European Network of Agricultural and Rural Policy Research Institutes

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Introduction to ENARPRI-Work on General Trade
Agreements based on contributions of Petra
Salamon, Marianne Kurzweil, Oliver von Ledebur -
FAL in Braunschweig, Germany Ellen Huan-Niemi,
Jyrki Niemi - MTT in Helsinki, Finland Crescenzo
dellAquila - INEA in Rome, Italy
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Outline

• Introduction
• EUs Preferential and Free Trade Agreements
  (PTA/FTA) and issues raised
• Policies affected and policy interactions
• How to address Trade Agreements (TA) in models
  
• Relevant questions to be dealt with in ENARPRI

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Trade Agreement - Definition

• A bilateral or multilateral treaty or other
  enforceable compact committing two or more
  nations to specified terms of commerce, usually
  involving mutually beneficial concessions

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How are FTAs possible within the WTO?

• Under GATT Article XXIV, WTO members can form
  trading blocks discriminating non-membersif the
  agreements (i) involve the elimination of all
  tariffs within the block for a substantial part
  of products and (ii) do no increase external
  trade barriers against non-members

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European Integration and EU Enlargements
Prominent examples are the Europe Agreements and
Association Agreements with Central and Eastern
European Countries, Malta, Cyprus, and Turkey,
complemented by Stabilisation and Association
Agreements with Albania, Bosnia-Herzegovina,
Croatia, Macedonia, Serbia and Montenegro Integra
tion in agriculture is promoted by gradually
implementation of customs unions with partial
tariffs cuts and/or establishing tariff rate
quotas, financial support, intended to lead to
deep integration in the Common Market
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EUs TAs with reference to agriculture
OEFTA
EU-15
Cand.
NMS
Med.
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Association of the Colonies (African, Caribbean
and Pacific countries - ACP) and the Overseas
Countries and Territories (OCT)
For APCs Lomé Conventions later replaced by the
Cotonou Conventions, have been primarily based on
non-reciprocal trade preferences granted to ACP
exports, must be replaced by (WTO conform)
Economic Partnership Agreements EPAs, will enter
into force by 1 January 2008 at the latest,
unilateral trade preferences will continue up to
2007For OCTs Association Agreement accepted by
the GATT in 1971, preferential market access to
the EU market, products originating from the OCTs
are not subject to import duties or quantitative
restrictions, non-reciprocal arrangements
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EUs TAs with reference to agriculture
OEFTA
EU-15
Acc
OCT
NMS
ACP
Med.
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Generalized System of Preferences (GSP) and as a
part thereof Everything But Arms (EBA) to
initiate trade and development
Although the original GSP focused on manufactured
products, preferences were granted for
agricultural products,EBA within GSP provides
unilateral trade concession, intended to improve
trading opportunities for the LDCs., nearly all
agricultural products are freed from ad valorem
or specific duties and import quotas, with a
phasing-in period for some products e.g. sugar
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EUs TAs with reference to agriculture
OEFTA
EU-15
Acc
EBA
OCT
Med
NMS
ACP
GSP
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Agreements with non-European trading partners to
facilitate trade
To improve relations with developing, emerging
and transitional countries in order to further
integrate them into the world economy,
negotiations or signed agreements with e.g.
MERCOSUR, Chile, Mexico, and South Africa,focus
not always inevitably on agriculture
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EUs TAs with reference to agriculture
OEFTA
ORTA
MER
Pref.
EU-15
Acc
EBA
OCT
Med.
NMS
ACP
GSP
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What are common features of TAs?

• Broader policy scope than trade facilitation
• Mostly general trade is covered, often with a far
  reaching liberalisation of non-agricultural goods
• Agriculture and textiles prove to be sensitive,
  so tariff rate quotas (TRQs) have been
  established with zero or reduced tariffs for
  limited quantities
• MFN tariffs and additional market access are
  granted by distinct tariff lines at HS-8-digit
  level or higher

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What are common features of TAs?

• Often specific instead of ad-valorem tariffs are
  applied
• Concessions are mostly provided bilaterally and
  reciprocally (FTA), but often implemented in an
  asymmetrical way, due to PTAs bound and applied
  rates may vary
• Import licences
• Safeguard clauses sensitive products
• Rules of origin, SPS, foreseen settings for
  property rights, standards, FDI

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Adjustments of the trade policies due to TAs?
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Do TAs interact with domestic policies?
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How will policies be represented?

• Standard price wedges or tariff equivalents
  Difference between world market prices and
  comparable domestic prices
• Problems homogeneous goods, distorted world
  market prices, exchanges rates, restrictions
• Alternative PSE comprise transfers from
  consumers to producers (market price support) and
  government transfers to producers (premiums)
• Problems fluctuation of world market price,
  exchanges rates, domestic output

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How will restrictions be represented?

• Production quotas
• TRQs
• Limitation of subsidized export
• Problems
• binding and non-binding restrictions
• non-binding restrictions have lower or zero
  tariff equivalents
• policy change makes restrictions binding, but
  tariff equivalents still unchanged

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Modelling core requirements of TAs
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Requirements for policy representation Border
measures
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Requirements for policy representation Domestic
policy measures
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Needs for further investigationin ENARPRI

• Due to actual developments the focus shifted from
  FTAs and PTAs to WTO (multi-lateral agreement)
• In principle, the same requirements and features
  occur concerning trade policies
• But in the case of WTO, the interaction and the
  need to adjust domestic policies according to WTO
  requirements is much stronger
• Therefore, the following impact analysis
  concentrates on WTO

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Approach

• Global CGE with projections based on theGlobal
  Trade Analysis Project (GTAP)
• Because in the standard version allows for
• bilateral trade flows
• of general trade
• within a world-wide context,
• with PTAs represented in tariffs,
• and the possibility to add projections as well
  as
• additional PTAs (like EBA)
• and to implement special features of the CAP

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Impact analysis of possible WTO negotiation
outcomes on EU and third countries

• Extension
• tariff line representation,
• taking into account bound and applied tariffs,
• EU-Budget
• MTR

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Interaction of WTO negotiation outcomes with
Domestic Policy Reform

• Extensions
• Detailed implementation of MTR,
• Amber Box,
• Green Box,
• Blue Box

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Thank you for your attention