Special Products: Options for Negotiating Modalities
by Anwarul Hoda
Agricultural Trade and Sustainable Development Series • Issue Paper 3
While it is widely recognised that developing countries as a whole would benefit from freer agricultural trade, some fear that most of the new opportunities the Doha Round is set to bring would be captured by a few middle-income countries and large food exporters. Lower income countries would gain only little and might even lose from further liberalisation. Many still have large rural populations composed of small and resource-poor farmers with limited access to infrastructure and few employment alternatives. Thus, these countries are concerned that domestic rural populations employed in import-competing sectors might be negatively affected by further trade liberalisation, becoming increasingly vulnerable to market instability and import surges as tariff barriers are removed.
A large number of countries still depend on the export of a few commodities, the prices of which show high volatility and long-term decline. Commodity dependence, the expected erosion of preferences that some countries depend on for their export earnings, as well as increased food import prices due to the elimination of export subsidies, will make it difficult for these countries to guarantee their growing populations the food they need. In this context, safeguarding domestic food production capacity has become an essential component of food security strategies in an increasing number of countries.
These concerns were first raised at the WTO in the context of the “Development Box” debate, in which developing countries tabled a set of proposals aimed at providing flexibility for countries to enhance domestic food production and adopt measures to protect the livelihoods of resource poor farmers. These proposals included concrete measures to address dumping and import surges. Some were eventually reflected in the so-called 2004 July package. The S&DT provisions under paragraphs 41 and 42 of this framework agreement are probably the most innovative from a sustainable development perspective. They specify that “developing country Members will have the flexibility to designate an appropriate number of products as Special Products, based on criteria of food security, livelihood security and rural development needs. These products will be eligible for more flexible treatment“. The Framework Agreement further states that a “Special Safeguard Mechanism (SSM) will be established for use by developing country Members.”
However, key aspects of these instruments – such as the selection and treatment of SPs, or the specific modalities for a new SSM, including product coverage, possible trigger mechanisms and remedies – were left for future negotiations. As a contribution to this highly controversial debate, the ICTSD Project on Special Products and a Special Safeguard Mechanism aims to generate knowledge and options to better articulate and advance the concepts of SP and SSM from a sustainable development perspective.
The present Issue Paper (No. 3) on “Special Products: Options for Negotiating Modalities,” by Anwarul Hoda, is intended as a contributions to the discussion on the selection of SPs and their treatment in the WTO. After a short description of the rationale for Special Products, the paper lists possible options for the designation of SPs, ranging from a multilaterally agreed definition to self-designation based on food security, livelihood security and rural development needs, within an agreed numerical limit. The paper also reviews the pros and cons of various treatment options ranging from total tariff reduction exemption to differentiated treatments following the bands structure provided under the tiered formula for tariff reduction. The paper is not intended as an academic exercise, but rather as a practical tool for developing country negotiators, national policy makers and other relevant stakeholders, with immediate applicability to the current WTO negotiations on agriculture.