Issues in Agricultural Trade Policy ProceedIngs of The 2014 oecd globAl forum on AgrIculTure Issues in Agricultural Trade Contents Chapter 1. Issues in agricultural trade policy: An overview Policy Chapter 2. A re past OECD analyses of agricultural policy reforms relevant to current policy and market settings? Chapter 3. Current domestic policy settings in the context of past and potential international agreements ProceedIngs of The 2014 oecd globAl forum Chapter 4. Review of the performance and impacts of recent stockholding policies on AgrIculTure Is s u e s in A g r ic u lt u r a l T r a d e P o lic y P r o c e e d In g s o f T h e 2 0 1 4 o e c d g l o b A l f o r u m o n A g r Ic u l Consult this publication on line at http://dx.doi.org/10.1787/9789264233911-en. Tu r e This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. Visit www.oecd-ilibrary.org for more information. Isbn 978-92-64-23388-1 51 2015 06 1 P Issues in Agricultural Trade Policy PROCEEDINGS OF THE 2014 OECD GLOBAL FORUM ON AGRICULTURE ThisworkispublishedundertheresponsibilityoftheSecretary-GeneraloftheOECD.The opinionsexpressedandargumentsemployedhereindonotnecessarilyreflecttheofficial viewsofOECDmembercountries. This document and any map included herein are without prejudice to the status of or sovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersandboundaries andtothenameofanyterritory,cityorarea. Pleasecitethispublicationas: OECD(2015),IssuesinAgriculturalTradePolicy:Proceedingsofthe2014OECDGlobalForumonAgriculture, OECDPublishing,Paris. http://dx.doi.org/10.1787/9789264233911-en ISBN978-92-64-23388-1(print) ISBN978-92-64-23391-1(PDF) ThestatisticaldataforIsraelaresuppliedbyandundertheresponsibilityofthe relevantIsraeliauthorities.Theuse ofsuchdatabytheOECDiswithoutprejudicetothestatusoftheGolanHeights,EastJerusalemandIsraeli settlementsintheWestBankunderthetermsofinternationallaw. Photocredits:Cover©Thinkstock/Dominiquedelacroix. CorrigendatoOECDpublicationsmaybefoundonlineat:www.oecd.org/about/publishing/corrigenda.htm. ©OECD2015 Youcancopy,downloadorprintOECDcontentforyourownuse,andyoucanincludeexcerptsfromOECDpublications,databasesand multimediaproductsinyourowndocuments,presentations,blogs,websitesandteachingmaterials,providedthatsuitable acknowledgmentofthesourceandcopyrightownerisgiven.Allrequestsforpublicorcommercialuseandtranslationrightsshouldbe submittedtorights@oecd.org.Requestsforpermissiontophotocopyportionsofthismaterialforpublicorcommercialuseshallbe addresseddirectlytotheCopyrightClearanceCenter(CCC)[email protected]çaisd’exploitationdudroitdecopie (CFC)[email protected]. 3 FOREWORD – Foreword This book brings together a collection of papers prepared for the Global Forum on Agriculture which took place at the OECD in December 2014. It reviews current knowledge about agricultural and agricultural trade policy settings and asks how pertinent that knowledge is in the light of profound market and structural changes that have been taking place in the global agro-food sector in recent decades. It aims to inform and assist policy makers and negotiators as they seek to overcome the problems that have made the agricultural pillar of the Doha Agenda trade negotiations particularly difficult. The data and analysis presented cover OECD and major G20 and emerging economies which account for the great bulk of global food production, consumption and trade. Chapter 1, prepared by Jared Greenville of the OECD Secretariat, provides a short overview and synthesis of the main conclusions which can be drawn from the papers which make up the book. Chapter 2, by Stefan Tangermann, Professor Emeritus at the University of Göttingen, examines the validity of analysis undertaken by OECD since the conclusion of the Uruguay Round, in light of the profound changes that have occurred in agricultural markets and policies in recent years. It asks in particular whether earlier policy recommendations and analyses of reform impacts remain pertinent in a world of higher and more volatile international prices, and where the role and influence of key emerging economies is much greater than in the past. Chapter 3, by Lars Brink, Independent Advisor, examines current policy settings in 20 major agricultural producing and consuming countries against their Uruguay Round commitments and against the 2008 draft modalities drawn up in the context of the Doha negotiations, with a view to gauging the degree of further reform effort that would be required to give effect to the draft modalities in today’s policy and market environment. Finally, Chapter 4, by Annelies Deuss of the OECD Secretariat, reviews recent experience in the use of buffer stocks and social safety net stocks, mainly in emerging and developing countries, with a view to determining how effective they have been in meeting their seemingly contradictory aims to raise or stabilise prices for producers while lowering them for consumers. A summary of the discussion during the Global Forum on which this proceedings volume is based, as well as the presentations made during the Forum, are available from the Forum webpage (http://www.oecd.org/agriculture/global-forum-agriculture-2014.htm). ISSUES IN AGRICULTURAL TRADE POLICY: PROCEEDINGS OF THE 2014 OECD GLOBAL FORUM ON AGRICULTURE © OECD 2015 5 TABLE OF CONTENTS – Table of contents Foreword ......................................................................................................................................................... 3 Chapter 1. Issues in agricultural trade policy: An overview ...................................................................... 9 1.1. Evolving agricultural markets ........................................................................................................ 10 1.2. The landscape of agricultural support policies has evolved ........................................................... 14 1.3. Do changes in agricultural markets require new principles for formulating future agricultural trade and domestic policies? ...................................................................................... 