A rebalancing of exporter and importer rights and responsibilities could help revive the stalled Doha Round negotiations, the head of a trade policy group told BNA June 18.
Charlotte Hebebrand, president of the International Food and Agricultural Trade Policy Council, said World Trade Organization rules largely focus on the rights of exporters and do not protect importers from export restrictions, which are allowed under current rules with only the requirements of notice and consultation. However, no country followed the modest disciplines in place in the 2007-2008 period and notified importers, she said.
The rise of export restrictions in response to price spikes in 2007-2008, as documented in reports by her group and the Organization for Economic Cooperation and Development, created a fair amount of panic, which in turn further raised the burden of adjustment on the world, she said.
“Developing countries could use export restrictions as a bargaining chip in Doha Round trade negotiations, as they have little else to offer beyond market access,” she said. “Revisiting the issue of export restrictions could introduce a negotiating dynamic that could help to break the present logjam.”
Hebebrand made her remarks in the context of trade policy experts looking for ways to break the impasse in the round (110 ITD, 6/10/10). She acknowledged, however, the political importance of decisions by governments to impose export restrictions in the name of food security considerations.
The United States, Japan, South Korea, and Switzerland have favored inclusion of more stringent export restriction disciplines in multilateral trade negotiations, she said. Various proposals have been made in the context of current WTO negotiations to correct the imbalance of import and export rules, including the binding and elimination of export taxes, and prohibition of export restrictions.
The United States, for example, sought in its comprehensive proposal (G/AG/NG/W/15) to “strengthen substantially” WTO disciplines on export restrictions to increase the reliability of the global food supply and to prohibit the use of export taxes, which are often a proxy for restrictions.
Quantitative restrictions on exports, including agricultural goods, are banned in the General Agreement on Tariffs and Trade, but exceptions in the agreement make the rules difficult to interpret and enforce, according to the January 2009 report Hebebrand's group, Agricultural Export Restrictions: Welfare Implications and Trade Disciplines by Siddhartha Mitra and Tim Josling.
Article XI of the GATT (1994) states in paragraph 1 that there shall be “no prohibitions or restrictions other than duties, taxes or other charges … on the exportation … of any product” destined for another WTO member, the report said, noting, however, that “paragraph 2(a) makes an exception for quantitative restrictions 'temporarily applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party.'”
The report found that it has been relatively easy for countries to justify export restrictions as a means of relieving critical food shortages.
“No definitions exist as to what is 'temporary,' 'critical' or what constitutes a 'shortage',” according to the report, adding: “There has yet to be any successful challenge to the export restrictions implemented by an exporter of a foodstuff.”
As export taxes are not prohibited, an export tax could substitute for a ban if needed.
“A further basis for imposing export restraints is found in Article XX , the 'general exceptions' provision,” the report said. “Paragraph (h) allows an exemption (from other disciplines in the GATT) 'undertaken in pursuance of obligations under any intergovernmental commodity agreement which conforms to the accepted conditions of such agreements.' Paragraph (i) allows an exemption if the product in question is a (raw) material used in domestic processing and the domestic price 'is held below the world price as part of a governmental stabilization plan.' Even more generally, Paragraph (j) allows restrictions that are 'essential to the acquisition or distribution of products in general or local short supply.'”
Though aimed at nonagricultural raw materials, the report said it would seem likely that this article could provide an argument that restrictions on food exports are allowed under the general exceptions rule.
According to the report, the Uruguay Round Agreement on Agriculture (URAA) sets the disciplines on export prohibitions and restrictions: Article 12 stipulates that when a member institutes new export restrictions “in accordance with paragraph 2(a) of Article XI of GATT 1994,” the member shall observe the following provisions:
• “give due consideration to the effects of such prohibition or restriction on importing Members' food security;
• give notice in writing, as far in advance as practicable, to the Committee on Agriculture comprising such information as the nature and the duration of such measure; and
• consult, upon request, with any other Member having a substantial interest as an importer with respect to any matter related to the measure in question.”
The report noted that these obligations are relaxed for food importing developing countries: they do not apply “to any developing country Member, unless the measure is taken by a developing country Member which is a net-food exporter of the specific foodstuff concerned.”
The effect of Article 12, the report said, is to allow a continuation of export bans and taxes without effective limits or penalties. No country followed these disciplines and notified importers.
The latest draft language on export restrictions in the Doha Round, from July 2008, states: “In order to strengthen the existing disciplines on export prohibitions and restrictions of Article XI. 2 (a) of GATT 1994, Article 12 of the Agreement on Agriculture shall be modified to include the following elements:
• Prohibitions or restrictions under Article XI.2 (a) of GATT 1994 in Members' territories shall be notified to the Committee on Agriculture within 90 days of the coming into force of these provisions.
• A Member instituting export prohibitions and restrictions under that provision shall give notice of the reasons for introducing and maintaining such measures.
• The Committee on Agriculture shall provide for annual notification update and surveillance of these obligations.
• As provided in paragraph 7 of Article 18 of the Agreement on Agriculture, any Member may bring to the attention of the Committee on Agriculture such measures under that provision which it considers ought to have been notified by another Member.
• Existing export prohibitions and restrictions in foodstuffs and feeds under Article XI.2 (a) of GATT 1994 shall be eliminated by the end of the first year of implementation.
• Any new export prohibitions or restrictions under Article XI.2 (a) of GATT 1994 should not normally be longer than 12 months, and shall only be longer than 18 months with the agreement of the affected importing Members.”
While Hebebrand and her group strongly favor completion of the round, she said people should think of alternatives should the negotiations fail, such as an early harvest of smaller deals on things that are already agreed upon.
Hebebrand noted that the European Union has agreed, contingent upon passage of the Doha Round, to phase out all export subsidies by 2013. In order to realize this concession absent completion of the round, developing countries might pledge to take care with exports restrictions--banning them or agreeing in advance to impose them for only a short duration.
A voluntary “exporters' code,” as outlined in the report by her group, could include ending both direct and indirect restrictions--which come through food aid, export credit guarantees, and state trading entities, as well as a ban on export embargoes and a limit on export taxes.
“Developing countries, which have been concerned about stronger multilateral disciplines on export restrictions, may be more willing to accept a code, in particular if it secures a commitment on export subsidies,” the report said.
According to the June 15 joint report by the OECD and the U.N. Food and Agriculture Organization, Argentina lifted some export restrictions, such as maximum export prices for dairy products and lowered its export taxes on cereals and soybeans.
India has retained some export restrictions on selected grains, pulses, and oils, the report said.
Indonesia and Vietnam have lifted all short-term export restrictions, but they have continued to apply reduced tariffs on imports of a wide rage of food products.
Chile and South Africa are among very few emerging economies that focused on one-off direct support to consumers and did not apply any policy responses directly affecting the price or increasing the supply of agricultural commodities on domestic markets, according to the report.
“In Brazil, all trade-related measures were lifted in 2008 while cash transfers to the poor population and concessional credits for agricultural producers gained importance in 2009,” the report said, adding that analysis is underway at both the OECD and FAO into the efficiency and effectiveness of these policy responses.
By Len Bracken
The International Food & Agricultural Trade Policy Council report can be found at http://www.agritrade.org/documents/ExportRestrictions_final.pdf, and extensive highlights of the OECD-FAO report at: http://www.oecd.org/dataoecd/13/13/45438527.pdf.
Copyright 2010, The Bureau of National Affairs, Inc.