WTO Agricultural Trade Liberalization and the Doha Round of Trade Negotiation

1
WTO Agricultural Trade Liberalization and the
Doha Round of Trade Negotiation

• Nipon Poapongsakorn
• Faculty of Economics, Thammasat University
• A Seminar at the Faculty of Economics, Thammasat
  University
• 26 January 2004

Dsep/nipon/present/TU_26_1_04
2
1. Topics of discussion

• Despite a success of the Uruguay Round
  negotiation to bring agriculture under the global
  trade rules, Why are many developing countries
  not satisfied with the UR-AoA? What are their
  experience with the AoA implementation?
• What are the difficulties in the Doha Round of
  Development?

3
1. Topics of discussion

• What are the factor that brought about the
  collapse of the Cancun ministerial meeting?
  Is it the process or the substance or both?
• How could the negotiation substance be improved
  to ensure that the negotiations can bring about
  substantial gain from the agricultural trade?

4
2. Importance of the WTO Agreement on Agriculture

• Agriculture accounts for a greater proportion of
  the economy employment in the developing
  countries than in the developed countries, with
  some exception
• Developing countries as a group stand to gain
  significantly from agricultural trade reforms
• Thats why many developing countries actively
  participated in the Uruguay Round of agricultural
  negotiation

5
2. Importance of Agriculture in developing
countries (cont.)

• The AoA is hailed as the first important step to
  bring agricultural trade under the global trade
  rules
• Under the AoA, a 3-pillar comprehensive approach
  was adopted to address the problem of
  agricultural protection and support that
  negatively affect the agricultural trade (a)
  measures to expand market access (b) reduce
  distorting domestic support and (c) reduce
  export subsidy
• In addition, it also establishes the new
  institution that can limit the unilateral action
  of the super power.

6
3. Developing Countries disappointment with the
UR-AoA

• Despite its success, most developing countries
  are not happy with the UR-AoA.
• (a) The UR focused on the sectors that the
  industrialized countries have comparative
  advantage, while doing very little to pry open
  agriculture and textiles in which LDC can compete
  effectively

7
3. Developing Countries disappointment with the
UR-AoA (cont.)

• (b) The AoA rewarded the developed countries for
  past heavy subsidization by permitting them to
  continue the practice remember the Blair House
  Accord and the choice of base period for
  calculation of subsidy. OECD spent 1 trillion
  dollar in agricultural support between 1996-98,
  comparing with LDCs agricultural export of 0.5
  trillion

8
3. Developing Countries disappointment with the
UR-AoA (cont.)

• (c) Such agricultural support has significant
  negative impact on LDC (a) precluding their
  entry into the OECD market, (b) unfair
  competition in LDC own markets
• (d) LDC have to bear huge costs in implementing
  the UR (at US150 million), with very little
  benefits

9
4. Implementation of the AoA has shown mixed
experience Benefits

• Export subsidy by DC has been markedly reduced,
  eg., it is one fourth of what was 10 years ago.
• Very limited gain, if any, has been made with
  market access via preferential schemes and
  minimum access through tariff quota true only
  in a few case studies

10
4. Implementation of the AoA has shown mixed
experience FAO study and others (cont.)

• While nominal value of agricultural exports in
  1995-2000 was higher than in 1990-94 for 20 out
  of 23 countries, 6 countries experienced a
  declined in export volume.
• In most case studies, the growth of agricultural
  exports was due to (a) improved world market
  condition unrelated to AoA (b) devaluation, (c)
  improved domestic conditions such as a removal of
  export tax on soybeans in Brazil, and good
  weather Real impact of AoA cant be established
• Food security status has improved in the majority
  of sample countries, but cannot prove that the
  AoA is the contributing factor

11
(No Transcript)
12
(No Transcript)
13
(No Transcript)
14
4. Implementation of the AoA has shown mixed
experience FAO study and others (cont.)

