Identifying Special Products in Developing countries: Preliminary Findings of ICTSD

1
Identifying Special Products in Developing
countries Preliminary Findings of ICTSDs
Country Studies
Christophe Bellmann Programmes Director - ICTSD
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Special Products (SP) (para. 41)

• .. Developing countries will have the
  flexibility to designate an appropritate number
  of products as Special Products, based on
  criteria of food security, livelihood security
  and rural development needs.
• .These products will be eligible for more
  flexible treatment.
• ..The criteria and treatment of these products
  will be further specified during the negotiation
  phase and will recognise the fundamental
  importance of SP to developing countries .

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The Rationale for Special Products

• Food security combination of domestic
  production, importation and public stockholding.
  However some degree of self-sufficiency for basic
  foodstuffs remains a major objective for DC.
  Availability of foreign exchange is also a
  constraint on the import capacity of some DC.
• Livelihood security Agriculture accounts for 70
  of the employment in low-income countries and
  30 in middle-income countries. Alternative
  avenues of employment are lacking.
• Rural Development In DC, agriculture constitutes
  a big slice of the GDP. Since in the rural areas
  agriculture is the dominant economic activity,
  rural development can be sustained only by a
  vibrant and growing agricultural activity.
• Importance of looking at the three criteria
  together as opposed to individually

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The Rationale for Special Products (cont.)

• As tariffs are removed, the livelihood of
  communities employed in import-competing sector
  might be affected by lower prices and increased
  international competition.
• While this benefits urban consumers it might
  affect large rural populations who rely on
  agriculture but cannot compete with low prices on
  world market.
• Developing countries have limited access to
  domestic resources to cushion farmers against
  adverse effects of imports they essentially rely
  on border measures (tariffs)

5
Source Based on the Millennium Development
Indicators Database (UNSD)
6
Source FAO, WTO Agreement on Agriculture The
Implementation Experience, FAO, Rome, 2003.
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Agricultural Employment in G33 Countries
Source Earth Trends database (World Resources
Institute)
8
Share of Agriculture in GDP in G33 in Countries
Source Earth Trends database (World Resources
Institute)
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LDCs and NFIDCs Agricultural Trade Evolution
Source FAO
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Bound Tariff Structures in G33 Countries
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Effect of a 40 Reduction of Bound Tariffs on G33
Applied Tariff
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Examples of Tariff Structure Subgroup A
Source The G-33 An Analysis of bound and
Applied Tariffs on Agricultural Products Mario
Jales, ICTSD
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Examples of Tariff Structure Subgroup B
Source The G-33 An Analysis of bound and
Applied Tariffs on Agricultural Products Mario
Jales, ICTSD
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Examples of Tariff Structure Subgroup C
Source The G-33 An Analysis of bound and
Applied Tariffs on Agricultural Products Mario
Jales, ICTSD
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Examples of Tariff Structure Subgroup D
Source The G-33 An Analysis of bound and
Applied Tariffs on Agricultural Products Mario
Jales, ICTSD
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Examples of Tariff Structure Subgroup D
COTE DIVOIRE
7
0
6
0
5
0
4
0

3
0
2
0
1
0
0
01
02
02
04
04
05
07
07
07
08
08
09
09
09
11
11
12
12
14
15
15
16
17
18
20
20
21
22
22
23
33
41
51
H
S

c
h
a
p
t
e
r
B
o
u
n
d
A
p
p
l
i
e
d
Sources WTO (2004) and WITS (2002).
Source The G-33 An Analysis of bound and
Applied Tariffs on Agricultural Products Mario
Jales, ICTSD
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Country studies background

• Field research component of a DFID funded project
  on SP-SSM
• To take advantage of the strategic window of
  opportunity in July Framework to address food
  security, livelihood security and rural
  development needs in current agricultural
  negotiations
• Objective of country studies
• Providing some empirical-based and scientific
  justification for the selection of SPs
• Test possible indicators of food/livelihood
  securtiy and rural development which could
  subsequently be used by other countries in the
  preparation of their list

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Countries Selection

• Formally associated with G 33
• Non LDCs
• Focus on Net Food-Importing Developing Countries
  (NFIDC), Low-Income Food-Deficit Countries
  (LIFDC), Small Island Developing States (SIDS)
• Geographical balance
• Focus on subgroups B and C
• Countries with proven domestic research capacity
• Commitment of national government to actively
  support and participate in the project

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Countries Selection (cont.)

