COFI:FT/VIII/2002/5 |
| COFI:FT/VIII/2002/5 |
Item 6 of the Provisional Agenda |
COMMITTEE ON FISHERIES |
SUB-COMMITTEE ON FISH TRADE |
Eighth Session |
Bremen, Germany, 12-16 February 2002 |
IMPACT OF URUGUAY ROUND AGREEMENTS ON INTERNATIONAL FISH TRADE: INFORMATION COLLECTION AND IMPACT STUDIES |
1. The Uruguay Round of Multilateral Trade Negotiations facilitated international trade through the reduction of many import duties. In addition, a number of agreements with strong implications for international fish trade were introduced, such as the Agreements on the Application of Sanitary and Phytosanitary measures (SPS), Technical Barriers to Trade (TBT), Subsidies and Countervailing Measures, Non-Tariff Barriers, Anti-Dumping and Trade-Related aspects of Intellectual Property Rights (TRIPS).
2. The results of the Uruguay Round negotiations in which participating countries committed themselves to eliminate or reduce tariff rates and non-tariff measures applicable to trade in goods are recorded in the Schedules of Concessions. These form an annex to the Marrakech Protocol and are an integral part of GATT 1994. Tariff reductions agreed upon were implemented in five annual rate reductions starting on 1 January 1995 and fully implemented by 1 January 1999. Many fishery products, and in particular, processed products, are still subject to high tariffs.
3. The Uruguay Round Agreements have undoubtedly made international fish trade easier, both through the overall reduction in duties but also through the standardization and harmonization of international trade rules through the various Agreements. However, the direct and quantifiable impact on trade development is less apparent. Thus, the various studies recommended by the Sub-Committee were carried out with the intent of investigating whether such links were present and whether they could be quantified.
4. Eight countries were selected: four developing countries, one a country in transition and three developed countries. In addition, the trade development of two regions with the single largest import market, the European Community, as well as their intra-regional trade, were studied. Total exports and imports as well as trade on commodity level were analysed. Trade patterns and relations with trading partners were also studied. One problem encountered during the analysis was insufficient trade statistics. Trade data on trading partners for some of the target countries were not always available. In these cases, average numbers on commodity groups were calculated.
5. One would expect trade to increase when trade is liberalized. Therefore, trade development before and after 1995 was analysed. However, the tariff reductions agreed upon in the Uruguay Round were in most cases not fully implemented until 1 January 1999. As the statistical data for the most part do not go beyond 1999, the full impact of the reductions can not be measured yet. It is also important to note that trade liberalization in itself does not necessarily create a market, and where a ready market does not exist, trade can develop only over time.
6. During the period 1990 to 1999, the value of global fish exports showed a steady increase with an exception mainly due to the El Niño effect and the Asian economic crisis in 1998. The relative share of the exported quantity rose from 33.6 % in 1990 to a peak of 41.3 % in 1994, decreasing to 34 % in 1999. The share of export value as a percentage of total production value rose from 35 % in 1990 to 43 % during 1994-97 with a small reduction to 42 % in 1998 and 1999.
7. In the study of the specific countries, enormous differences were observed in the development of trade in fish and fishery products from one country to the other. For some countries, a stable increase in imports and exports was evident during the period. For others, periods of strong trade growth were followed by periods of trade contraction. On the whole, exports were more stable than imports. This result could be expected as imports depend to a large degree on the state of the national economy whereas exports rely upon the state of many export markets on a more aggregate level, and as such are more stable. At the same time, exports as well as imports are strongly influenced by the resource situation in the country. In years with healthy catch and production levels, exports increase. In years with decreasing local fish production, domestic demand could be covered by increasing imports.
8. In cases with significant increases in trade by specific countries, a number of explanatory factors can be present. Political policy decisions seem to play a very large part in changing trade patterns, especially in cases in which the whole political system change such as for countries in transition that are emerging from a situation in which the state planned and executed most economic decisions. Countries that previously followed an autarchic economic policy naturally also show large increases in external trade when the entire economy is liberalized. This was the case when many countries gradually opened their economies from the early 1990s onwards. Another example are countries which in the past subsidized their fishing production for domestic consumption and exports. In a new political and economic system without production subsidies they experience falling production and exports and are forced increasingly to rely on imports to cover a large part of domestic demand for fish and fishery products.