• Expenditure on food imports increased
  significantly in all but two sample countries
• although increased imports displace domestic
  production, it does not necessarily imply reduced
  food security unless the displaced farmers remain
  unemployed.

15
5. Negative experience with the AOA
implementation

• Domestic support rules are the weakest and the
  result has been a wholesale reorientation of farm
  assistance in the DC into form of domestic
  support that were exempted from any reductions
• actual domestic support has increased in some
  developed countries when agric prices went down
  in 2000-2001

16
5. Negative experience with the AOA (conts)

• Problems with market access in the developed
  country markets
• tariff peaks on export products of interest to
  developing countries
• tariff escalation deters high-value added food
  processing industry in LDC
• increasing use of SPS measures (in both the DC
  and LDC and long delays in recognizing the
  equivalence of SPS measures adopted in LDC
• non-transparent administration of TRQ and
  preferential trade
• the general GATT safeguards are to difficult to
  use while the more effective SSG can be used by a
  few LDCs

17
5. Negative experience with the AOA (conts)

• the majority of LDCs have chosen to meet the WTO
  obligation on TRIPS by adopting a sui generis
  system which recognize the rights of farmers and
  local communities as well as the plant breeders.
• But some countries have worried that overseas
  companies could use TRIPS protection in their
  home countries to appropriate into private hands
  the traditional knowledge concerning medicine in
  LDC
• Others also concern about the higher cost of
  bio-engineered seeds and the monopolization of
  seeds by the MNCs.

18
6. The current Doha Round of Development

• The DRD which was launched in November 2001 could
  breath new life into agricultural negotiations
  because
• it covers a broad range of products and issues,
  and thus provides opportunities for trade off
• all the negotiations will be treated as a single
  undertaking in which all areas of negotiations
  must be agreed to for any of the negotiated
  outcome to be binding thus forcing the
  negotiators to find common grounds

19
6. The current Doha Round of Development (conts)

• But there are two difficulties
• disparate positions of the WTO members in the DRD
• the current proposals may not benefit most
  developing countries

20
6.1 Wide differences in developing countries
position and developed countries

• a) Differences among developing countries
• The Cairns Group advocates strongly for more open
  market, tighter rules limiting domestic support
  an elimination of export subsidy
• Most LDC want DC to open their markets for their
  products
• Others want exemption from cuts to domestic
  export subsidies, or less stringent rules
  governing the use of subsidy than apply for DC,
  while some call for a Development Box

21
6. The current Doha Round of Development (conts)

• Some want to have unlimited use of all the import
  restricting measures (e.g. SSG)
  trade-distorting subsidies for food security
  rural development because
• (1) Developing countries cant afford providing
  large domestic subsidy as in DC
• (2) The only means to maintain food security are
  price stabilization and stockholding programs

22
6. The current Doha Round of Development (conts)

• Many LDC failed to submit commitments in certain
  areas in the UR and fear that they could be
  unfairly constrained to use such measure in the
  future. (But this does not mean that they should
  by treated on the different standards without
  having to make any adjustments along other WTO
  members).
• Despite the different positions, there is a
  common thread, ie, they should be accorded
  special treatment because of development needs
  differential adjustment

23
6. The current Doha Round of Development (conts)

• b) USA position
• anxious to open markets for its exportsso
  proposing no export subsidy
• but oppose substantive reforms of concessional
  export credits and use of food aid in market
  distorting ways
• wish to maintain and extend the scope for
  exempting some major forms of domestic subsidy
  from reduction (because of increasing subsidies
  caused by the new farm act)

24
6. The current Doha Round of Development (conts)

• c) EU position
• a defensive strategy to maintain the exemptions
  that are in the present AOA
• not willing to eliminate export subsidy of which
  it is the worlds largest user
• seek to incorporate a number of non-trade
  concerns or multi functionality e.g.,
  environment issues, animal welfare and health,
  food safety
• emphasize positive effect but discount negative
  effect

25
6. The current Doha Round of Development (conts)

