US escalating efforts for market access outcomes in agriculture
Published in SUNS #9006 dated 28 October 2019

Geneva, 25 Oct (D. Ravi Kanth) -- The United States has escalated its efforts at the World Trade Organization to force members to focus on Washington's core priorities in market access for agricultural products while spiking the other two linked issues of domestic support and export subsidies/credits in the Doha farm trade negotiations.

Also part of the Doha farm trade negotiations, and that also has been spiked by the US, is the mandate for a permanent solution for public stockholding programs for food security in developing countries, trade envoys told the SUNS.

Rulings by the Appellate Body in trade disputes against the United States on cotton, the European Union on sugar and Canada on dairy products have made clear that the domestic support programs (including some claimed to be under the "green box") are in fact WTO-illegal subsidies that result in export subsidies and denial of market access.

On the market access front, the US circulated a paper on "Tariff Implementation Issue - Tariff Peaks" for consideration by members at the Doha agriculture negotiating body.

This is the third paper presented by the US since June 2018, underscoring its demand for a deeper assessment of the challenges confronting market access for agricultural products.

In June 2018, the US had presented its first paper (Job/AG/141) on issues concerning the gap between bound versus applied tariffs for farm products in major developing and developed countries.

It tried to show that the gap between the bound and applied tariffs - i. e. the "water" between bound and applied tariffs, as it is referred to in the trade negotiations jargon, is much higher in developing countries than in developed countries.

In the second paper presented early this year, the US chose to focus on "complex tariffs" that include non-ad valorem tariffs that are largely levied by farm defensive developed countries such as the European Union, Switzerland, Norway, and Iceland among others.

The third paper presented by the US on 24 October highlighted issues concerning "tariff peaks" in major developed and developing countries.

The US has also announced that its fourth paper will deal with tariff rate quotas (TRQs) while the fifth paper will throw light on agricultural safeguards (SSGs).

The last paper will highlight issues concerning the treatment of agricultural products in "regional/preferential trade agreements."

On the latest paper on tariff peaks issued on Thursday, the US argued that it "aims to provide a deeper understanding of the tariff treatment, primarily focusing on tariff peaks faced by Members using Members' submitted tariff schedules, WTO tariff profiles, and World Integrated Trade Solutions (WITS) data."

"This analysis considers the distribution of tariff peaks by Member, product group, and development status with particular focus on the top 20 largest agricultural exporters and the top 20 largest agricultural importers in 2017," the US said.

Although members "have generally provided greater transparency on agricultural tariffs than on other agriculture-related issues, a number of problems related to transparency of agricultural tariffs remain," the US said.

The issues include:

* Applied tariff schedules submitted to the WTO that are out of date;

* Several Members have never published any applied tariff schedule to the WTO;

* Absence of tariff concordance information for Members' tariff schedules;

* Lack of ad valorem equivalent (AVE) data for non-ad valorem tariffs, including complex tariffs;

* Tariffs applied and notified at different (HS) line levels for each Member;

* Use of arbitrary letters or symbols to denote a tariff;

* Published tariff schedules containing rates different than corresponding schedules available on Members' official publication website(s).

Notwithstanding the multilateral and unilateral reforms since the Uruguay Round, the US argued that "WTO Members have continued to provide high levels of protection for certain, often sensitive, tariff lines at levels well in excess of the Members' average bound and applied tariff rates."

"These tariff peaks could negatively affect international trade in agriculture, including exports from developing countries, inhibiting the welfare gains that come from trade," the US said.

According to the US, "In 2017, the global value of imports of agricultural products totalled more than USD 869.5 billion."

"The largest imported product group was "fruits, vegetables, and plants", followed by "oilseeds, fats, and oils", and "cereals and preparations"," the US said.

"Together these three product groups accounted for approximately 56% (or USD 489.3 billion) of global imports by value in 2017."

"Sugar and confectionary", "dairy products", and "cotton" were the least traded product groups in 2017, totalling approximately 7% (or USD 67.1 billion) of global imports, the US said.

Washington said it remains concerned about the continued prevalence of tariff peaks in all major agricultural product groups in both developed and developing countries, and the need for a deeper understanding of the tariff treatment by members.

The US noted that the "tariff range is larger for developed members and large trading economies than the most developing members and small trading economies."

As regards the "tariff peaks", the US said that "developing members [and] large agricultural trading economies have [a] higher frequency of tariff peaks than developed members and small trading economies."

The US claimed that despite the increasing agricultural trade, WTO members' "bound tariffs in agriculture can exceed more than 1,000% and some Members apply tariffs at a very high level across an entire sensitive sector."

In 2017, amongst all WTO Members, 18 Members have bound tariffs that exceed 500%, the US said.

"Of these 18 Members, eight Members also apply tariffs in excess of 500% (Malaysia; Egypt; Switzerland; Norway; Korea, Republic of; Saudi Arabia; Japan; and Fiji)," the US noted.

"On average across all Members, the average maximum bound tariff is four times larger than the average bound tariff (i. e., 235% versus 55%) and the average maximum applied rate is almost 11 times higher than the average applied rate tariff (i. e., 157% versus 14.9%)," the US said.

"Developed Members, having an applied rate of 292% and an average maximum bound rate of 317%, have significantly higher maximum rates than developing countries that have an average maximum applied rate of 135% and an average maximum bound rate of 222%."

In all these three papers, the US has only indicated the challenges while remaining silent on what needs to be done, said a trade envoy, who asked not to be quoted.

The US reckons that members should not be focusing on trade-distorting domestic subsidies in which it is one of the leading providers, the envoy said, but Washington wants to gain something in market access.

"They simply outline the challenges by highlighting issues such as the gap between bound and applied tariffs or the impediments to market access arising from levying complex tariffs and so on," the envoy suggested.

In short, the US agenda is to keep members engaged in market access challenges without giving any direction, said another trade envoy, who asked not to be quoted.

Effectively, the US doesn't want the market access discussion to go rapidly as demanded by the South American Cairns group members such as Uruguay and Paraguay among others, the envoy suggested.

They will keep releasing the papers with a time gap of three or four months to keep members engaged only on the issues raised in those papers, the envoy said.

At the WTO's eleventh ministerial conference in Buenos Aires, in December 2017, the US had pulled the plug on the permanent solution for public stockholding programs for food security as well as the Doha agriculture mandates, particularly the trade-distorting farm subsidies.

In crux, the WTO is now increasingly sought to be turned into an organization only to address the US concerns, on whether it is making the Appellate Body dysfunctional or demanding agricultural market access, and special and differential treatment based on differentiation/graduation among developing countries or introducing enhanced punitive "naming and shaming" provisions for countries failing to comply with transparency and notification provisions, among others, trade envoys said. +