19 1.4. Agricultural market liberalisation remains important, including for food security ........................ 20 References ................................................................................................................................................. 23 Chapter 2. Are past OECD analyses of agricultural policy reforms relevant to current policy and market settings? ................................................................................................................................... 25 2.1. Introduction .................................................................................................................................... 26 2.2. Market situation and outlook ......................................................................................................... 27 2.3. Evolution of the policy landscape .................................................................................................. 29 2.4. Market and trade impacts of agricultural policies .......................................................................... 40 2.5. Achieving optimal policy performance .......................................................................................... 49 2.6. Implications for agricultural trade negotiations post-Bali .............................................................. 57 2.7. Conclusions .................................................................................................................................... 60 Notes.......................................................................................................................................................... 61 References ................................................................................................................................................. 64 Chapter 3. Current domestic policy settings in the context of past and potential international agreements ................................................................................................................................................... 69 3.1. Introduction .................................................................................................................................... 70 3.2. Background .................................................................................................................................... 70 3.3. Market access ................................................................................................................................. 73 3.4. Export competition ......................................................................................................................... 84 3.5. Domestic support ........................................................................................................................... 97 3.6. Discussion .................................................................................................................................... 116 3.7. Conclusion ................................................................................................................................... 123 Notes........................................................................................................................................................ 124 References ............................................................................................................................................... 128 Chapter 4. Review of the performance and impacts of recent stockholding policies ........................... 133 4.1. Introduction .................................................................................................................................. 134 4.2. Scope of the study ........................................................................................................................ 135 4.3. Performance of recent public stockholding policies that influence prices ................................... 136 4.4. Other impacts of recent public stockholding policies .................................................................. 145 4.5. Conclusions .................................................................................................................................. 147 Notes........................................................................................................................................................ 148 References ............................................................................................................................................... 149 ISSUES IN AGRICULTURAL TRADE POLICY: PROCEEDINGS OF THE 2014 OECD GLOBAL FORUM ON AGRICULTURE © OECD 2015 6 – TABLE OF CONTENTS Tables Table 3.1. Attributes of studied countries .............................................................................................. 72 Table 3.2. Tariff cuts under harmonising tiered formula for developed countries................................. 74 Table 3.3. Tariff cuts under harmonising tiered formula for developing countries ............................... 74 Table 3.4. Selected elements of tariff profiles in agriculture ................................................................. 78 Table 3.5. Tariff profiles before and after REV.4 reductions ................................................................ 80 Table 3.6. Export subsidy commitments and notifications .................................................................... 86 Table 3.7. Export subsidy outlays and subsidized quantities as percentage of commitments ............... 87 Table 3.8. Export financing support: selected data ................................................................................ 92 Table 3.9. Features of agricultural exporting state trading enterprises (STEs) of six countries ............ 94 Table 3.10. Overview of countries’ food aid programmes ...................................................................... 