• d) Japan
• a defensive strategy with an emphasis on food
  security, i.e., targeting self-sufficiency ratio
• strong advocate of multi-functionality

26
6.2 Worse, both the EUs proposal and Harbisons
proposed modalities would make the developing
countries worse off UNCTADs study

• Only the US proposal will benefit the developing
  countries by 6 billion out of a global gain of
  26 billion per year.
• Mr. Harbisons modalities (chairman of the WTO
  Agriculture Committee) is rejected by most
  members
• This is a source of conflicts in the current
  round of negotiation

27
6.3 But this Round faces other difficulties

• The Cairns Group is the only group that is
  pushing strongly for more liberalized
  agricultural market
• The US which used to be the free market advocate
  has not only fail to show strong stand for more
  open market, but has acted in the opposite
  direction when it passed the new farm law
• In addition, the US, EU and Japan were facing
  economic slowdown until mid 2003.
• But these are not enough to explain the collapse
  of the Cancun Ministerial Conference.

28
7. The collapse of the WTO Ministerial Conference
in Cancun

• 7.1 Did Cancun fail?
• Cancun meeting, on 10-14 Sept 2003, was attended
  by 148 members, 38 observer governments, 76
  observer inter-govt organizations 1,700
  journalists and 950 registered NGO.
• For some, Cancun has failed. Its a lost
  opportunity!

29
7. The collapse of the WTO Ministerial Conference
in Cancun

• For others, the conference was a success
• No deal is better than a bad deal
• for NGOs, it was the expected end to a trading
  system
• Though Cancun failed in its objective to reach an
  agreement, it does not necessarily mean that the
  Doha Development Round has collapsed and that the
  multilateral trading system is in crisis
• Past failures 1988 Montreal mid-term review,
  the 1990 Brussel Ministerial
• But it takes months or years to assemble pieces
  from Cancun and reach agreements on time-table,
  modalities, NAMA and how to address new issues.

30
7. The collapse of the WTO Ministerial Conference
in Cancun

• 7.2 Why did the Cancun fail?
• it is the interlink between the process of
  negotiation and the complex substance
• Complexity of the Doha Round Although the UR
  was very challenging and successfully dealt with
  many new and complex issues, its complexity does
  not necessarily find a parallel with the Doha
  Round

31
7. The collapse of the WTO Ministerial Conference
in Cancun

• (a) Increased number of WTO members (148) and
  more active participation make the task of
  finding consensus more difficult
• (b) Political limitations of the EU and US
  delegations to move beyond what their internal
  agricultural lobbies demand because of the coming
  US Presidential election in 2005 and EU
  enlargement
• (c) Many developing countries do not trust the
  large trading power countries (1) bad
  experience with AoA (2) the Singapore
  issues which are new and unexplored areas for them

32
7. The collapse of the WTO Ministerial Conference
in Cancun

• (d) Factors (b) and (c) have led some developing
  countries to adopt an extreme non-negotiable
  position in variety of new issues despite the
  fact that they would gain from some of those
  issues
• Persistent divergence in members substantive
  positions on agriculture

33
7. The collapse of the WTO Ministerial Conference
in Cancun

• 7.3 Who is to be blamed?
• Chairperson Luis Derbez, Mexicos foreign
  minister, closed the meeting too early without
  giving Ministers a chance to discuss agricultural
  issues and narrow their divergent positions in
  the final negotiation
• The least developed countries for giving no
  concessions on any of the new issues
• The EU refusal to reform its agricultural
  subsidies and attempt to foist new non-trade
  issues into the WTO

34
7. The collapse of the WTO Ministerial Conference
in Cancun

• The US for its unwillingness to reduce its
  subsidies particularly its subsidies on cotton
  and its insignificant response to the African
  Cotton Initiative
• Japan due to its refusal to dismantle its trade
  barriers on rice
• In effect, all WTO members share a collective
  responsibility in the decision not making
  process. So it is the inter-linkage between the
  substance and the process.

