The Treatment of Agriculture in Regional Trade Agreements
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1 Inter-American Development Bank Integration and Trade Sector The Treatment of Agriculture in Regional Trade Agreements Antoni Estevadeordal December, 2009
2 STRUCTURE 1. Introduction: key findings 2. How Agriculture is treated in the RTAs (tariffs, SPS, TBT, subsidies, safeguards) 3. Recommendations 4. Implications for the Multilateral System
3 KEY FINDINGS Market Access: Tariff liberalization is the greatest measureable commitment (although sugar and diary face lower liberalization) SPS/TBT provisions lack deep commitments and do t expand much on language agreed at the multilateral level. Complete elimination of agriculture subsidies is still a sensitive issue (ne RTA where a LA country partnered with the U.S. or an Asian country set a specific deadline). Agricultural safeguards are commonly used in the North-South RTAs to address the impacts of tariff cuts (mainly used for livestock products) Asymmetries of power: Commitments tend to be weaker when trading partners at different levels of development pursue integration bilaterally.
4 # de Acuerdos 16 The Development of RTAs Extra-LAC Inter-Regional Intra-LAC
5 LAC Integration menu in 2008: spaghetti bowl Japan Korea NAFTA Canada USA CAFTA-DR Mexico Canada-CRI Dominican Republic EFTA EU, EFTA EU Bahamas (CARICOM members but t in CSME) Haiti China Thailand Singapore Brunei Australia Trans-Pacific SEP N.Z. G-3 El Salvador Guatemala Honduras Chile- Cent. Amer. Chile Nicaragua Costa Rica CACM Colombia Ecuador ACE 59 Peru ACN Bolivia ACE 36 ACE 35 ACE 58 Panama ACE 59 Venezuela ACE 59 Paraguay Antigua & Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St. Kitts & Nevis, St. Vincent & the Grenadines, Suriname, Trinidad & Tobago Brazil Argentina MERCOSUR CARICOM CSME Uruguay Source: A. Estevadeordal in Bridging Trade Agreements in the Americas IDB-INT Forthcoming 2009
6 How Agriculture is treated in the RTAs Tariffs, TRQs and exceptions SPS TBT Agriculture Safeguards Agriculture Subsidies Other specific provisions
7 Tariffs Progress in Market Access 1. Big push in liberalization at year Mini-jump in year 15, followed by convergence toward steady state 3. Considerable disparities between HS chapters
8 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 % of Lines duty-free 100 Market Access Concessions Reflect Greater Sensitivity of Agricultural Products Product Sector Overall Industrial Agricultural 10 0
9 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 % of Lines Duty-Free 100 Tariff Elimination by Agreement Year, Averages by HS Chapter HS Chapter Essential Oils Live Plants Live Animals Dairy Sugar 10 0
10 Exceptions to Full Tariff Elimination Vary by Sector Sector # of RTAs w/in Sample Live Animals 11 Meat 15 Dairy 16 Eggs 11 Honey 5 Other Animal Products 6 Vegetables 13 Nuts 5 Fruit 13 Coffee and Coffee Substitutes 6 Tea 4 Mate 3 Spices 4 Cereals 14 Flours and Other Milling Industry Products 12 Oil Seed etc 12 Lac, Gums, Resins, Vegetable Saps, etc 7 Vegetable Plaiting Materials 2 Animal or Vegetable Fats and Oils 16 Sugars and Sugar Confectionery 20 Cocoa and Cocoa Preparations 17 Fruit and Vegetable Juices 7 Other Food Preparations 21 Beverages, Spirits and Vinegar 15 Food Residues and Wastes; Animal Fodder 12 Tobacco 11 Chemicals 6 Raw Hides and Skins, Fur Skins 2 Raw Textile Materials 7 26 agreements in the sample
11 Harmonization Equivalence Regionalization Assessment of risk Transparency WTO plus Depth of SPS principles WTO Plus NAFTA Present United States-Colombia United States Peru Canada-Costa Rica CAFTA Chile-United States Absent Chile-Canada Chile-Japan Chile-China Chile-Korea Chile-Mexico Chile-Peru Chile-EU Chile-New Zealand-Singapore-Brunei (P Mercosur-Chile Mercosur-Bolivia Mexico-EU Mexico-Bolivia Mexico- Costa Rica Mexico-Nicaragua Mexico-Northern Triangle Mexico-Uruguay Mexico-Peru Mexico-EFTA Mexico-Japan Mexico-Israel Mexico-Colombia Mercosur-Peru (ACE 58) Mercosur-Andean Community (ACE 59) Panama-Singapore Peru-Thailand Cent.Amer-DR Cent.Amer-Chile TOTAL: 33 RTAs (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+) Depth of regional provisions vis-a-vis the multilateral commitments WTO Plus 52% No value added to the WTO commitments 48%
