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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