35
7. The collapse of the WTO Ministerial Conference
in Cancun

• 7.4 Is failure part of the process, or is the
  process what creates the failure?
• Some argue that failure is part of the evolution
  of the now more complex than ever multilateral
  trading system. The system is condemned to learn
  by failing.
• But there must be ways to avoid such failures,
  especially the adaptation of the process itself
  to the new realities and challenge of the WTO.
  Unfortunately, the process at all stages have not
  been adapted

36
7. The collapse of the WTO Ministerial Conference
in Cancun

• The preparatory stages were the root cause
• members took more than 20 months after the
  launching of the DRD to switch from general
  discussions to substantive negotiations in
  preparation for the Cancun
• little time left for consultations that could
  lead to concensus on a variety of key issues such
  as time frames, modalities on agriculture, NAMA
  and for consolidating a draft text for the
  discussions by Ministers in Cancun
• as a result, the draft Ministerial Declaration
  prepared by General Council Chair Carlos Castillo
  and D.G. Supachai had no real status since non
  part of the text had members concensus

37
7. The collapse of the WTO Ministerial Conference
in Cancun

• Ministers could not solve the highly complex
  technical issues in four days meeting which was
  supposed to be a mere mid-term review.
• Ministers task should be to provide political
  legitimacy, guidance, and leadership

38
7. The collapse of the WTO Ministerial Conference
in Cancun

• 7.5 The negotiation process during the Conference
• Prior to the Conference, different groups of
  developing countries sent strong messages to the
  Chairman asking for transparency and inclusion
  of their proposal in the process G21 and a
  group of 5-smaller developing countries
• Chairman Derbez organized the negotiations in 5
  working groups, each was led by a facilitator in
  charge of identifying areas for progress. The aim
  is to use facilitators as bridges between small
  and big groups to help ensure inclusiveness

39
7. The collapse of the WTO Ministerial Conference
in Cancun

• But the mechanism fell short of expectations (1)
  some members felt excluded from the process or
  had to negotiate with the facilitators instead of
  with other members (2) the draft text did not
  truly reflect members positions (3) the draft
  texts submitted to the Chairman did not have
  concensus
• Derbez put together the new Ministerial draft.
  But reactions to the text showed members were
  more apart than ever.
• Agriculture was the main point of discord
• But in the end, it was the new issues that made
  the talks collapse

40
7. The collapse of the WTO Ministerial Conference
in Cancun

• 7.6 The role of the Chairpersons and Facilitators
  and the venue of meeting
• Minister Derbez was the Chairman because Mexico
  was the host country
• But unlike Minister Enrique Iglesias (chairman of
  the Punta del Este GATT Ministerial Conference),
  Derbez is a politician with no skill in trade
  negotiation

41
7. The collapse of the WTO Ministerial Conference
in Cancun

• some suspect that in taking the decision to
  abruptly close the meeting, Derbez could have
  been influenced by the US which faced the dilemma
  of not being able to offer developing countries
  something substantial in agriculture and
  preferred to switch the blame on to others
• It is not clear how the facilitators were chosen
  and with whose support capabilities and
  experience
• Some begin to question the practicality of
  continuing to hold biennial ministerial meetings
  in different members capitals instead of in
  Geneva. But it should be noted the Swiss
  government is reluctant to host the Ministerial
  Meeting

42
7. The collapse of the WTO Ministerial Conference
in Cancun

• 7.7 Lessons for future trade talks coalitions
• One distinct aspect of the Cancun was the
  creation of multiple coalitions, particularly
  among developing counties.

