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  1 1.  AGRICULTURE IN THE WTO Agriculture has traditionally benefited from special arrangements whichsheltered it from the full impact of GATT disciplines. Even today, in theWTO agricultural policies are covered by a separate agreement that, to adegree, still shelters it from generally applicable rules.A variety of political, social, economic and cultural arguments are used to ustify this special treatment. The main ustification is the need to guarantee,over time, stable food supplies in a world of fluctuating harvests and potential famines.The scope of the traditional agricultural !e ception# was to some e tentlimited by the $ruguay %ound agreements& WTO 'embers agreed upon aset of principles and disciplines that were designed to help liberali(einternational trade in agricultural products.The $ruguay %ound achieved two things in relation to agriculture. )tintroduced specific disciplines on mar*et access, domestic support ande port subsidies. At the same time it too* away the !fig leaf# behind whichagriculture had been hiding from the full force of general GATT disciplines.The  Agreement on Agriculture see*s to reduce restrictions on trade inagricultural products by introducing disciplines to+ ã  increase mar*et access& ã  reduce domestic support measures& ã  reduce subsidi(ed e ports.This 'odule e amines each of the three disciplines in turn and the other  provisions of the  Agreement on Agriculture .Other WTO agreements also discipline trade in agricultural products. Thosewith the biggest impact on trade in agricultural products are+ the GATT1-& the  Agreement on Safeguards or the Safeguards Agreement  & the  Agreement on Import Licensing Procedures or the  Import Licensing  Agreement  & the  Agreement on the Application of Sanitary and  Phytosanitary Measures or the SPS Agreement  & the  Agreement onTechnical Barriers to Trade or the TBT Agreement and, the  Agreement onTrade Related Aspects of Intellectual Property Rights or the TRIPs Agreement  .These agreements, along with the  Agreement on Subsidies and Counterailing Measures or the SCM Agreement and the  Agreement on Implementation of Article !I of the ATT #$$% or the  Antidumping  Agreement are also briefly e amined.   2. THE AGREEMENT ON AGRICULTURE Objectives On completion of this section, the reader should be able to describethe main disciplines that were introduced by the  Agreement on Agriculture on trade in agricultural products and, in particular, theprovisions of the  Agreement on Agriculture on market access,domestic support and export subsidies. 2.1 Introduction The  Agreement on Agriculture is one of the *ey agreements within the WTOsystem. )ts importance is reflected by its presence as the first Agreementanne ed to the 'arra*esh Agreement establishing the WTO.The  Agreement on Agriculture is fairly short, with only 1 Articles and /Anne es. The 1 Articles are rather surprisingly divided into 10 hapters.This form of the  Agreement on Agriculture  probably reflects the sensitivityof the sector and the difficulty in achieving agreement among WTO'embers.The specific agricultural commitments made by WTO 'embers are notfound in the  Agreement on Agriculture , but in Article )) !ountry2chedules# of the GATT 1-. 3oth the  Agreement on Agriculture and theountry 2chedules must be e amined together to understand a WTO'ember4s commitments on agriculture.The  Agreement on Agriculture applies to agricultural products. Agricultural products are defined in Anne 1 of the  Agreement on Agriculture . Thisdefinition ma*es reference to the 5armoni(ed 2ystem of productclassification. )n practice, agricultural products are those within hapters 1to - of the 5armoni(ed 2ystem less fish and fish products, as well as somespecific products which come from the soil. 6orestry products are notincluded.The definition of agricultural product covers not only basic agricultural products such as wheat, mil* and live animals, but the products derived fromthem such as bread, butter, oil and meat, as well as all processed agricultural products such as chocolate, yoghurt and sausages. The coverage alsoincludes wines, spirits and tobacco products, fibres such as cotton, wool andsil*, and raw animal s*ins destined for leather production.The  Agreement on Agriculture has three main parts+ 7art ))) on mar*etaccess& 7art )8 on domestic support 9subsidies: and 7art 8 on e portsubsidies. Each of these parts are e amined in turn.  0 2.2 Market Access 2.2.1 Introduction 'ar*et access simply means the right which e porters have to access aforeign mar*et. The WTO agreements allow WTO 'embers to protect their mar*ets. )n practice !mar*et access# refers to the ways in which that protection can be implemented. )n the WTO