E15 ag groupreport2 agricultural trade and rural development

The

E15

Initiative

Strengthening the multilateral trading system

Group Report E-15 Workshop on Agricultural Trade, September 27-28, 201

E15 Expert Group on Agriculture and Food Security

E-15 Workshop on Agricultural Trade, September 27-28, 2012 Report of Group on Agricultural Trade and Rural Development Tim Josling (Rapporteur) The Group considered three fundamental questions:   

How can the agricultural trade system provide the right environment for rural development in a changing and uncertain world?

What new agricultural trade rules and institutional innovations may be necessary to support the rural development efforts by governments?

What are the implications for the agenda of the WTO and other institutions?

The responses of the Group to the first question can be summarized as follows: 1. An open trade system for agricultural products links farmers and rural businesses with consumers in other countries. The system works best with a minimum of impediments to such trade.

2. Such a trade system needs to be reliable, predictable and resilient.

Arbitrary interruptions to trade and actions that exacerbate price instability reduce the value of the trade system.

3. Trade rules should contribute to increasing the confidence of market participants, should provide adequate access to information, and ensure appropriate levels of competition.

4. The reduction of transaction costs is an important function of the trade system. This involves such areas as improving customs procedures, harmonizing where appropriate standards for health and safety, and lowering the costs of meeting the many private standards used in the food industry.

5. The trade system plays a major role in transmitting appropriate price signals and other incentives to producers and consumers. This is an important part of making the best use of scarce global resources and avoiding market fragmentation.

6. The trade system reduces price instability by allowing local shortages to be met from other sources. Restrictions on such trade impede this valuable function.

7. The trade system should be based on similar rules for all countries but with adequate assistance to those countries that are less able at present to take advantage of trade opportunities.

8. Coherence between multilateral, regional and bilateral trade rules is of considerable importance. This is necessary to avoid confusion and reduce trade costs.

9. The trade system needs to allow producers to have access to farm inputs, knowledge and technology to enable them to satisfy market demand.

10. Improvements in the trade rules for services, intellectual property protection and investment will be needed to complement efforts to strengthen the agricultural trade system.

Among the actions needed to improve the trade system for agricultural trade the Group emphasized the following: 1. A continuation of the efforts underway in the Doha Round to reduce high tariffs, remove export subsidies and curb domestic support that distorts trade.

2. Discipline export restraints, particularly in times of high prices, and discourage import subsidy policies by importers that impose similar pressures on world markets.

3. Improve information systems that can report on stock levels and production conditions. Such information can allow countries to anticipate the need for purchases of food at times of high world prices and hence avoid hasty action that can further destabilize markets.

4. Take actions to improve access to financing for imports of food and agricultural produce, so as not to add a further burden to food deficit countries.

5. Avoid excessive concentration of economic power in the food and agricultural trade system that works to the detriment of producers and consumers and may reduce confidence in the global marketplace.

6. Encourage countries to develop food security plans that take full advantage of the benefits of the trade system while respecting the needs of other countries in terms of their own food security.

7. Assist developing countries in devising and implementing risk management programs to help producers to survive weather and disease risks and reduce production instability.

8. Reduce tariffs on input items, improve infrastructure in port facilities and marketing, and promote transfer of technology that would enable developing country farmers to compete on world markets.

9. Help countries to graduate from dependence on Special and Differential Treatment and on unilateral preferences offered by developed countries that often limit the scope of development.

10. Enable producers and consumers of food and agricultural products in countries that are signatories to preferential (regional or bilateral) trade agreements to take advantage of the more open markets by ensuring that agricultural products are included whenever possible in the expansion of trade.

The Group identified specific items for the WTO agenda and for those of other multilateral institutions, including: 1. Discipline export restraints as a matter of priority, if necessary by way of a separate agreement among the small number of countries that make up the major share of trade in grains (particularly in wheat, maize and rice) and in oilseeds and other vital foodstuffs. This discipline should include an agreement not to restrict shipments of food aid such as to the World Food Program.

2. Agree on provisions such as those in the Doha Round Draft Modalities for improving disciplines on export subsidies and similar measures. This should include the more substantive rules on food aid and other forms of

assistance to exports, while not impairing the ability of countries to import food on concessional terms at times of food shortage.

3. Improve market access over time, in conjunction with that for other goods, with the aim of reducing tariff peaks, lowering tariff bindings and narrowing the gap between MFN and preferential tariff rates. This should include expansion of TRQs and improvements in their administration so that access offered can be translated into increased trade.

4. Improve monitoring and surveillance of domestic policies, so as to avoid the arbitrary differences in notification of similar policy instruments, and reduce lags in notifications that reduce the value of the notifications themselves.

5. Put in place safeguards that can give developing countries the confidence to remove tariffs knowing that temporary re-instatement of tariff protection may be necessary when serious threats to the domestic sector emerge. Such safeguards will be needed regardless of the tariff reductions in the Doha Round, and could be negotiated outside the current framework of the Round such as by amending the Safeguard Agreement.

6. Move towards generalized duty-free and quota-free access for the imports from Least Developed Countries. As much of this trade is in agricultural and food products, this could be a valuable step in developing South-South trade as well as trade with developed countries.

7. Complete the negotiation of the Trade Facilitation package that promises practical benefits to agricultural producers in developing countries.

Perishable agricultural products need special attention in making sure that customs procedures and trade infrastructure do not hamper such trade.

8. Improve the notification of agricultural provisions in PTAs and encourage their full inclusion in the opening up of regional and bilateral trade. This would also be helped by the adoption of cumulative rules of origin for regional trade agreements to encourage trade among the countries concerned, and avoid the overly-restrictive rules of origin that distort production decisions.

9. Promote the use of CODEX and other multilateral standards and speed up the process of adopting such standards. Assistance should be increased to help developing countries to meet such standards. Clarification of the rules under which private standards operate in international trade and their relationship to government standards.

10. Limit the negative aspects of IP protection that unduly limit the spread of new varieties; open up services markets that are vital to support agriculture; and, in cases of direct investment in farmland, follow investment guidelines that are being developed.