Market access

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The conceptual framework 

On the market access side, the Uruguay Round resulted in a key systemic change: the switch from a situation where a myriad of non-tariff measures impeded agricultural trade flows to a regime of bound tariff-only protection plus reduction commitments. The key aspects of this fundamental change have been to stimulate investment, production and trade in agriculture by (i) making agricultural market access conditions more transparent, predictable and competitive, (ii) establishing or strengthening the link between national and international agricultural markets, and thus (iii) relying more prominently on the market for guiding scarce resources into their most productive uses both within the agricultural sector and economy-wide.

In many cases, tariffs were the only form of protection for agricultural products before the Uruguay Round — the Round led to the “binding” in the WTO of a maximum level for these tariffs. For many other products, however, market access restrictions involved non-tariff barriers. This was frequently, though not only, the case for major temperate zone agricultural products. The Uruguay Round negotiations aimed to remove such barriers. For this purpose, a “tariffication” package was agreed which, amongst other things, provided for the replacement of agriculture-specific non-tariff measures with a tariff which afforded an equivalent level of protection. The tariffs resulting from the tariffication process account, on average of the developed country Members, for around one fifth of the total number of agricultural tariff lines. For the developing country Members, this share is considerably smaller. Following the entry into force of the Agreement on Agriculture, there is now a prohibition on agriculture-specific non-tariff measures, and the tariffs on virtually all agricultural products traded internationally are bound in the WTO.

 

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Schedule of tariff concessions 

Each WTO Member has a “schedule” of tariff concessions covering all agricultural products. These concessions are an integral part of the results of the Uruguay Round, are formally annexed to the Marrakesh Protocol [cross-reference] and have become an integral part of the GATT 1994 [cross-reference]. The schedule sets out for each individual agricultural product, or, in some cases agricultural products defined more generally, the maximum tariff that can be applied on imports into the territory of the Member concerned. The tariffs in the schedules include those that resulted from the tariffication process, which, in many cases, are considerably higher than industrial tariffs, reflecting the incidence of agriculture-specific non-tariff measures prior to the WTO. Many developing countries have bound their previously unbound tariffs at “ceiling” levels, i.e. at levels higher than the applied rates prior to the WTO.

Developed country Members have agreed to reduce, over a six-year period beginning in 1995, their tariffs by 36 per cent on average of all agricultural products, with a minimum cut of 15 per cent for any product. For developing countries, the cuts are 24 and 10 per cent, respectively, to be implemented over ten years. Those developing country Members which bound tariffs at ceiling levels did not, in many cases, undertake reduction commitments. Least-developed country Members were required to bind all agricultural tariffs, but not to undertake tariff reductions.

 

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... and tariff quota commitments

As part of the tariffication package, WTO Members were required to maintain, for tariffied products, current import access opportunities at levels corresponding to those existing during the 1986-88 base period. Where such “current” access had been less than 5 per cent of domestic consumption of the product in question in the base period, an (additional) minimum access opportunity had to be opened on a most-favoured-nation basis. This was to ensure that in 1995, current and minimum access opportunities combined represented at least 3 per cent of base-period consumption and are progressively expanded to reach 5 per cent of that consumption in the year 2000 (developed country Members) or 2004 (developing country Members), respectively.

The current and minimum access opportunities are generally implemented in the form of tariff quotas. In case of minimum access, the applicable duty was required to be low or minimal, low that is either in absolute terms or, at least, in relation to the “normal” ordinary customs duty that applies to any imports outside the tariff quota. These tariff quotas, including the applicable tariff rates and any other conditions related to the tariff quotas, are specified in the schedules of the WTO Members concerned.

While the vast majority of tariff quotas in agriculture have their origin in the Uruguay Round negotiations, a number of such commitments were the result of accessions to the WTO. Currently (July 1999), 37 Members have tariff quotas specified in their schedules. In total, there are 1374 individual tariff quotas. These tariff quotas constitute binding commitments as opposed to autonomous tariff quotas which Members may establish at any time, for example, in order to stabilize the domestic price after a poor harvest.

