1 Nepal’s WTO Membership and the Agriculture Sector Navin Dahal South Asia Watch on Trade Economics and Environment

2 Content of the Presentation Introduction to WTO Nepalese Agriculture Sector Agreement on Agriculture Nepal’s Commitments and Concerns Other Agreements that impact the Agriculture Sector

3 WTO Successor of GATT, Operational from 1 January 1995 Permanent inter-governmental body governing and regulating international trade in goods, services and IPR It’s an organisation for liberalising trade – help trade flow as freely as possible It’s a place for settling trade disputes

4 WTO WTO is based on four pillars  Promoting rules based multilateral trading system  Non-discrimination (Most-Favoured Nations and National Treatment)  Transparency  Special treatment for less developed countries It has 149 members Decisions are made through consensus It provides for an effective dispute settlement system

5 WTO At the heart of the system are WTO Agreements, negotiated and signed by members These Agreements are contracts that bind governments to keep their trade policies within agreed limits

6 Major WTO Agreements GATT 1994 Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement on Agriculture (AOA) General Agreement on Trade in Services (GATS) Agreement on Sanitary and Phytosanitary (SPS) Measures Technical Barriers to Trade (TBT) Agreement on Textile and Clothing (ATC)

7 WTO Agreements The WTO Agreements cover goods, services and intellectual property They spell out principles of liberalisation and permitted exceptions They include individual countries commitment to lower custom tariffs and other trade barriers and open key services sectors : 22,500 pages listing individual countries commitments They set procedures for settling disputes

8 Nepalese Agriculture Sector 38 % of GDP 70 % employment 83 % of total households Average farmland 1.09 hectares 40 % small farmers operating less than 0.5 hectares of land

9 AoA Objective – To establish a fair and market- oriented agriculture trading system Members are required to make commitments in three areas  Market Access  Domestic Support  Export Subsidies

10 Market Access Binding of tariff Reduction of tariff Developed countries 36 % 6 years Developing countries 24 % 10 years

11 Agriculture in WTO (contd..) Modest success in reforming agriculture Market Access Bound tariff-62 per cent Tariff peaks and escalation Non-predictability of tariff structure Use of specific duties Tariff Rate Quota Special Safeguard Measures (SSG) State Trading Enterprises

12 Tariff Structures Bound Tariffs USAEU-15INDIA Mean12%29%117% Maximum350%277%300% Minimum0% 10% # Tariff lines1,8292, T = 0% % 30%1,2471, % 100% T >100%

13 Products with High Tariffs USAEU-15INDIA DairyMeat of Bovine & Pork Nuts GrapesPorkWheat PeanutsDairyVegetable oil SugarBananaBeverages TobaccoProcessed Cereal Grains Sugar Prepared vegetables….

14 Domestic Support Aggregate Measurement of Support (AMS) Support that encourage overproduction Amber box, blue box and green box support base level Developed countries reduce 20 percent over 6 years Developing countries reduce 13 percent over 10 years De minimis – 10 and 5 percent of AGDP

15 Export Subsidies Prohibited unless specified in Member’s commitments Where listed members agreed to cut both amount and quantities Developed countries agreed to cut by 36 % over 6 years Developing countries by 21 % over 10 years

16 Agriculture in WTO (contd..) Domestic Support Existence of huge domestic support Concentrated in three members – EU, US and Japan Concentrated in grains, sugar and field cops Existence of blue box subsidies Export Subsidies Rights conferred only to 25 members EU uses 90 per cent followed by Switzerland and the US Concentrated in wheat and flour, coarse grains sugar, milk products and meat

17 Export Subsidies No SA country has right to use ES (EU - 20, US – 13) Share of Total ES notified to the WTO ( ) EU 25 – 90%, Sw’land –5%, USA 1.4% Share of Total ES notified to the WTO ( ) Dairy 35%, Beef 18%, Sugar 11%, Grains 14%. To be eliminated as scheduled by the end date to be agreed SDT 1 – Longer implementation period SDT 2 – Continued access to the provision under Article 9.4 of the AoA for a reasonable period to be negotiated

18 Export Credits Share of EC (1998) – USA 49%, Australia 20%, EU 15 16%, Canada 14% Share of EC – Cereals 28%, Livestock products 16%, Vegetable products 16%, Processed Products 10% Export credits, export credit guarantees or insurance programs with repayment periods beyond 180 days will be eliminated by the end date to be agreed

19 Agriculture in WTO (contd..) Nepal’s Commitment in Agriculture Final bound tariff-42 per cent No TRQ and SSG Elimination of ODCs Applied rate is 13.5 per cent: flexibility of upward revision AMS- nil No Export subsidies

20 Nepal’s Interest Opening of domestic Market Bound Tariff Trade with India Making agriculture produce available and affordable to the poor Market Access in Developed and Developing Markets Existing distortions Nepal net food importer

21 Agriculture in WTO (contd..) Ongoing Negotiation Doha Declaration July Package  Parallelism  Recognition of development and social issues  Domestic support  Export subsidies  Market access  Special and differential treatment Work on Technical Issues not drafting of Text

22 Nepal’s Concern Guiding Principles Policy flexibility Enlarged markets Protection of small farmers Import Bill

23 Import 19 % of total Crude palm oil – 24.3 % Rice – 2.6 %

24 Direction of Imports India % Singapore – 15 % Malaysia – 11 % Indonesia – 10 %

25 Export 26 % of total 30 % - Vegetable fats and oils 17.5 % wheat 8 % lentils

26 Direction of Exports India – 84 % Tibet – 7 % EU – 3 %

27 Nepal’s Concern (contd..) Concern on specific issues Market Access Domestic support Export subsidies Green box Food aid Preference erosion Special safeguard measures Special and sensitive products Duty free and quota free market access

28 HK Decisions Elimination of export subsidy by 2013 Four bands for reducing tariff Three bands for reducing domestic support Self designation of Special products SSM – price and volume trigger

29 Other Agreements SPS TBT TRIPS

30 Thank you for your kind attention