43
7. The collapse of the WTO Ministerial Conference
in Cancun

• Developing countries alliance the most market
  alliance is G21. Others include
• G33 (initially formed by 6 small countries)
  sought agreement on a framework for
  self-designated Strategic Products (SP) and
  Special Safe guard Mechanism (SSM), but not on
  market access
• west African group and the Cotton Initiative
• a new and large coalition AU/ACP/LDC (G90) called
  for SP, SSM and preservation of existing
  preferential access schemes
• a group of 70 developing countries led by India
  opposed the launch of negotiations of the
  Singapore issues

44
7. The collapse of the WTO Ministerial Conference
in Cancun

• Developed countries alliance
• US-EUs joint proposal on agricultural
• Friends of Multifunctionality (5 countries)
• The interplay between G-21, the G33 and the new
  AU/ACP/LDC group with China becoming part of the
  developing country alliance may have changed the
  power play of the WTO

45
7. The collapse of the WTO Ministerial Conference
in Cancun

• 7.8 Other lessons
• Ownership of the negotiating agenda developing
  countries were no longer prepared to accept the
  DCs initiative unconditionally and even showed
  their intent to address their own issues
• Capacity building necessary to be prepared to
  discuss and negotiate the new issues
• Trust building a need to build trust between
  and among members

46
8. How could the negotiation substance be
improved to ensure that the negotiation brings
about substantial gain from the agricultural
trade? The weakness of the Derbez text.

• Derbez text, named after the Chairman of the
  Conference, was the last draft to emerge from
  Cancun on 13 September 2003

47
8. How could the negotiation substance be
improved to...

• 8.1 The Doha mandate for agriculture 3 pillars
  2
• substantial improvement in market access
• reduction of, with a view to phasing out, all
  forms of export subsidies
• substantial reductions in trade-distorting
  domestic support
• special and differential treatment shall be an
  integral part of the negotiations and embodied in
  the schedules of concessions and commitments...to
  take account of the development needs of the
  developing countries, i.e., food security and
  rural development

48
8. How could the negotiation substance be
improved to...

• also take note of the non-trade concerns
• modalities (by Harbison) be established no later
  than 31 March 2003
• participants shall submit their comprehensive
  draft Schedule based on the modalities before the
  Fifth Ministerial Conference
• single undertaking the negotiations (rules,
  disciplines and legal texts) shall be concluded
  as part and at the date of conclusion of the
  negotiation agenda as a whole

49
8. How could the negotiation substance be
improved to...

• 8.2 Export competition the Derbez text
• the Derbez text covers explicit export subsidies
  export credits and food aid shipments that
  displace commercial activity. Its, therefore,
  most satisfactory comparing to the other 2
  pillars (mkt access and domestic support)
• export subsidies and subsidy element of export
  credit programs for products of particular
  interest to LDC shall be eliminated

50
8. How could the negotiation substance be
improved to...

• for remaining products, members must reduce, with
  a view to phasing out, both the quantitative and
  budgetary limits for subsidies
• an ending date for phasing out subsidies remain
  under negotiation

51
8. How could the negotiation substance be
improved to...

• Good points - (a) quantitative restriction on
  subsidy has been more constraining factor on the
  use of export subsidy than budgetary limits, e.g.
  EU has been closed to their quantity limit for 7
  products, rice, cheese, poultry, other milk
  product, fresh fruit and vegetable, wine
• (b) also important to limit the ability of
  countries to increase their subsidies for other
  products not currently receiving subsidy
• (c) reduction requirements for products of
  particular interest to LDCs are important because
  currently four major exports of LDCs are products
  for which the EU has provided substantial subsidy

52
Developing countries share of world export
8. How could the negotiation substance be
improved to...
53
8. How could the negotiation substance be
improved to...

• Weak points in the text no details on how to
  reform export credits and food aid
• (1) export credits are very important in cotton
  market and will be more important over time if
  explicit subsidies are eliminated
• (2) the text on export credits only addresses the
  length of payment but not the discounted
  interest rates
• (3) the text does not provide concrete proposals
  for reducing the disruptions to commercial
  markets from surplus disposal in the guise of
  food aid

54
8. How could the negotiation substance be
improved to...

