News and Analysis • Volume 12 • Number 1 • February 2008

Tropical Products in the DDA and Beyond

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The Agreement on Agriculture concluded during the Uruguay Round stressed that future negotiations should address ‘the fullest liberalisation of trade in tropical products’. The July 2004 Doha Round framework agreement further noted that the full implementation of this commitment was “overdue and will be addressed effectively in the market access negotiations.”

In December 2007, ICTSD and the Institute for International Trade Negotiations (ICONE) co-organised a stakeholder dialogue on tropical products, trade, natural resources management and poverty, which attempted to develop a better sense of how the WTO agricultural negotiations on tropical products could increase benefits for developing country exporters and identify elements of a pro-poor, pro-sustainable development agenda for tropical commodities.

The dialogue addressed not only challenges related to the Doha Round tropical products mandate (i.e. tariffs, tariff escalation, preference erosion and possible trade adjustments), but also other imperatives and research priorities with regard to a global strategy for sustainable development in agricultural trade (i.e. non-tariff barriers, domestic support, international supply and value chains, biofuels and the environment).

Among the elements included in the Forward-Looking Agenda on Tropical Products, which underpinned the discussions, were the following:

• It is widely recognised that standards, whether publicly set by governments or imposed by private entities, are becoming increasingly significant market access barriers. Where privately set, such standards are particularly difficult to cope with, not least because they mostly fall outside the remit of the WTO. At the same time, in certain situations private standards may allow exporters to apply measures that make them more competitive, especially with regard to achieving economies of scale. There seems to be much more scope for undertaking research and information exchange on standards, a topic that has only relatively recently become a major focus of WTO discussions, notably at the Committee on Technical Barriers to Trade.

Participants also suggested that more research was needed on the impact of private standards (positive and negative) on tropical products, as well as on options to resolve difficulties faced by exporters (mindful of the positive consequences which compliance with standards may bring). Further research into the effects of standard-related subsidies in export markets would also be valuable. The EU, for instance, allegedly provides subsidies to its own business sector to help it comply with private standards. How do these subsidies affect the ability of the private sector in countries that produce tropical products to comply with private standards? Do they indirectly encourage more stringent levels of such standards?

• As non-tariff barriers develop into ever more important obstacles to market access, and the effects of subsidies become more apparent, it would be useful to establish a composite index of protection, taking into account tariffs, domestic support and non-tariff barriers imposed on tropical products.

Market access cannot be ensured if discussions focus exclusively on tariffs, as is currently the case in the Doha Round negotiations on agriculture. The reduction, or even elimination, of farm tariffs would not secure entry for developing countries’ exports to developed country markets due to the proliferation of sanitary/phytosanitary and technical measures, including in particular private standards and the continued subsidisation of tropical products. In order to assess the true extent of trade liberalisation or, conversely, the effective protection prevailing in tropical products, a composite index of protection is necessary. Such an index would be of great use in better appreciating and visualising the real magnitude of trade liberalisation achieved during the Doha Round. Furthermore, it could be a powerful tool in pursuing further liberalisation and effective reform.