Market Access Commitments
Along with reducing domestic support and export subsidies, the
Uruguay Round Agreement on Agriculture (URAA) aimed at
improving market access. (See EU
Uruguay Round Commitments.) Market access, in short,
is the extent that a country allows the importation of
foreign products.
Prior to the URAA, countries used both tariffs and nontariff measures—such
as quotas and variable levies—to regulate the import of agricultural
goods. The URAA brought many nontariff measures in agriculture under
the discipline of the World Trade Organization (WTO). Since July
1, 1995, all import protection takes the form of ad valorem tariffs
(equal to a percentage of the product's value) or specific tariffs
(e.g., per-unit weight, by volume, by the piece).
Countries initially bound their tariffs at maximum levels and are
reducing them over the URAA implementation period (36 percent on
average between 1995/96 and 2000/01 for developed countries). Tariff-rate
quotas (TRQs) are used to import a fixed quantity of a product at
a tariff below the over-quota, most-favored-nation (MFN) tariff.
For the European Union (EU), in many cases MFN tariffs were determined
under the process of tariffication.
The process of tariffication involved converting nontariff barriers
(NTBs) into tariffs. For many countries like those in the EU, protectionist
NTBs were converted into prohibitive (very high) tariffs. Countries
were therefore required to establish TRQs:
- to preserve market access by ensuring that historical quantities
continued to be imported (current access TRQs), and
- to provide for additional imports under minimum access—a
guarantee that at least some new quantities would be provided
import opportunities under nonprohibitive tariffs.
Countries established minimum access TRQs for quantities of imports
needed to reach a negotiated amount of domestic consumption (often
5 percent of the 1986-88 base-period level) by the end of the implementation
period. Neither the current nor minimum access TRQs constitute a
minimum purchase agreement. TRQs provide only the opportunity to
import under the advantage of a preferential or suspended tariff.
From a political standpoint, TRQs serve to meet the concerns of
traditional exporters by preserving historical trade patterns. From
an economic perspective, TRQs are preferable to quotas because,
by allowing the opportunity to trade above a fixed quantity ceiling,
they theoretically cause less distortion to trade flows under certain
conditions. However, a TRQ distorts trade less than a quota only
if its out-of-quota tariff is not prohibitively high.
Additional benefits of the tariffication process include more transparency
in the application of border measures. The bound tariffs and TRQs
resulting from this process now provide a sound basis from which
to negotiate further tariff reductions or increased import opportunities
in future rounds.
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Small Impact of TRQs on Imports. An analysis
of two types of URAA arrangements—current access
TRQs and minimum access TRQs—reveals that their combined
impact on the level of EU imports has been minimal. For
example, based on quantities notified by the EU to the
WTO and using average import prices, 1996 EU imports under
its URAA TRQs (current access and minimum access combined)
made up only 11 percent of its total agricultural imports,
while imports under the minimum access TRQs alone accounted
for just 1 percent of the total.
The EU continues to import most of its agricultural goods under
TRQs and other preferential tariff arrangements that were not included
in its URAA market access schedule or under relatively low MFN import
tariffs (most of which were low prior to the URAA). None of the
EU's current access TRQs under the URAA will have an impact
on the level or source of EU imports. By their very definition and
design, current access TRQs have no net effect on overall EU imports,
as these arrangements under the URAA serve only to maintain EU historical
import levels. They do, however, put access opportunities on a firmer
footing.
The EU's TRQs are projected to have a limited impact on the level
of EU imports for a narrow range of products—pork, poultry,
skimmed milk powder, butter, cheese, and eggs. Assuming that all
TRQs are fully used, EU imports are expected to increase about 780
million euro (US$722 million) by 2000/01, roughly 1 percent of the
EU's 1998 agricultural imports of US$63 billion. Because of preferences
accorded the 10 Central and Eastern European (CEE) countries slated
to join the EU, the CEE states are likely to capture the largest
share of the EU's minimum access TRQs for pork and butter and a
substantial share of the minimum access TRQs for skimmed milk powder
and fresh/chilled poultry meats. The CEE-10 countries may also gain
EU import share for skimmed milk powder outside the framework of
the association agreements. Finally, all third countries have an
equal opportunity (from a tariff perspective) to export egg products
and cheese under the EU's minimum access TRQs. U.S. exporters are
most likely to gain a share of the EU's minimum access TRQs for
eggs, egg products, some pork loins, and some cheeses.
The EU's minimum access TRQs should be sufficient to reach import
opportunities of roughly 5 percent of base-period consumption for
skimmed milk powder and cheese. On the other hand, the minimum access
TRQs for pork, poultry, butter, and eggs do not increase import
opportunities up to the 5-percent level. EU market access is estimated
to reach only 0.9 percent of base-period domestic consumption for
pork, 3.5 percent for butter, 3.9 percent for eggs, and 4.1 percent
for poultry. EU reductions in out-of-quota tariffs under the URAA
may increase imports of these products by 2000/01, but further analysis
needs to be done on this subject.
References
Glossary
of trade terms
Morath, Todd, TRQs Have
Little Impact on EU Market Access, While CEEs May Benefit, Europe:
International Agriculture and Trade Report, USDA, ERS, Situation
and Outlook Report WRS 97-5, December 1997.
Wainio, John, Gene Hasha, and David Skully, Market
Access Issues, Agriculture in the WTO: International Agriciulture
and Trade Report. USDA, ERS, WRS 98-4, December 1998.
For additional information on this topic see:
EU Uruguay Round Commitments and ERS
WTO Briefing Room: Agreement on Agriculture.
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