12 - More superficial commitments SPS Commitments (-) Depth of coverage (+) + WTO Plus 86% LA- n regional countries 59% between LA countries Suggests that SPS negotiations are less complicated among Latin American countries The basic texts of the RTAs are still generic in the SPS aspects. Any deeper commitments is usually treated in the Annex, in a Memorandum of Understanding or in a ad hoc agreement Technical Barriers to Agricultural Products (TBT) 18% (6) contain TBT related provisions for agricultural products (reinforce the commitment to respect the principle of national treatment when applying marketing requirements to agricultural goods in the areas of packaging, grading and sizes of the product )
13 Year Agricultural Export Subsidies Agricultural Safeguards Domestic Support Trade remedies RTA NAFTA 1992 United States-Colombia 2006 United States Peru 2006 Canada-Costa Rica 2001 CAFTA-DR 2004 Chile-United States 2003 Chile-Canada 1996 Chile-Japan 2007 Chile-China 2005 Chile-Korea 2003 Chile-Mexico 1998 Chile-Peru 1998 Chile-EU 2002 Chile-New Zealand-Singapore-Brunei (P4) 2005 Mexico-EU 2000 Mexico-Bolivia 1994 Mexico- Costa Rica 1994 Mexico-Nicaragua 1997 Mexico-Northern Triangle 2001 Mexico-Uruguay 2003 Mexico-Peru 1995 Mexico-EFTA 2000 Mexico-Japan 2004 Mexico-Israel 2000 Mexico-Colombia 1994 Mercosur-Peru (ACE 58) 2005 Mercosur-CAN (ACE 59) 2004 Mercosur-Chile 1996 Mercosur-Bolivia 1996 Cent.Amer-DR 1998 Cent.Amer-Chile 1999 Panama-Singapore 2006 Peru-Thailand 2005 TOTAL: 33 RTAs Export subsidies for agricultural goods (67%) Agricultural Safeguard Measures (36%) Domestic Support for Agricultural Goods (36%)
14 # of Agreements Agricultural Subsidies 67% RTAs reinforce the WTO commitment to eliminate agricultural subsidies Timing of Subsidy Elimination No timing specified Due date Immediate elimination Phase Out No deadline (33%): LA-US, LA-Asia, Mercosur-Peru, Mercosur-CAN Deadline in 3 RTAs (averaging 4.7 years) Most within LA countries All within LA countries (Mx-Col, Mx- CR, Mx-Nic): complete elimination when the tariffs specified in the schedule reach zero
15 Agricultural Safeguard Key goal: -Address the expected increase of agricultural imports during the first years of the application of the Agreement due to the progressive reduction or elimination of duties and tariffs agreed by the Parties Characteristics: -The trigger levels (quantity of imports considered t to cause serious injury for the national market) varies depending how sensitive is the product. High variation among the RTAS analyzed -Livestock products are the most frequently specified safeguard applicable items (beef, poultry, pork) - Average duration: from 6 months to 1 year - Sunset clause for the use of safeguards: until the product reach a duty-free status
16 Other specific provisions 1. Technical cooperation on agricultural issues 2. Review clause (periodic assessments of specific commitments) 3. Export restrictions (to promote domestic food security or to keep internally the benefits of national programs related to food assistance) I.e. Mx-Bol, Mx-Col 4. Committee or Sub-committee on Agricultural Trade (42% RTA) 5. Geographical Indication: Specific treatment mostly focuses on alcoholic beverages.
17 Recommendations
18 I. Developing countries should target t only market access (through tariff liberalization) but also market penetration Period Creation of SPS and TBT regulation 0 Source: A. Estevadeordal in Bridging Trade Agreements in the Americas IDB-INT, 2009
19 As tariffs are reduced, n-tariffs measures are on the rise Notifications to the SPS Committee of SPS regulations created or modified
20 II. Countries should be prepared to negotiate deeper commitments that can produce a more efficient impact on agricultural trade. III. Mutual recognition, and on-site visits of technicians to build confidence on SPS and TBT. IV. Prioritize areas for harmonization, including the identification of key sectors. V. Analyze how to create greater convergence and compatibility among these varied agreements.
21 Implications for the Multilateral System Fewer parties means consensus easier in RTAs than in multilateral agreements RTAs have made substantial improvements in market access. Might undermine incentives for additional multilateral liberalization. Question is t whether multilateral or regional approach is better, but how to create more synergies among trade arrangements. Plurilateralization of RTAs will be helpful, but mulitilateral liberalization should be ultimate goal. Multilateral trade negotiations are best suited to achieve deeper commitments in some areas.
22 Thank you! For more information: Juliana Almeida Matthew Shearer
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