Special and Differential Treatment in the WTO Agricultural Negotiations



classification negotiated during the Uruguay Round, has acquired rights under the Marakkesh
Decision which would continue even if a further category of food-insecure countries to
receive Development Box treatment were to be defined.

Recently, the International Food & Agricultural Trade Policy Council proposed a possible set
of classification criteria (IPC, 2004). It acknowledged that the inability to differentiate
between developing countries made S&D treatment less effective, because developed
countries were less willing to provide concessions to developing countries if the beneficiaries
included some of the more competitive middle-income exporters. It proposes a three-fold
distinction based in a modified way on the distinctions drawn by the World Bank and the IMF
based on per capita income. But while the World Bank distinguishes between low income,
lower middle income and upper middle income developing countries, the IPC proposes to
distinguish between least developed countries, lower middle income and upper middle income
countries. The LDC grouping would be based on the UN definition (which includes
institutional constraints as well as per capita income) but, in addition, would include all
countries with a per capita income less than $900 (the World Bank uses a threshold of $765
per capita to distinguish between low income and lower middle income countries). The IPC is
opposed to granting special status to particular sub-categories like small island states, land-
locked countries or vulnerable economies. However, it proposes that countries should be able
to apply for classification into the next lower category if their per capita income does not take
into account unique vulnerabilities. It then argues that the degree of S&D treatment should be
differentiated over these three groups, rather than two as at present. For example, with respect
to market access, it suggests that upper middle income countries should accept the same tariff
reductions as developed countries but with a longer implementation period, the lower middle
income countries might be offered both lower reduction commitments and a longer
implementation period, while LDCs would not be required to make reduction commitments. It
would be encouraging if developing countries, and particularly the upper middle income
developing countries, were to react positively to such a proposal in the ongoing negotiations.

5. Assessment of S&D treatment proposals

The Agreement on Agriculture negotiated in the Uruguay Round does allow developing
countries considerable flexibility to address issues of food security, rural development and
poverty alleviation. Developing countries were able to opt for ceiling tariff bindings from
which to implement their tariff reduction commitments for products subject to unbound
tariffs. Reduction commitments were set at two-thirds those of developed countries and least
developed countries were exempted from reduction commitments altogether. With respect to
domestic support, specific measures to promote agricultural production in developing
countries are exempt from reduction commitments and they have higher
de minimis
thresholds for trade-distorting support.

Nevertheless, experience to date with the implementation of the AoA has revealed a number
of major shortcomings. The huge imbalance in the amount of Green Box and trade-distorting
support provided to developed country farmers compared to that available to developing
country farmers, despite and indeed because of provisions within the AoA, leaves many
developing countries fearful that further liberalisation of their agricultural policies will leave
their farmers exposed to unfair competition. There is a general concern across many
developing countries that poor farmers in these countries are much less capable of dealing
with the consequences of world market price volatility and deserve some special protection
against this volatility. Some countries which believe that food self-sufficiency is an important
element in their food security strategy and those which have bound their tariffs on food
staples at relatively low levels are concerned at the possible consequences for food security of
further tariff reductions. Other countries are concerned that their ability to pursue growth-
promoting agricultural policies may be limited because they will come up against the low
ceiling limits for domestic support.

18



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