framewor* it is a legalisticterm indicating the government;imposed conditions under which a productmay enter a country and be released for free circulation within that countryunder normal conditions.The specific border measures to protect mar*ets allowed under the  Agreement on Agriculture are tariffs and tariff rate &uotas . A tariff is aduty or ta . Although there are several different forms of tariffs, the maor ones used in agriculture are ad alorem 9calculated as a percentage of thevalue of the goods:,  specific 9a unit ta based on <uantity: and mi'ed 9acombination of these two:. A tariff rate <uota is a specific volume 9<uota: atwhich a product can enter a mar*et at a tariff rate which is different 9lower:than the over; <uota tariff.  A tariff is a trade barrier that ta(es the form of a goernment ta' imposed on goods )usually imports and occasionally on e'ports* +hen they crossborders Li(e internal ta'es, a tariff generates reenue for the goernment of the importing country A tariff rate quota is a &uantity of imports or e'ports +ithin +hich a lo+er tariff applies A higher tariff applies aboe the olume of the &uota )theoer- &uota tariff* General or specific border measures affecting agricultural products may beadopted under other WTO agreements such as the SPS or the TBT  Agreements . 2.2.2 Tariffication 7rior to the $ruguay %ound, border protection for agricultural products wasnot always in the form of tariffs. )n addition to tariffs, other non;tariff border measures were applied. A core element of the $ruguay %ound negotiationswas the agreement to convert these other types of border protectionmechanisms into tariffs. This process was called ! tariffication #. Tariffication is the process of conersion of all non-tariff mar(et protectionmeasures into the tariff e&uialent The tariff e&uialent to a non-tariff barrier is the difference bet+een the aerage domestic price and the aerage+orld mar(et price  -The process of tariffication is not straightforward. Economists argue as tothe appropriate methodology. )n theory it is simple. The tariff e<uivalent of a non; tariff border measure is the difference between the world mar*et priceand the domestic mar*et price for any specific product.5owever, it is not easy to determine what is the world mar*et or domesticmar*et price, how these prices should be measured and over what periodshould the measurement ta*e place. )t is also not clear to what e tentgeographic and transport costs should be ta*en into consideration.Article - of the  Agreement on Agriculture on mar*et access gives noguidance as to how this process of tariffication should have been underta*enor how 'ember4s schedules of concessions in this area had to be established.)t merely sets out that WTO 'embers must not revert to those border measures which had to be converted into ordinary customs duties. All thedetails of how mar*et access should be improved were set out in a provisional document entitled !'odalities for the Establishment of 2pecific3inding ommitments under the %eform 7rogramme#. )t was agreedamong negotiators that the legal status of this document should end with theconclusion of the %ound.The first step re<uired for all $ruguay %ound signatories, including the leastdeveloped countries, was to tariffy all of the agricultural tariff lines byconverting all non;tariff border measures to simple tariff e<uivalents 9 ad alorem or  specific or both:. The second step to be followed was tariff reduction, for which the 'odalities Agreement provided different rulesaccording to product type 9e.g. previously bound or unbound: - and economicgrouping 9e.g. developed, least developed:. The 'odalities Agreement setminimum tariff reduction re<uirements at two levels = the level of individual tariff lines and the overall averages for all agricultural products = to be implemented over a si ;year implementation period commencing in1/. The !tariffication formula# re<uires the developed countries to reducetariffs for all agricultural products on average by 0> per cent from the basetariff rate with a minimum reduction of 1/ per cent per tariff line over a si year period 9for the developing countries by two;thirds of that applying tothe developed countries over the 1? year implementation period:.)n practice, during the $ruguay %ound countries made their owncalculations of the tariffs resulting from tariffication and inscribed them intheir draft country schedules. )f another WTO 'ember did not obect to thefigures placed in the draft schedules, by the conclusion of the $ruguay%ound agreements on 1/April 1-, the draft figures were incorporated into the final countryschedules. Once the $ruguay %ound was concluded, the ! CountrySchedules # became fi ed.
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