• 8.3 Domestic support
• The text calls for substantial reductions in all
  forms of distorting domestic support
• reducing final bound of total AMS de minimis
  support
• capping product specific AMS
• sum of AMS, de minims and Blue box support in
  2000 shall be cut
• tightening the Green box rules
• SD LDC is exempt from de minims support
  reduction, and allowed lower reduction of support
  and longer implementation period

55
8. How could the negotiation substance be
improved to...

• Good points by capping product-specific support
  to a historical level, members can increase
  support for specific products even if AMS is
  still below the agreed level

56
8. How could the negotiation substance be
improved to...

• Weak points
• Methodology problem not address the inadequate
  definition of the market price support component
  of the AMS which accounts for 90-100 of
  notified AMS. Currently, artificial prices are
  used in the calculation of AMS
• if the Dohas mandate of substantial support
  reduction is to be achieved, a very large
  percentage reduction of AMS is required, say at
  beast 40-50. This is because currently, the
  actual AMS in developed countries is only 50-70
  of the limit

57
8. How could the negotiation substance be
improved to...

• The cap of Blue box support (currently not
  subject to any limit) will not be effective since
  it is based on the value of agricultural
  production rater than on the current level of
  use. But the best way is to eliminate all Blue
  box support
• The text does not include the requirement that
  the blue box support arrangement be producing
  limiting. Thus, the blue box could be more
  distorting

58
8. How could the negotiation substance be
improved to...

• 8.4 Market Access
• The Doha mandate commits WTO members to
  substantially improve market access
• The market access provisions of the Derbez text
  would fail to meet the requirement, especially
  the framework for reducing tariff

59
8. How could the negotiation substance be
improved to...

• The Derbez text calls for a blended approach to
  tariff reductions which subjects all tariffs to
  one of three reduction methods
• xs.t.UR method average tariff cut to a group
  of tariffs with a minimum cut for each tariff
  line
• ysubject to a Swiss formula final tariff
  (A x initial tariff) / (A initial
  tariff)
• the remaining tariff lines to be duty-free

60
8. How could the negotiation substance be
improved to...

• Weak points
• UR methods allows countries to the minimum cut on
  products of substantial commercial interest, and
  large cuts for a large number of tariff lines
  with little commercial interest
• Since only 10 of tariff lines in EU accounted
  for 80 of imports in 2001, the EU could choose
  to apply the UR method to the important products
  in the 10 of tariff lines.

61
8. How could the negotiation substance be
improved to...

• If substantial additional market access is to be
  achieved, more than 36 tariff cut is
  needed..very difficult !!
• No provision to bring down the bound tariff to
  the applied tariffs. A study finds that the EU
  bound tariff has to be reduced substantially
  before trade to occur beyond the quota 77 for
  wheat, 45 for beef import in EU and 38 for
  sugar in US

62
8. How could the negotiation substance be
improved to...

• Developed countries should not be allowed to use
  SSG. An ABARE study finds that with existing
  tariff and SSG, the would price of sugar would
  need to be zero for trade beyond the tariff quota
  do occur. But the texts limitation is that the
  future use and duration of SSG remains under
  negotiation

63
8. How could the negotiation substance be
improved to...

• The text also allows countries to escape tariff
  cap on the grounds of addressing non-trade
  concerns, eg,exports of rice and skimmed milk
  powder to Japan face very high tariffs.
• A minimum simple average tariff cut for each
  country stipulated in the text would not be
  effective in expanding market access. For
  example, a 50 simple average cut to agricultural
  tariffs could result in a weighted average cut of
  just 0.3 for EU and 1 for US.
• No clear commitment to expand tariff quotas
  (volume). Even the US proposed expansion of
  existing tariff quota quantity by 20 would be
  equivalent to the quota by 1 percent of
  consumption.
• In-quota tariffs and tariff quota administration
  (which affects quota fill rates) are also not
  mentioned in the text.

64
8. How could the negotiation substance be
improved to...