96 Table 3.11. Bound Total AMS before and after any Rev.4 reduction ................................................... 100 Table 3.12. De minimis percentages ...................................................................................................... 101 Table 3.13. Total blue box limits ........................................................................................................... 102 Table 3.14. Calculation of Base OTDS and Bound OTDS .................................................................... 104 Table 3.15. Assessment of Rev.4 reductions in Bound Total AMS and de minimis percentage ........... 107 Table 3.16. Calculation of current OTDS .............................................................................................. 115 Table 4.1. Performance variables for the different stockholding programmes .................................... 137 Table 4.2. Grain trading enterprises in Africa that deal with buffer stocks ......................................... 139 Table 4.3. Agencies in Asia that manage buffer stocks ....................................................................... 141 Figures Figure 1.1. Net agricultural production ................................................................................................... 11 Figure 1.2. Real food prices .................................................................................................................... 12 Figure 1.3. Growth in agricultural trade .................................................................................................. 13 Figure 1.4. Notified bilateral and regional trade agreements .................................................................. 14 Figure 1.5. Trends in PSE: OECD and emerging economies .................................................................. 15 Figure 1.6. Applied agricultural tariff rates ............................................................................................. 15 Figure 2.1. International market prices of cereals in real terms, 1971-2023 ........................................... 28 Figure 2.2. Price projections for selected agricultural commodities for the average of years 2014 to 2023 ......................................................................................................................... 28 Figure 2.3. Producer Support Estimate as a share of gross farm revenue, 1995-2023 ............................ 30 Figure 2.4. Shares of country groups in aggregate producer support of all 47 countries covered in the OECD’s M&E ............................................................................................................. 31 Figure 2.5. Change of %PSE and Producer NPC from 2002-07 to 2012 ................................................ 32 Figure 2.6. Share of potentially most distorting support in all producer support, 2002-07 and 2012 ..... 32 Figure 2.7. Bound and MFN Applied Tariffs for agricultural products, 2012 ........................................ 33 Figure 2.8. Maximum duty (MFN Applied) among all tariff lines for agricultural products, 2012 ........ 34 Figure 2.9. Change of average tariffs (mfn applied) for agricultural products from 2007 to 2012 ......... 34 Figure 2.10. Export measures affecting agricultural products: Number of measures taken, 2007 to 2011 ......................................................................................................................... 37 Figure 2.11. Production impact ratios of alternative agricultural policies: Highest and lowest results of various OECD studies on decoupling ................................................................... 42 Figure 2.12. Ranges of reduction rates for agricultural tariffs in developed countries suggested in the successive draft modalities of 2006, 2007 and 2008 ....................................................... 58 Figure 3.1. Commodity prices index 2006-2013 ..................................................................................... 82 Figure 3.2. Change of average tariffs (MFN Applied) for agricultural products from 2007 to 2012 ...... 82 Figure 3.3. China’s net grain imports, 2000-13 ....................................................................................... 93 Figure 3.4. Non-green-box support in the EU, Japan, Russia and the United States ............................ 122 Figure 3.5. Non-green-box support in Brazil, China, India and Indonesia ........................................... 122 ISSUES IN AGRICULTURAL TRADE POLICY: PROCEEDINGS OF THE 2014 OECD GLOBAL FORUM ON AGRICULTURE © OECD 2015 7 TABLE OF CONTENTS – Figure 4.1. Indonesian and Thai wholesale rice price, January 2000 – September 2011 ...................... 142 Figure 4.2. Stocks of wheat and rice in India: actual stock levels vis-à-vis mandated norms (million tonnes) ................................................................................................................... 143 Figure 4.3. China wheat price support and market price, 2004-14 ....................................................... 144 Figure 4.4. China soybean price support and market price, 2004-14 .................................................... 145 Boxes Box 1.1. Increasing use of public stockholding policies ..................................................................... 17 Box 1.2. Current trade policies and Doha draft modalities ................................................................. 18 Box 1.3. Principles for agricultural policy design from past OECD analysis ..................................... 19 Box 1.4. Trade and food security ........................................................................................................ 21 Box 4.1. Types of public food stocks ................................................................................................ 135 ISSUES IN AGRICULTURAL TRADE POLICY: PROCEEDINGS OF THE 2014 OECD GLOBAL FORUM ON AGRICULTURE © OECD 2015