Harmonizing and reducing trade distorting domestic support: An analysis of the impacts of new domestic support disciplines at the WTO
The upcoming WTO Ministerial in November 2021 will once again provide WTO Members with an opportunity to address and reform agricultural domestic support. As pointed out in the Draft Chair Text on Agriculture of 29 July 2021, the Domestic Support pillar has been at the heart of the agricultural nego...
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| Format: | Informe técnico |
| Language: | Inglés |
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International Food Policy Research Institute
2021
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10568/143599 |
| _version_ | 1855528551571259392 |
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| author | Glauber, Joseph W. Laborde Debucquet, David Piñeiro, Valeria |
| author_browse | Glauber, Joseph W. Laborde Debucquet, David Piñeiro, Valeria |
| author_facet | Glauber, Joseph W. Laborde Debucquet, David Piñeiro, Valeria |
| author_sort | Glauber, Joseph W. |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | The upcoming WTO Ministerial in November 2021 will once again provide WTO Members with an opportunity to address and reform agricultural domestic support. As pointed out in the Draft Chair Text on Agriculture of 29 July 2021, the Domestic Support pillar has been at the heart of the agricultural negotiations since their commencement in 2000, and, to date, has proven to be a challenging area to achieve consensus on how best to further reforms in that area. This paper examines three broad questions: First, what would be the effect on agricultural trade if Members were to fully utilize domestic support entitlements under the current Agreement on Agriculture. To study the role of existing space inherited from the Uruguay Round, we examine the impact of full utilization of domestic support entitlements on agricultural markets. Under the scenario, trade-distorting support would increase to USD 1.3 trillion, 5.5 times the level under the baseline scenario (USD 246 billion). Assuming full use of space, global agricultural production is projected to increase by 6 percent and global prices will drop by 8 percent, with all agricultural product prices showing declines. While farm income rises, a greater share of farm income comes from taxpayer resources, and the efficiency of additional transfers (ratio between increase in farmer income and taxpayer cost) is about 60 percent. The second objective of the paper is to discuss and analyze new disciplines that would further the re-forms accomplished under the Agreement on Agriculture by harmonizing support levels across Members and providing additional constraints to prevent Members from undermining these disciplines by concentrating support in a few commodities. The paper examines how these disciplines would affect production, prices, trade and farm sector income compared to a business-as-usual baseline. We find that using an overall concept of Overall Trade Distorting Support including all forms of trade-distorting measures, associated with amber and blue boxes, will have very negligible impacts on applied policies by 2030 and small effects on the agricultural markets overall. Extending this discipline to measures currently notified under Art. 6.2., the development box, will not put significant constraints on developing countries. Moving to this simplified and more transparent framework will require to define properly an anti-concentration clause, limiting the amount of payments that can benefit the producers of a specific commodity. Such feature will be quite important for sensitive commodities like cotton. Lastly, the paper examines how the proposed disciplines would affect agricultural markets under the alternative baseline that assumes that Members will utilize full entitlements under the current AoA. De-pending on the discipline scenarios, the potential subsidies increase will be reduced by USD 240 billion to USD 800 billion. |
| format | Informe técnico |
| id | CGSpace143599 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2021 |
| publishDateRange | 2021 |
| publishDateSort | 2021 |
| publisher | International Food Policy Research Institute |
| publisherStr | International Food Policy Research Institute |
| record_format | dspace |