• 8.5 SD Treatment
• The Doha mandate clearly states that SD
  treatment is a central concept of the round
• The Derbez text provides SD treatment for
  developing countries by giving them (a) longer
  time, frames (b) requiring smaller tariff cuts
  than for DC and (c) exempting some forms of
  support from limit, reduction or reform

65
8. How could the negotiation substance be
improved to...

• SD are necessary since it can address the
  problems of food security, adjustment pressures
  from trade liberalization and fewer resources
• But SD should not be considered as a means of
  maintaining trade distorting protection. The test
  may provide scope for LDC to opt out of market
  access reforms.

66
8. How could the negotiation substance be
improved to...

• 8.6 Other issues non-trade concerns
• The Derbez text also has clauses covering newly
  acceded members, peace clause, least developed
  countries and a yet-to-be agreed clause
• A long list of issues of interest that are yet
  to be agreed includes non-trade concerns and
  geographical indications which could undermine
  the benefits from agricultural trade reform
  agreement

67
8. How could the negotiation substance be
improved to...

• Non-trade concerns such as protection of
  environment, animal welfare, rural employment and
  development are best addressed through direct
  targeted and minimally trade distorted means
  rather than through trade barriers and distorting
  domestic support

68
9. Is the multilateral trading system in danger ?

• After the collapse of Cancun, many countries have
  begun to pursue bilateral and regional trade
  negotiations
• But to successfully negotiate FTAs, countries
  need multilateral rules and benchmarks that can
  serve as a framework for those agreements
• Otherwise, the FTAs may create the problems of
  Spaghetti Bowl.

69
10. What are required for success in the WTO
negotiations?- -Substance Strategies

• Conditions the success of WTO negotiations will
  depend on how much they enable both the exporting
  importing LDC to benefit from trade and from
  producing the goods they have comparative
  advantage in. In particular, importing countries
  have to be convinced of and be ensured that their
  food security concern can be maintained while
  protection is being reduced.

70
10. What are required for success in the WTO
negotiations?- -Substance Strategies

• The answer is clear strengthening the 3-pillar
  agreement
• market access reforms must expand actual trade
  significantly
• curtailing the avenues for shuffling domestic
  support between forms of assistance to avoid
  agreed cuts
• substantial reduction in and phasing out of
  export subsidy, export credits and food aid
• non-trade concerns should be dealt with by the
  direct measures and not by the trade measures
  which could be abusively used to erect trade
  barriers

71
10. What are required for success in the WTO
negotiations?- -Substance Strategies

• Some developing countries fear that opening the
  agricultural sector would result in serious
  social disruption as poor farmers who are exposed
  to the external shocks are not able to adjust
  themselves
• Even in the net food exporting countries like
  Thailand, trade liberalization may have negative
  impact on some poor farmers who may find it
  difficult to change their occupation
• 3 policy implications on new institutions for
  developing countries
• (a) social protection measures for the
  disadvantage groups

72
10. What are required for success in the WTO
negotiations?- -Substance Strategies

• Some policy implications
• (a) social protection measures for the
  disadvantage groups
• (b) development programs to shift away from
  non-competitive agricultural products
• (c) special and differential treatment, including
  the rights to use tariffs to
  stabilize their agricultural markets and to
  protect the poor farmers
• (d) however the developing countries must also
  reform their policies to reduce protection

73
11. Conclusion

• Although economists are trained to think about
  trade policy reform in terms of implications of
  changes in tariffs and NTBs on trade,
  employment, growth and government budget, policy
  makers have a different perspective on trade
  reform.
• for them what is a stake is a deeper
  transformation of the pattern of behavior within
  the public sector, and how the governments
  relationship with the farmers and the private
  sector will change

74
11. Conclusion (conts)

• the success of trade policy reform, thus, depends
  critically on the governments capacity to build
  the new quality institutions to cope with the
  new trading environment
• many imported institutions are counter productive
  and must be modified locally, e.g., enforcement
  of the TRIPS agreement may have serious negative
  impact on the poor
• the developed countries also need to create the
  new policy reform and new institutions that
  facilitate the political process of the reduction
  of agricultural support