Transcript Aspirations of the multilateral Trading system The Doha

Implications of a Doha
Agreement for Agricultural
Markets in Sudan
Imad Eldin Elfadil Abdel Karim
University of Khartoum - Sudan
David Abler
Penn State University - USA
1
Introduction: Doha Agenda
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The latest round of multilateral trade
negotiations was launched at the ministerial
meeting of the WTO in Doha, 2001.
Agriculture is a major item on the agenda
for the Doha Round. The primary focus is
on the three “pillars” of the Uruguay Round
agreement—domestic support, market
access, and export competition.
The framework for a final agreement was
finalized in July 2004, it contains few details
on modalities (e.g., the formula to be used
for reductions in tariffs/increases in tariffrate quotas, quantitative limitations on
domestic support, and the schedule for the
elimination of export subsidies)
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Detailed proposals on a number of
these issues were put forward in
October 2005 by the European Union
and the United States, in addition to
the G10 and G20 groups of countries.
In this paper we analyzed the
implications of the provisions of a
Doha agreement on agricultural
markets in Sudan. More specifically,
the impact of the US, EU, and G20
proposals on agricultural markets in
Sudan was analyzed.
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Agriculture in Sudan
(background)
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Agriculture is the main sector of economy.
The agricultural sector contributed about
40% of the GDP (1994-2006)
Agricultural exports were the main sources
of foreign currency before exploitation of
oil e.g. during the period 1994-1998,
agricultural commodities represented
about 88.6% of the total country’s
exports, this share declined to only 6.0%
in 2006.
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Sudan is not a currently member of the
WTO although it has been in the
accession process since 1994
Sudan undertake reforms of its all
commercial laws to bring all its traderelated laws, regulations and procedures
into conformity with WTO requirements.
Assuming that Sudan continues outside
of WTO membership, its trade policies
will not be directly affected by a Doha
agreement. But Sudan could be affected
significantly by changes in global
agricultural markets.
5
Methodology



The analysis is based on the Partial Equilibrium
Agricultural Trade Simulator (PEATSim)
developed by the Penn State University in
collaboration with the Economic Research
Service of the U.S. Department.
The model is dynamic, multi-country, multicommodity covers 35 of the major traded
agricultural commodities and contains a
detailed representation of markets and policies
in twelve countries/regions that are particularly
significant for world agricultural trade
Sudan was included in the model to depict the
potential impact of trade liberalization on its
agriculture.
6

Production and/or consumption of
15 of the 35 products in PEATSim
are negligible in Sudan: soybeans,
soybean oil, soybean meal,
sunflowerseed oil, sunflowerseed
meal, rapeseed, rapeseed oil,
rapeseed meal, pork, butter,
cheese, nonfat dry milk, whole dry
milk, and other dairy products
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Treatment of Trade
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
Raw milk, fluid milk, and other dairy
products are treated as non-traded
commodities. The other 32 commodities
are traded internationally
The model is non-spatial, meaning that it
does not distinguish a region’s imports by
their source or a region’s exports by their
destination.
8
Policy Coverage
 The model incorporates a wide range of
domestic and border policies in agriculture
 The core set of policies for all countries
includes both specific and ad valorem
import tariffs, tariff-rate quotas (TRQs),
and producer and consumer subsidies.
 Other types of domestic policies and
programs are also included. For example
for the EU the model includes intervention
prices, variable import levies,
compensatory payments, acreage setasides, base area bounds.
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Model Structure and Parameters
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a reduced-form economic model
The behavioral equations in the model are largely
constant-elasticity in nature
The structure of the behavioral equations is the
same for all countries in the model
The model includes five types of consumption
activities: food/consumer demand, feed demand,
crush demand, dairy processing demand, and
other use demand.
A number of restrictions were imposed on the
model's elasticities to ensure that requirements
of economic theory are satisfied at the baseline
values for the data
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WTO Scenario


