This study examines trade and policy concerns raised during agricultural negotiations under the Doha Development Agenda and evaluates their potential impacts on domestic agriculture and farm policies. By analyzing key negotiation proposals tabled by major member countries including the United States, the European Union and G20 developing countries, this research investigates modality issues on market access, domestic support and export competition.
The results of market access scenarios can be summarized as follows: First, the EU and the G20 proposals would have Korea cut its tariffs less than the case of the US proposal. Second, the designation of sensitive products would attenuate a sharp cut in tariffs. But, the advantages of tariff cuts by designating sensitive products would be vanished if tariff capping is placed on. Third, special products could be a practical way to ward off tariff capping on most sensitive and high tariff products. Regardless of
their scope, special products is likely to bring about far significant benefits than sensitive products.
As for domestic support, Korea may not be bound by the Overall Trade Distorting Subsidies (OTDS). But, the reduction obligation of the Aggregate Measurement of Support (AMS), de minimis and Blue Box would restrain policy flexibilities in the future. Special and differential treatment for developing countries are envisaged to ensure gradual policy reform.
Monte Carlo simulations are utilized to forecast possible outcomes of modalities. Korea's average tariff rate (currently 63%) is forecast at 35% under a developing country status. The total AMS is expected to fall from 1.5 to 1.0 trillion won. The de minimis support is likely to be 2.9 trillion won and blue box payments would be capped by 862 billion won. With developed country's commitments, the average tariff rate would be 17%. And the domestic support is forecasted at 759 billion won for the total AMS, 1.1 trillion won for de minimis, and 867 billion won for Blue Box.
To fully take advantage of developing country's status, Korea should pay attention to the securement of enough number of tariff lines as special products. In addition, tariff capping must be abrogated. If inevitable, tariff capping should not apply neither to sensitive products nor to special products.
As shown in the sensitivity analysis, the OTDS support would be greatly influenced by a permitted level of de minimis support. Hence, any cuts in de minimis support must be minimized to ensure the effectiveness of OTDS support and policy flexibilities.
Researchers: Song Soo Lim, Sang Hyun Kim, So Yeong Lim
E-mail address: songsoo@krei.re.kr