 

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The prohibition of non-tariff border measures 

Article 4.2 of the Agreement on Agriculture prohibits the use of agriculture-specific non-tariff measures. Such measures include quantitative import restrictions, variable import levies, minimum import prices, discretionary import licensing procedures, voluntary export restraint agreements and non-tariff measures maintained through state-trading enterprises. All similar border measures other than “normal customs duties” are also no longer permitted. Although Article XI:2(c) of the GATT [cross-reference] continues to permit non-tariff import restrictions on fisheries products, it is now inoperative as regards agricultural products because it is superseded by the Agreement on Agriculture.

However, Article 4.2 of the Agreement on Agriculture does not prevent the use of non-tariff import restrictions consistent with the provisions of the GATT or other WTO agreements which are applicable to traded goods generally (industrial or agricultural). Such measures include those maintained under balance-of-payments provisions (Articles XII and XVIII of GATT), general safeguard provisions (Article XIX of GATT and the related WTO agreement), general exceptions (Article XX of GATT), the Agreement on the Application of Sanitary and Phytosanitary Measures, the Agreement on Technical Barriers to Trade or other general, non-agriculture-specific WTO provisions.

 

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Special treatment

The Agreement on Agriculture contains a “special treatment” clause (Annex 5), under which four countries were permitted, subject to strictly circumscribed conditions, to maintain non-tariff border measures on certain products during the period of tariff reductions (with the possibility of extending the special treatment, subject to further negotiations). As one of the conditions, market access in the form of progressively increasing import quotas has to be provided for the products concerned. The products and countries concerned are: rice in the case of Japan, Korea and the Philippines; and cheese and sheepmeat in the case of Israel. As of 1 April 1999, Japan has ceased to apply special treatment.

 

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The special safeguard provisions 

As a third element of the tariffication package, Members have the right to invoke for tariffied products the special safeguard provisions of the Agreement on Agriculture (Article 5), provided that a reservation to this effect (“SSG”) appears beside the products concerned in the relevant Member’s schedule. The right to make use of the special safeguard provisions has been reserved by 38 Members, and for a limited number of products in each case.

The special safeguard provisions allow the imposition of an additional tariff where certain criteria are met. The criteria involve either a specified surge in imports (volume trigger), or, on a shipment by shipment basis, a fall of the import price below a specified reference price (price trigger). In case of the volume trigger, the higher duties only apply until the end of the year in question. In case of the price trigger, any additional duty can only be imposed on the shipment concerned. The additional duties cannot be applied to imports taking place within tariff quotas.

 

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Notification obligations  

The bound agricultural tariffs and the tariff quota commitments are contained in Members’ schedules. There is no requirement for Members to notify their tariffs to the Committee on Agriculture. Applied tariffs are, however, to be submitted to other bodies of the WTO, including the Committee on Market Access and in the context of the Trade Policy Review mechanism.

Members with tariff quotas and the right to use the special safeguard provisions are required to make both ad hoc and annual notifications to the Committee on Agriculture. At the beginning of the implementation period, an “up-front” notification was due, setting out how each tariff quota is to be administered. Such notifications disclose, for example, if imports are permitted on a “first-come-first-served” basis or if import licences are used — and in the latter case, an indication of who is able to obtain a licence and how they are allocated. An ad hoc notification is required if the method of allocation under any tariff quota changes. At the end of each year, a notification of the quantity of imports entering under each tariff quota is required (tariff quota fill).

Members with the right to use the special safeguard provisions must notify its first use in order to allow its trading partners to establish the parameters of the special safeguard action, such as the volume or price used to trigger the special safeguard action. In the case of the price trigger, an upfront notification of the relevant reference prices has also been possible. In addition, an annual summary notification of the use of the special safeguard is required.

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