In early 2014, building on the Bali success, WTO Members began revisiting the rest of the DDA under its three main pillars of agriculture, non-agricultural market access (NAMA) and services. The implementation of the Bali package itself, however, turned out to be more difficult than expected. In July, India signaled that it was unwilling to join the consensus on a proposed protocol of amendment integrating the new trade facilitation agreement into the WTO rule book, unless it saw evidence of progress on the concerns it had raised in Bali, starting with a permanent solution on public stockholding. This new impasse, only six months after Bali, not only affected mutual trust among countries but also significantly delayed discussions on the post-Bali work programme mandated by Ministers. Fortunately, after several months of deadlock, an agreement reached in mid-November between India and the United States finally allowed Members to overcome the impasse, paving the way for the implementation of the Bali deal on trade facilitation, as well as progress on the broader negotiating agenda.
Members will now need to turn their attention to the arduous task of defining the contours and content of a possible post-Bali work programme. The first step in this process will consist of undertaking a reality check of the 2008 modalities. While the existing draft texts cannot be dismissed, Members also cannot ignore the fact that the 2008 draft modalities was not accepted as a basis of future negotiations by developed members, including the United States and the EU. Furthermore, during the process of negotiations on DDA work programmes, it is most likely that the draft texts will be significantly changed to reflect arguments of developed countries - the reduction of gap in the applied and bound tariffs, the reduction of farm subsidies of China and India, and the reduction of special and differential treatments for developing counties.
Given such circumstances, Korea, a member of the G-33, should establish feasible and effective negotiation strategies on the following key issues in which Korea has deep interest. First, Korea needs to support the positions of developed countries on reducing the difference in MFN applied tariffs and bound tariffs. The ratio of applied tariffs to bound tariffs in Korea is just 0.8, which is relatively high compared to average values for both developed countries (0.6) and developing countries (0.4). Therefore, it is reasonable to propose a new tariff reduction method which relates to water. For example, a larger cut is applied to products which have more water.
Second, in absolute terms, farm support in China is now nearing the level of EU farm subsidies although China’s farm support is heavily focused on payment for general services such as infrastructure. India’s agricultural domestic support has also grown dramatically in recent years with a particular emphasis on input and investment subsidies in developing countries. Since Korea’s farm support is still very timid, there will be almost no substantial impact on the operations of Korea’s agricultural policy.
Third, the reduction of S&D for developing countries could negatively affect Korea’s trade policies because it can produce results that Korea could not obtain: special products with no tariff cut. Hence, Korea needs to build its alliance with the G-33 firmly, which strongly support special products for developing countries. However, if the reduction of S&D for special products is unavoidable, Korea needs to put its emphasis on treatments rather numbers of special products because its agricultural production is centered on several products such as rice.
Finally this study shows that the political costs of an agreement to increase market access could be reduced substantially by using a proportional-cut approach (for example, overall X percent reduction with a minimum cut of Y percent on each tariff line, following the Uruguay Round model) rather than progressive tariff-cutting formulas which has been discussed till now.