WTO: Big Challenges Lie Ahead In Market Access

WTO Framework Welcome But Big Challenges Lie Ahead In Market Access, Says Global Dairy Alliance

The Global Dairy Alliance sees the WTO framework agreement reached this month as a major step forward in the Doha Development Round, but is warning that real challenges lie ahead on the market access side.

“For dairy exporters a successful round is vital to reducing the major distortions in current international dairy trade” said Chairman Osvaldo Cappellini.

“But this is still a long way off and detailed negotiations are still required on all three key aspects of export competition, market access and domestic support”.

He underlined that eliminating export subsidies is a major gain for dairy exporters. “It has been a long-term goal for dairy exporters for many years to remove the price depressing effects of export subsidies on product prices.”

“But the commitment to eliminate must be implemented with effective disciplines and implemented over a limited period”. The GDA advocates a down payment in the initial year of a substantial subsidy reduction, with full phase-out taking no more than three years.

Mr Cappellini emphasised that eliminating export subsidies can only be really effective if there is substantial reform of the other two pillars as well.

“Frankly the market access text is disappointing. It has neither the same precision nor ambition as the commitments on export competition. In particular allowing rich developed countries to designate ‘sensitive products’ of their choosing puts at risk the prospect of a substantial outcome on access.”

“The text has large loopholes that will limit the creation of opportunity for new trade. The risk is that protectionist countries will make so-called concessions in tariff reduction that simply reduce ‘water’ in the tariff, and leave landed prices still well above domestic levels.”

Dairy tariffs are among the highest in the world, with many tariffs in key developed markets being well over 100%. The tariff for butter imported into Japan butter is currently around 500 % while dairy tariffs in Canada are between 200% and 300%. The EU tariff of E1900/tonne is equal to current world prices for butter. A tariff reduction of anything under 60% at current prices would see no new imports result at all.

Access under quotas is also very limited. The world’s largest cheese markets in the EU and USA each import less than 5% of consumption.

Further, the disciplines on domestic support spelled out in the framework text offer only limited scope for reducing domestic subsidies in the dairy sector.

“Given these problems with the framework, the GDA will be working hard over the next few months to highlight the pitfalls in the text, and to ensure that the final phase of the negotiations delivers the “substantial improvement in market access” that all countries committed to at the launch of the Doha Round,” said Mr Cappellini.

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Background Note

The Alliance includes the dairy industries of Argentina, Australia, Brazil, Chile, New Zealand and Uruguay. It represents over 1.5 million dairy farmers, 60 billion litres of milk production annually and a majority of world dairy trade.

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