Assessing the agricultural negotiations with ATPSM September 2006 David Vanzetti Division on International Trade in Goods and Services, and Commodities.

Assessing the agricultural negotiations with ATPSM

 September 2006

David Vanzetti

Division on International Trade in Goods and Services, and Commodities

UNCTAD, Geneva

United Nations Conference on Trade and DevelopmentUnited Nations Conference on Trade and Development

ATPSM

• Agricultural Trade Policy Simulation Model

• Static

• Deterministic

• No stocks

• 35 commodities

• 160 countries plus EU25 plus RoW.

Outline

• Features

• Documentation

• Coverage

• Trade policies

• Outputs

• A likely scenario

• Results

ATPSM Documentation

• Downloadable from website unctad.org/tab• Online help from interface• Updates from website• This ppt presentation available on request

Features

• Free• Easy to use for and researchers, policymakers and

negotiators • Graphical user interface• On-line help function and

handbook available• Report writer - Export to Excel

Limitations

• Bilateral trade issues (non-spatial)• Tariff line level cuts• TRQ definitions (=> overfilled)• C++ version ≠ Excel version

– EU25

– Production quotas

– Land constraint

– Decoupled domestic support

ATPSM Commodity Aggregation (1)

• Livestock• Bovine meat• Sheepmeat• Pigmeat• Poultry• Milk, fresh• Milk, conc. • Butter • Cheese• Hides and skins• Wheat

• Maize • Sorghum • Barley• Rice• Sugar raw• Sugar refined• Oilseeds, temperate• Oilseeds, tropical

• Vegetable oils

ATPSM Commodity Aggregation (2)

• Pulses

• Roots, tubers

• Tomatoes

• Non-tropical fruits

• Citrus fruits

• Bananas

• Other tropical fruits

• Coffee green

• Coffee processed

• Cocoa beans

• Cocoa processed

• Tea

• Tobacco leaves

• Tobacco processed

• Rubber

• Cotton linters

Trade Policies Specified

• Global import quota• Bound in-quota tariff rates• Bound out-of-quota tariff rates• Applied tariff rates• Distribution of quota rents• Export subsidies• Domestic support• Production quota• Not suitable for RTAs

Two tier tariff structure

ATPSM output

• Consumer surplus

• Producer surplus

• Tariff revenue

• Quota rents

• Welfare

• Commodity prices

• Production

• Consumption

• Exports

• Imports

Market Access: Current Tariffs

Bound Applied

High-income countries 51 48Middle-income countries 60 25Low-income countries 78 39

High-income countries 4 3Low & Middle-income countries 20 13

Agriculture

Non-AgricultureSource: UNCTAD TRAINS, WTO

Specific Problems:• Tariff escalation• Tariff peaks

European Union: bound and applied tariff rates

Note: New AVEs (Paris), Five products with tariffs above 500% not plotted.

0

50

100

150

200

250

300

350

400

450

1 159 317 475 633 791 949 1107 1265 1423 1581 1739 1897 2055

Olive oil, refinedSugar, raw

Tea

Developing countries: bound and applied tariff rates

Kenya bound and applied tariffs

0

20

40

60

80

100

120

0 200 400 600 800

bound

applied

Number of tariff lines

Tar

iffs

in p

er c

ent

Bound at ceiling level

Lower applied rates

Market Access: Tiered Formula

Thresholds Cuts

Band % %

1 0 – 30 35

2 30 – 60 45

3 60 – 90 50

4 90 60

Developed Countries

Market Access: Tiered Formula

Thresholds Cuts

Band % %

1 0 – 30 25

2 30 – 80 30

3 80 – 130 35

4 130 40

Developing Countries

Ambitious scenario

• Banded tariff cuts plus caps 100, 150%• Export subsidies -100%• Domestic support -70/-60/-50%, -50%• LDCs 0%.

But• No sensitive products• No special products• No TRQ expansion• No safeguards

Base developing country exports

0100020003000400050006000

700080009000

$m

Total = $117b

Base developing country imports

0100020003000400050006000700080009000

10000

$m

Total = $102b

Base developing country tariff revenueby commodity

0

500

1000

1500

2000

2500

$m

Total = $14.5b

Base implied tariff by commodity

0

20

40

60

80

100

120

%

Total = 14%

Results

• Prices• Exports• Imports• Welfare

Change in world prices

-2

0

2

4

6

8

10

12

14

%

Change in developing country exportsby commodity

-50

0

50

100

150

200

250

%

Change in developing country exportsby commodity

-500

0

500

1000

1500

2000

2500

3000

3500

$m

Change in developing country importsby commodity

-15

-10

-5

0

5

10

15

%

Change in developing country importsby commodity

-400-300-200-100

0100200300400500600

$m

Change in welfareby commodity

-500

0

500

1000

1500

2000

2500

3000

3500

$m

Total = $15004m

Change in welfare Ranked

-1000

0

1000

2000

3000

4000

5000

6000

7000

$m

Total = $15b

45 winners (inc EU25)

Implications

• World prices increase• Increase in exports• Increase in global welfare, $15b• But 116 countries worse off (-ve terms of

trade)– Export subsidy removal– bound > applied = few allocative gains– production quota rent

Improvements?

• Special/sensitive products + compensatory expansion of TRQs

• Tariff line level data• Update data

The End