Agricultural Market Access under the World Trade Organization: Identifying Sensitive Products in the EU
Avainsanat:
WTO, EU, Doha Round, tariffs, sensitive agricultural products, border protection, exchange rates, WTO draft proposal, EU proposal, US proposalAbstrakti
Agriculture is at the centre of the Doha Round of multilateral trade negotiations at the World Trade
Organization. The US is aggressively demanding for significant reduction in tariff, but the EU is
unable to lower its tariffs drastically because further tariff reductions will erode border protection for
some of its important agricultural products.
In this study, EU agricultural products are examined by tariff lines at eight digit level to reveal the
sensitive agricultural products in the EU. These products are butter, skim milk powder, beef meat,
poultry meat, pig meat, white sugar, wheat, barley, and maize. A spreadsheet model is used as an
analysis tool to complement the various modelling approaches in identifying the sensitive agricultural
products of the EU. The spreadsheet projection model is a simple forecasting model that uses a set of
projection values from other models to predict possible outcomes. The sensitivity of EU agricultural
products is analysed with various exchange rates (USD 0.90 per Euro to USD 1.50 per Euro), different
tariff reduction formulas (according to the EU proposal, WTO draft proposal, and US proposal), and
the separate tariff-cut limits in the Draft formula and US formula.
Out of the many proposals submitted to the WTO for the tariff reduction formula, the US proposal is
the most extreme and the EU proposal is the most lenient with the G-20 proposal and the WTO draft
proposal being in the middle. It is natural that the EU proposal will generate a lower number of
sensitive products compared to the WTO draft proposal, and the US proposal will generate the highest
number of sensitive products.
The results demonstrate that cereals such as wheat, barley, and maize are the most resilient to the
erosion of border protection due to further reduction in tariffs in the projected Doha Round. In
contrast, poultry meat has the weakest border protection in the projected Doha Round. The examined
EU agricultural products are very sensitive to the fluctuations of exchange rate. In the projected Doha
Round, there are no sensitive agricultural products in the EU if the Euro is very weak - USD 0.90 per
Euro. On the contrary, a very strong Euro (USD 1.50 per Euro) will create the greatest amount of
sensitive products in the projected Doha Round.
WTO members are entitled to select and designate an appropriate number of sensitive products.
Proposals have extended from as little as one percent to as much as fifteen percent of tariff lines. The
EU has proposed eight percent of the tariff lines to be designated as sensitive products. In contrast, the
US and G-20 group have proposed only one percent of the tariff lines to be designated as sensitive
products. The WTO draft proposal estimated that the number of sensitive products may be between
four to eight percent of all agricultural tariff lines. Therefore, the EU may be eligible to designate
between 88 to 176 tariff lines as sensitive products. This study has analysed only nine tariff lines out
of the 2200 tariff lines for EU agricultural products. The examined EU agricultural products may
represent other tariff lines in the same product category, but potential sensitive products at eight digit
level have to be analysed individually in order to choose the correct and exact number of sensitive
products for the EU.