| spelling | CGSpace1435992025-11-06T06:33:45Z Harmonizing and reducing trade distorting domestic support: An analysis of the impacts of new domestic support disciplines at the WTO Glauber, Joseph W. Laborde Debucquet, David Piñeiro, Valeria models computable general equilibrium models trade wto agricultural trade The upcoming WTO Ministerial in November 2021 will once again provide WTO Members with an opportunity to address and reform agricultural domestic support. As pointed out in the Draft Chair Text on Agriculture of 29 July 2021, the Domestic Support pillar has been at the heart of the agricultural negotiations since their commencement in 2000, and, to date, has proven to be a challenging area to achieve consensus on how best to further reforms in that area. This paper examines three broad questions: First, what would be the effect on agricultural trade if Members were to fully utilize domestic support entitlements under the current Agreement on Agriculture. To study the role of existing space inherited from the Uruguay Round, we examine the impact of full utilization of domestic support entitlements on agricultural markets. Under the scenario, trade-distorting support would increase to USD 1.3 trillion, 5.5 times the level under the baseline scenario (USD 246 billion). Assuming full use of space, global agricultural production is projected to increase by 6 percent and global prices will drop by 8 percent, with all agricultural product prices showing declines. While farm income rises, a greater share of farm income comes from taxpayer resources, and the efficiency of additional transfers (ratio between increase in farmer income and taxpayer cost) is about 60 percent. The second objective of the paper is to discuss and analyze new disciplines that would further the re-forms accomplished under the Agreement on Agriculture by harmonizing support levels across Members and providing additional constraints to prevent Members from undermining these disciplines by concentrating support in a few commodities. The paper examines how these disciplines would affect production, prices, trade and farm sector income compared to a business-as-usual baseline. We find that using an overall concept of Overall Trade Distorting Support including all forms of trade-distorting measures, associated with amber and blue boxes, will have very negligible impacts on applied policies by 2030 and small effects on the agricultural markets overall. Extending this discipline to measures currently notified under Art. 6.2., the development box, will not put significant constraints on developing countries. Moving to this simplified and more transparent framework will require to define properly an anti-concentration clause, limiting the amount of payments that can benefit the producers of a specific commodity. Such feature will be quite important for sensitive commodities like cotton. Lastly, the paper examines how the proposed disciplines would affect agricultural markets under the alternative baseline that assumes that Members will utilize full entitlements under the current AoA. De-pending on the discipline scenarios, the potential subsidies increase will be reduced by USD 240 billion to USD 800 billion. 2021-11-29 2024-05-22T12:15:29Z 2024-05-22T12:15:29Z Report https://hdl.handle.net/10568/143599 en https://doi.org/10.2499/9780896292499 https://hdl.handle.net/10568/141991 https://doi.org/10.2499/p15738coll2.134771 Open Access application/pdf International Food Policy Research Institute Glauber, Joseph W.; Laborde Debucquet, David; and Piñeiro, Valeria. 2021. Harmonizing and reducing trade distorting domestic support: An analysis of the impacts of new domestic support disciplines at the WTO. IFPRI Project Report November 2021. Washington, DC: International Food Policy Research Institute (IFPRI). https://doi.org/10.2499/p15738coll2.134803. |
| spellingShingle | models computable general equilibrium models trade wto agricultural trade Glauber, Joseph W. Laborde Debucquet, David Piñeiro, Valeria Harmonizing and reducing trade distorting domestic support: An analysis of the impacts of new domestic support disciplines at the WTO |
| title | Harmonizing and reducing trade distorting domestic support: An analysis of the impacts of new domestic support disciplines at the WTO |
| title_full | Harmonizing and reducing trade distorting domestic support: An analysis of the impacts of new domestic support disciplines at the WTO |
| title_fullStr | Harmonizing and reducing trade distorting domestic support: An analysis of the impacts of new domestic support disciplines at the WTO |
| title_full_unstemmed | Harmonizing and reducing trade distorting domestic support: An analysis of the impacts of new domestic support disciplines at the WTO |
| title_short | Harmonizing and reducing trade distorting domestic support: An analysis of the impacts of new domestic support disciplines at the WTO |
| title_sort | harmonizing and reducing trade distorting domestic support an analysis of the impacts of new domestic support disciplines at the wto |
| topic | models computable general equilibrium models trade wto agricultural trade |
| url | https://hdl.handle.net/10568/143599 |
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