9. In some cases studied, changes in imports can be directly linked to the creation of the WTO and the Uruguay Round Agreements. This is especially the case for countries that previously operated systems with import quotas and licenses. In most cases, however, liberalization of import regimes started earlier than the Uruguay Round Agreements and are probably an expression of a general climate of growing economic and commercial liberalization in the early 1990s. Of course, this general climate of liberalization was also reflected in the Uruguay Round negotiations which culminated in the creation of the WTO and the enactment of the Agreements.
10. A finding of the study seems to indicate that a substantial part of trade today is conducted within the framework of regional trade agreements. The rules of trade set in the Uruguay Agreement provide a base framework for many of the regional agreements but the bilateral or regional agreements in effect are usually more detailed and go further than the WTO Agreements. For countries outside regional agreements or bilateral agreements, the WTO Agreements are usually the only legal frameworks that rule this trade.
11. In many regions, intra-regional trade in fish and fishery products is very limited whereas total imports and exports for the region may be increasing. The causes for limited intra-regional trade are many, at times reflecting large similarities in output and therefore limited scope for product exchange. More important reasons seem to be large intra-regional informal barriers to trade, significant deficiencies in communications, banking, logistical and infrastructural networks, and of course, higher prices paid by export markets.
12. Trade policies in the largest import markets also differ widely. USA and Japan have both generally low tariffs on unprocessed products, whereas prepared or value added products meet higher tariffs. The tariffs of the European Union on the other hand, have traditionally been very high and are quite high even after the Uruguay Round for many products. However, with the general reduction in tariff levels, import duties to the EU have also been reduced and exports to the EU have increased. This has occurred in a period with reduced own resources and the gap in supply was exacerbated by higher domestic demand by the EU's own consumers. It was therefore not surprising that EU imports from all but one of the studied countries increased from 1995 onwards.
13. It is important to underline that duty escalation on value added products can constitute an effective obstacle to the development of a viable processing industry in developing countries. This leads to a sub-optimal allocation of resources both in import and export countries. Another important finding is that development of an export-led fish processing industry in developing countries often is the result of tariff concessions and bilateral trade agreements.
14. The creation of the WTO and the implementation of the Uruguay Round Agreements seem to have had a positive direct effect on trade in fish and fishery products in some of the countries studied and an indirect effect in others by setting the agenda for a general liberalisation, lower tariffs and a dismantling of many trade impediments. The indirect effect, manifested as a broad international sentiment throughout the multilateral trade negotiations of the Uruguay Round probably also had an effect on domestic policies in many countries in the same period, a development that was well evident in the early 1990s. In this sense, significant political changes which took place well before the creation of the WTO, seem to have had larger impact on international fish trade than the creation in 1995 of the WTO itself.
15. Regional trade agreements also seem to have had a significant impact on trade, especially on increased trade with neighbouring countries. For imports, the state of the domestic economy is probably the single most important factor for any given year. The last factor, which of course crucially affects the trade situation, is the state of and changes in domestic fishery resources.
16. As a result of the many various causes that influence and determine a country's trade in fish and fishery products, the studies undertaken did not permit a quantification of the Uruguay Round Agreements' direct impact. However, it seems clear that a significant factor behind the increasing international fish trade, both in absolute and relative terms, can be found in the liberalization of international trade as represented by the creation of the WTO and the enactment of the Uruguay Round Agreements.
17. As the implementation of the Uruguay Round Agreements has direct consequences for international trade in fishery products, the Sub-Committee is invited to consider the implications of likely developments, especially in the context of the new Multilateral Trade Negotiations. It is invited to discuss the findings in this paper and may wish to recommend that further studies to assess current and future impact of the Agreements, including its quantification, should be undertaken.