The impact of US, EU, and G20 proposals
(on market access, export subsidies and
domestic support) on agricultural market
of Sudan was analyzed.
Market Access - The tariff cuts for the US,
EU, and G20 proposals as they are
simulated in this scenario are presented in
the next table:
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US Proposal
EU Proposal
Percentage Cut
in AVE
AVE
Tariffs
within
Band
Percentage Cut
in AVE
0-30
35%
0-20
45%
65-75%
30-60
45%
20-50
55%
40-60
75-85%
60-90
50%
50-75
65%
60+
85-90%
90+
60%
75+
75%
AVE Tariffs
within
Band
Percentage Cut
in AVE
AVE Tariffs
within
Band
Band
1
0-20
55-65%
2
20-40
3
4
Developed Countries
G20 Proposal
Tariff Cap (%)
Sensitive Products
(% of Tariff Lines)
Developing Countries
75%
100%
100%
1%
8%
1%
US Proposal
EU Proposal
G20 Proposal
Band
1
0-20
37-43%
0-30
25%
0-30
25%
2
20-40
43-50%
30-80
30%
30-80
30%
3
40-60
50-57%
80-130
35%
80-130
35%
4
60+
57-60%
130+
40%
130+
40%
Tariff Cap (%)
100%
150%
150%
Sensitive Products
(% of Tariff Lines)
1%
8%
1%
12
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Export Competition - The three
proposals analyzed include the elimination
of export subsidies
Domestic Support – For the purposes of
this paper, the EU’s Single Farm Payment
(SFP) and US direct payments are
assumed to remain in the Green Box. The
PEATSim model also assumes that these
payments have no impacts on production.
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Some Selected Results
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Domestic Prices
Commodity
US Proposal
EU Proposal
G20 Proposal
Rice
7.2
4.7
5.4
Wheat
7.7
4.5
5.6
Corn
11.9
7.4
9.5
Other Coarse Grains
10.5
7.2
8.6
Sunflower seed
3.2
1.9
2.2
Cottonseed
4.6
2.5
3.3
Cottonseed Oil
4.6
2.7
3.4
Cottonseed Meal
2.0
0.7
1.6
Peanuts
4.2
2.5
3.1
Peanut Oil
3.6
2.2
2.7
Peanut Meal
6.6
3.4
4.5
Other Oilseeds
8.5
4.0
5.9
Other Oilseed Oil
7.2
3.9
5.4
Other Oilseed Meal
8.7
1.0
4.0
Cotton
5.4
3.1
4.1
Sugar
14.7
7.4
11.0
Beef & Veal
6.3
3.1
4.3
Poultry
4.8
2.6
3.4
Raw Milk
3.1
2.0
2.4
Fluid Milk
3.2
2.0
2.5
15
Production
Commodity
US Proposal
EU Proposal
G20 Proposal
Rice
0.9
0.6
0.7
Wheat
1.0
0.5
0.6
Corn
2.6
1.7
2.1
Other Coarse Grains
2.3
1.8
2.0
Sunflowerseed
-0.9
-0.5
-0.7
Cottonseed
-0.8
-0.7
-0.7
Cottonseed Oil
-0.4
0.0
-0.2
Cottonseed Meal
-0.4
0.0
-0.2
Peanuts
-0.1
-0.1
-0.1
Peanut Oil
-0.6
-0.4
-0.5
Peanut Meal
-0.6
-0.4
-0.5
Other Oilseeds
0.8
0.1
0.4
Other Oilseed Oil
-1.9
-1.1
-1.5
Other Oilseed Meal
-1.9
-1.1
-1.5
Cotton
-0.8
-0.7
-0.7
Sugar
3.6
1.8
2.7
Beef & Veal
0.3
-0.2
-0.1
Poultry
-0.5
-0.6
-0.7
Raw Milk
0.4
0.2
0.3
Fluid Milk
0.1
0.0
0.1
16
Consumption
Commodity
US Proposal
EU Proposal
G20 Proposal
Rice
-0.1
-0.1
-0.1
Wheat
-0.2
-0.1
-0.1
Corn
-1.1
-0.7
-1.0
Other Coarse Grains
-0.8
-0.7
-0.8
—
—
—
Cottonseed
-0.4
0.0
-0.2
Cottonseed Oil
-1.1
-0.6
-0.8
Cottonseed Meal
-0.1
-0.1
-0.1
Peanuts
-0.2
-0.1
-0.2
Peanut Oil
-0.7
-0.4
-0.5
Peanut Meal
-0.5
-0.4
-0.4
Other Oilseeds
-1.9
-1.1
-1.5
Other Oilseed Oil
-2.0
-1.1
-1.5
Other Oilseed Meal
-0.8
-0.1
-0.4
Cotton
-0.1
-0.1
-0.1
Sugar
-0.8
-0.4
-0.6
Beef & Veal
-0.6
-0.2
-0.4
Poultry
0.0
-0.1
-0.1
Raw Milk
0.4
0.2
0.3
Fluid Milk
0.1
0.0
0.1
Sunflowerseed
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Exports and Imports (1000 MT)
Base Period (2004)
Model Baseline (2014)
US Proposal (2014)
EU Proposal
(2014)
Exports
Imports
Exports
Imports
Exports
Import
s
Exports
Import
s
Export
s
Imports
Rice
0
36
0
36
0
36
0
36
0
36
Wheat
0
1066
0
1067
0
1060
0
1064
0
1063
Corn
0
0
0
2
0
0
0
1
0
0
Other Coarse Grains
17
0
142
0
315
0
279
0
300
0
Sunflowerseed
7
0
6
0
6
0
6
0
6
0
0
3
0
4
0
4
0
4
Commodity
Cottonseed
G20 Proposal
(2014)
Peanuts
3
0
5
0
6
0
5
0
5
0
Other Oilseeds
218
0
273
0
280
0
275
0
278
0
Other Oilseed Oil
0
0
0
0
0
0
0
0
0
0
Other Oilseed Meal
0
0
1
0
0
0
0
0
0
0
Cotton
79
0
77
0
76
0
76
0
76
0
Sugar
24
17
47
17
81
17
64
17
73
17
Beef & Veal
6
0
5
0
20
0
5
0
11
0
Poultry
0
217
0
217
0
217
0
217
0
217
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Conclusion
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As long as Sudan is not a member of the
WTO, the major effect of global
agricultural trade liberalization facing it is
higher world prices and therefore higher
domestic prices
Sudan’s agricultural producers will benefit
from higher prices but consumers will be
negatively affected
Production and exports of major
agricultural commodities are projected to
increase under the US, EU, and G20
proposals
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Designing domestic policy that
favorable for agriculture is important
for Sudan to maximize its benefits
from global agricultural trade
liberalization and to maximize its
potential in agricultural production
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Thanks
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