• Selected Countries
• Barbados, Caribbean (SIDS)
• Honduras, Central America (LIFDC)
• Kenya, Africa (LIFDC)

• Pakistan, Asia (NFIDC)
• Peru, South America (NFIDC)
• Sri Lanka, Asia (LIFDC)

• Methodology
• Developing an analytical framework for the
  operationalisation of food/livelihood securtiy
  and rural development
• Test it in the field and refine the methodology
• A two track process
• Guidelines
• Stakeholder consultation

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Conceptual Framework for the Identification of
Special Products
Conceptual Framework for the Identification of
Special Products
ICTSD country studies
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Step 1 Identification of intended beneficiaries
Focus on rural poor, small subsitance farmers
but also small comercial farmers
Assess economic and social importance of
particular products for specific regions
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Step 2 Identification of productsLivelihood
secutrity rural development indicators
Purpose of indicators Possible indicators
Contribution of a paricular product to the economy Contribution of the product to national / regional agricultural GDP Extension of land dedicated to a particular crop at national and regional level Number of heads of livestock in the country or region Share of per capita income derived from a particular sector in a specific region or at the national level Environmental impact and agroecological sustainability Analysis of links with the rest of the economy and potential for value addition (degree to which product can be locall processed share of domestic ag. internediate inputs used in non-ag sectors value of good and services used as inputs in the sector)
Contribution of a particular product to employment Total number of labour engaged in the sector at the national and regional level Share of ag population engaged in the production of a specific product at the national and regional level Labour requirement nb. of workers per day/year to cultivate one ha of land (crop/livestock and technology specific)
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Step 3 Identification of products (cont.) Food
Security indicators
Purpose of indicators Possible indicators
Food Security Product identified in national food securtiy baskets or strategies Share of the product in national/regional consumption Contribution to the caloric intake of the population (complemented by contribution to protein and fat requirements) Share of income spent on a particular product at nat/reg. Level Rate of selfsufficiency and import penetration Import revenue (i.e. tariffs) as a contribution to financing of food security programmes
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Data Used for Estimating SP Indicators
Data Used for Estimating SP Indicators
Type of data Reporting focus Data source
Agricultural GDP (Rs/Year) Province Central Bank
Total net revenue (Rs/unit/Yr) Crop / livestock Dep. Agriculture
Crop extent (ha) District Dep. Census Statistics
Livestock (number) District Dep. Census Statistics
Labour use (md/unit/year) Crop / livestock Dep. Agriculture
Agriculture population District Dep. Census Statistics
Material cost of production (Rs/unit/year) Crop / livestock Dep. Census Statistics
Production of crops livestock (MT/year) District Dep. Census Statistics DCS
National requirement of product (MT/year) Crop / livestock Food Balance Sheet
Nutrient conversion factors of products Calories / 100 gm protein fat gm / 100 gm Dep. Census Statistics DCS
Calories, Protein Fat requirement District National Food Balance Sheet
Total imports of products (Mt/Year) National Custom Returns
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ICTSD Country Studies Findings in a Nutshell
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Supplementary elements for the analysis

• Substitutes
• Unfair competition
• Vulnerability to import displacement
• Current level of protection

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Implications for negotiating modalities on SP

• Selection
• Countries should be allowed to self-designate
  their SP within an agreed limit (eg. 15 20 of
  tariff lines).
• There might be a reference to an illustrative,
  non-exhaustive and non-prescriptive list of
  indicators, but a set of multilaterally agreed
  indicators including thresholds would not be
  practicle and not desirable from a sust. dev.
  perspective
• Treatment
• regardless of the size of the lists, there is a
  case for tariff reduction exemption for at least
  a sub-set of SPs (e.g. 7-8 of tarif lines).
• For remaining products calibrated treatment could
  be based on the tiered formula (e.g. 0 reduction
  if product falls in the lowest tier, 5 if it
  falls in the 2nd tier and 10 if it falls in 3rd
  or 4th tier)