Cutting agricultural tariffs

Next week, the diplo­mats return to Gene­va to try once more to come up with a ‘frame­work’ for cut­ting the high tar­iff bar­ri­ers sur­round­ing mar­kets for agri­cul­tur­al prod­ucts. Here’s what I’d like them to do: 

Set a lev­el of ambition

There’s no point in work­ing around the dif­fer­ence between coun­tries using _words_ if the basic prob­lem is that some coun­tries just don’t want to achieve what they promised to achieve at the start of the nego­ti­a­tions (‘sub­stan­tial reduc­tions in mar­ket access barriers&#8217). By mak­ing it clear that when the final details are agreed there’ll be a _target_ that every­one has to meet, we’ll know whether the nego­ti­a­tions are head­ed some­where or just wan­der­ing aimlessly.

At present there’s no such tar­get, but _there should be_. It could be set as the size of the cut each coun­try will achieve in it’s _own tar­iff average_ for agri­cul­tur­al prod­ucts. Gov­ern­ments agreed on _average cuts_ in the last round of nego­ti­a­tions rather than a cut in tar­iff aver­ages. Turns out, this was a big mis­take that result­ed in avoidance. 

There’s no need to agree the actu­al cut now. For the moment, _square brackets_ […] can be a place-hold­er for a num­ber to be decid­ed at the end of the nego­ti­a­tions (it can _only_ be decid­ed at the end of the negotiations)

Cut the ‘water’ out of agri­cul­tur­al tariffs

The last round intro­duced the _tariffs only_ rule for agri­cul­tur­al pro­tec­tion but imple­ment­ing this rule result­ed in some stratos­pher­ic rates of duty that are much high­er than nec­es­sary to elim­i­nate _all_ import com­pe­ti­tion. The _global average_ bound rate of duty on agri­cul­tur­al imports around the world is *62 per­cent*: about 15 times the rate of duty charged in indus­tri­al­ized coun­tries on non-agri­cul­tur­al goods.

Cut these peak rates down to size first by set­ting a cap on all tar­iff rates _before_ the for­mu­la cuts are applied. Express this cap for each coun­try in terms of a per­cent of its own tar­iff aver­age. So, for exam­ple, all coun­tries could start by cut­ting tar­iffs that are more than twice their own aver­age for the agri­cul­ture sec­tor to, say, 150 per­cent of their own average. 

This would allow any for­mu­la even­tu­al­ly adopt­ed to work on a _flatter_ tar­iff struc­ture. Again, the _actual_ per­cent num­ber can be decid­ed lat­er in the negotiations

Keep it simple

Cut through the cur­rent con­tort­ed diplo­mat­ic solu­tions in favor of some­thing that is easy to under­stand and has obvi­ous effects. Nego­tia­tors instinc­tive­ly try to _write around_ dif­fer­ences over fun­da­men­tal goals and pro­ce­dures. This sub­ject is too impor­tant for that sort of shennanigans.

The ‘band­ed’ formulas—although bet­ter than the _blended_ approach reject­ed at Cancún—have _too much ‘flexibility’_ built-in; they con­fuse the issue, to the advan­tage of those who want to min­i­mize results. Unless reci­procity is _visible_, there’ll be less will­ing com­pli­ance with the rules.

Cut the num­ber of ‘bands’—if they must be retained—from five (devel­op­ing coun­tries) and four (indus­tri­al­ized coun­tries) to two: above and below aver­age rates

Get rid of ‘spe­cif­ic duties’

These are duties expressed in some unit of cur­ren­cy per unit of prod­uct. They are per­ni­cious because they off­set mar­ket-respon­sive exchange rate move­ments that are meant to _facilitate_ trade. Also, they under­mine the GATT sys­tem of tar­iff bind­ing because and they gen­er­al­ly become more restric­tive when world prices fall with­out any change in the duty itself.

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