes into account commitments not I effect in 2001, hence its lower levels in comparison with the MFN rate. Figures for regions are computed as import-weighted averages across countries.

Table 9: Key Features of Applied Agricultural Tariffs, by Table 9: Key Features of Applied Agricultural Tariffs, by selected Countries and Regions, 2001 (%, trade-weighted selected Countries and Regions, 2001 (%, trade-weighted

average)average)

Australia 3 2.1 0.9 1 5.6Bangladesh 14.4 14.4 0 0 0Canada 9.7 8.3 1.3 30.7 21China 38.9 38.9 0 5.7 22Japan 35.5 9.9 25.6 103.4 8.8Korea, Rep. Of 93.9 93.9 0 226.3 38.5Mexico 10.7 10.6 0.1 33.8 23.6Pakistan 30.4 9.7 20.7 0 0India 55.1 54.3 0.9 0 0Turkey 14 13.9 0.1 0 0United States 2.7 0.9 1.7 11.2 17.1Mercosur 12.9 12.9 0 6.9 3.3EFTA 28.6 2 26.6 58.2 33.6ASEAN 11.2 7.5 3.7 32 8.4Sub-Saharan LDC's 13.1 13.1 0 0 0Other SSA 25.6 25.5 0 0 0Maghreb 17.6 16.2 1.5 39.4 14.3SACU 13 4.4 8.6 16.3 55.9EU 11.8 3.1 8.8 35.5 21.5Developed 14.3 4.3 10 36.9 17.3Developing 20.9 18.5 2.4 63.7 11.6LDCs 13.4 13 0.3 0 0World 17.2 10.8 6.4 46.5 14.4

Tariff for TRQs

TRQ Share

Country/regionOverall average

Ad Valorem tariffs

Specific tariffs

Source: MAcMap HS6 Database, Centre d’Etudes Prospectives et d’Informations Internationalses (CEPIIs), Paris. (see Boulet and others 2004).Note: the Maghreb region consists of Algeria, Libya, Mauritania, Morocco, and Tunisia. Figures for regions are computed as import-weighted averages across countries.

Table 10: Pre- and post- accession import protection (tariff or Table 10: Pre- and post- accession import protection (tariff or tariff equivalent)tariff equivalent)

China

1995 2001

Post-accession

Rice -5.0 -3.3 -3.3 Wheat 25.0 12.0 12.0 Feedgrains 20.0 32.0 32.0 Vegetables & fruits -10.0 -4.0 -4.0 Oilseeds 30.0 20.0 3.0 Sugar 44.0 40.0 20.0 Plantfibers 20.0 17.0 20.0 Livestock & meat -20.0 -15.0 -15.0 Dairy 30.0 30.0 11.0 Processed food 20.1 26.2 9.9 Beverages & tobacco 137.2 43.2 15.6 Extract 3.4 1.0 0.6 Textiles 56.0 21.6 8.9 Apparel 76.1 23.7 14.9 Light manufactures 32.3 12.3 8.4 Petrochemicals 20.2 12.8 7.1 Metals 17.4 8.9 5.7 Automobiles 123.1 28.9 13.8 Electronics 24.4 10.3 2.3 Other manufactures 22.0 12.9 6.6 Trade & transport 1.9 1.9 0.9 Construction 13.7 13.7 6.8 Communications 9.2 9.2 4.6 Commercial services 29.4 29.4 14.7 Other services 24.5 24.5 12.7 Total – agriculture 4.8 7.6 3.6 Total - manufactures 25.3 13.5 6.9 Total merchandise trade* 24.3 13.3 6.8 *The estimates in the table are based on trade weights for the respective years. If trade weights for 2000 at the six-digit level of the harmonized system are used the total weighted average tariffs in 2001 and 2007 are 12.2% and 6.3%, respectively. Source: Elena Ianchovichina and William Martin, “Economic impacts of China’s accession to the World Trade Organisation,” World Bank Policy Research Working Paper 3053, May 2003.

Table 11: Percentage PSEs for China and selected countries Table 11: Percentage PSEs for China and selected countries As per cent of gross farm receiptsAs per cent of gross farm receipts

1% 4% 4% 6% 6%

19% 20% 20% 22%31% 34%

58%

0%

10%

20%

30%

40%

50%

60%

70%

Note:EU15Source: OECD PSE/CSE databases 2005

Table 12: Standard rates of duty on import of selected Table 12: Standard rates of duty on import of selected agricultural commodities in India during 1991-92 to 2002 -03agricultural commodities in India during 1991-92 to 2002 -03

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