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The Way Forward for WTO Reform: Notification of Agricultural Subsidies and Differentiation of Developing Countries Multilateral negotiations, Trade policy

Author Jin Kyo Suh, Ji Hyun Park, Min-Sung Kim, and Siddhartha Mitra Series 중장기통상전략연구 19-01 Language Korean Date 2019.12.31

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   The global trading system - with the WTO at its heart - is facing a ‘make or break’ moment. All three of the WTO’s functions are under pressure and in need of reform: administering multilateral trade rules, serving as a forum for trade negotiations and providing a mechanism to settle trade disputes. But despite this gloomy outlook, there is reason to be cautiously optimistic. Among many important issues related to reforming the WTO trading system, this study focuses on following two issues; reinforcing WTO notifications and differentiating developing countries since the two issues are core and key interest of both developed and developing members.
   Agricultural support can divided into three types: (i) trade or border measures such as tariffs or quotas that provide market price support (MPS); (ii) coupled subsidies (CS) provided by governments as direct subsidies on output or as subsidies on inputs (such as fertilizers or seeds) that create incentives to increase output; and (iii) decoupled subsidies (DS) that avoid altering incentives to change output levels but provide direct income support to farmers.
   The traditional pattern of agricultural support involved substantial support to farmers in the rich countries, while poor countries, on balance, used to tax agriculture. This pattern has changed substantially over the past decades. In wealthy nations, average rates have fallen and there has been a move away from trade measures and towards decoupled protection that seeks to avoid pushing for higher agricultural production and reducing the market access opportunities of other countries. In developing countries, agricultural support has shifted from net taxation to net assistance on average.
   A key question is which interest groups might engage on reform of agricultural subsidies in the future. Reformers need to develop a reform narrative that frames the issues in a way that makes the benefits of reform clear and mobilizes a range of actors in support of a specific approach to reform. Discourse coalitions can help build such a shared understanding and identify narratives that will convey its essence to broader groups of stakeholders. While the road to such reform is likely to be long and hard there is, at last, a great deal of attention focused on how this might be done.
   The Trump administration, in another sign of its tough approach to trade, moved in March 2019 to exclude India and Turkey from a program that has long granted the two countries preferential duty-free access to US markets. The administration’s action came after Brazil and Australia lodged parallel claims that India’s sugar subsidy regime has depressed world prices. Earlier this year, the World Trade Organization (WTO) took a similar step, ruling against China’s rice and wheat subsidies.
   These actions underscore an important issue, bringing the role of larger developing countries in the trading system to the front burner. Developing countries’ exports have grown to represent almost half of total world exports, with the largest 15 developing economies accounting for some three-quarters of that share. When the players?advanced or emerging?are large, their actions can have sizeable economic effects in international markets. There is thus a strong rationale to have them play by the same rules.
   The central issue at hand is the long-standing practice in the WTO?and its predecessor, the GATT?that each country may “self-declare” as developing to benefit from special and differential treatment (S&DT). Least developed countries (LDCs) qualify automatically, however, once certain thresholds are met. While the exact meaning of S&DT is defined in the context of each negotiation?preferential market access, exceptions to commitments, technical assistance, etc.?the concept departs from the key principles of reciprocity and nondiscrimination that underlie the multilateral trading system.
   One way to improve the system would be to limit the practice of developing-country self-declaration. The United States recently proposed that in current and future negotiations, members or acceding members of the Organization for Economic Cooperation and Development (OECD) may not invoke the self-declaration option. The same would apply to members of the Group of 20 (G-20), “high income” countries as per the World Bank definition, or countries that account for 0.5 percent or more of global merchandise trade. Over 30 countries would fall in at least one of these categories.
   Agreeing on a formal categorization of developing countries in the WTO context can become a byzantine negotiating exercise, with little likelihood of agreement because of the diverse nature of countries in this category. In reality, however, differentiation does occur. The WTO Trade Facilitation (TFA) allows countries to self-determine the timeline for implementation of commitments, in some cases linked to technical assistance. The “developed-developing” dichotomy does not serve the WTO membership well. Rather than debating definitional criteria, however, WTO members should consider the following steps to help integrate developing countries in global trade:
   Countries can decide to follow Taiwan’s example and not claim differentiated treatment, without the need to declare themselves “developed.”
   Countries could opt not to claim differentiated treatment in a specific negotiation, as with the implementation of TFA commitments. The ongoing negotiations on fisheries subsidies disciplines provide a good opportunity to put this measure into practice.
   Flexible negotiating formats, in particular plurilateral agreements open to participation by all countries, are a useful alternative for designing rules in areas of interest to groups of members. Finding a way to bring them to the WTO would benefit the broader WTO membership, increasing transparency. Countries not wanting to join a negotiation would not be required to do so or be allowed to block it.
   Active engagement by larger developing countries in trade negotiations could strengthen their bargaining position to set a balanced negotiating agenda, encompassing the interests of countries at different levels of development, including, for example, in agriculture.
   Negotiations should provide for differentiated treatment taking into account the policymaking challenges in developing countries without establishing permanent exemptions. These provisions should either be time-bound or have clear threshold and phase out criteria, as in the WTO Agreement on Subsidies and Countervailing Measures.
   Technical assistance and capacity-building support for development and reform in developing economies can be essential to success and are thus in the interest of both those that provide such assistance and those that receive it.


국문요약 


제1장 서론
1. 연구의 배경과 필요성
2. 연구 목적과 주요 연구 내용
3. 기존 연구의 검토 및 본 연구의 기여


제2장 WTO 농업보조 규범과 우리나라의 농업보조 실적
1. WTO 농업보조 규범과 의미
2. 우리나라 농업보조 실적과 특징


제3장 우리나라 농업보조 검토
1. 2018년 농림축산식품부 예산사업 검토
2. 2018년 농림축산식품부 기금사업 검토


제4장 주요국의 농업보조 현황과 특징
1. 주요 선진국의 농업보조 현황 및 특징
2. 주요 개도국의 농업보조 현황 및 특징
3. 선진국과 개도국 농업보조 비교


제5장 WTO 개도국지위 문제와 개도국 세분화
1. WTO 개도국지위 논의 동향
2. 우리나라의 개도국지위 검토와 영향
3. 개도국 세분화 분석과 결과


제6장 정책 제언
1. WTO 농업보조 통보강화 대책
2. WTO 개도국지위 관련 대책


참고문헌


[부록] 선진국 포함 시 군집분석 결과


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