6. CONCLUSIONS

On the basis of the criteria specified in the July Framework Agreement, four countries are evaluated in a trade and development context to draw conclusions related to designating "Special Products" in the WTO multilateral negotiations.

a) Number of indicators. Based on the factor analysis it appears several indicators are explaining the same criteria. Thus, it is possible that from the menu of indicators, countries can select a few indicators to identify special products.

b) Number of criteria to be satisfied. Based on the fact that indicators have loadings across all the three criteria (factors) and that the factor scores indicate that the commodities have significant scores across the criteria, it suggests that products need only meet one criteria to qualify for Special product status.

c) Number/Percentage of products and tariff lines. Based on the indicator and factor analysis, the number of products or tariff lines identified is not necessarily related to the number of indicators. Further, the results suggest that there is a possibility of specifying a relatively small number of tariff lines, less than 10 percent, as "Special Products". Given some of the current proposals in the negotiations this would increase the flexibility for developing countries without sacrificing their ability to call for ambition in the negotiations.

d) Product Categories as grouped tariff lines. The indicator analysis suggests that given the broad substitutability of products, including across HS Chapters, the indicator analysis suggests that there should be consideration for "Special Products" to be product categories, allowing a series or package of different HS codes and lines to define a particular "Special Product" for treatment. Substitution between some cereals and root crops are obvious in this regard as are products at different levels of processing.

e) Tariff overhang is limited in assisting "Special Products" designation. The uniform manner in which bound rates were set by countries implies that the protection needs of individual products were not evaluated when they were set during the Uruguay Round. Further, applied tariff rates were set and in many cases restrictions imposed on their level in other multilateral frameworks, often as loan conditionalities.

f) Information development linked to additional product identification. Given the data shortages, especially at a disaggregated level, there could be consideration for linking data development processes and the identification of "Special Products" in a framework that allows products to be exchanged and identified in the future. Rural development, food systems and associated livelihood systems are dynamic processes and different products can be identified in the future as needing flexibility.

g) A comprehensive approach to "Products". Given that "Special Products" (paragraph 41), identified on the basis of the criteria in the Framework Agreement, addresses similar development goals to Tropical Products (paragraph 42) and Preferential Products (paragraph 43), and in each case many of the products are the same, it might advance negotiations to address their treatment under "Special Products" rather than keeping these closely related concepts separate. Regional and international agreements between countries could identify products and agree on their treatment under this scenario.

h) LDC treatment. Given the possibility that designating "Special Products" does in fact lead to greater ambition that could result in bound rates falling below currently applied rates, the flexibility for all products now given to LDCs, should perhaps be considered for "Special Products" for all developing countries. Thus, for a specified period there could be no commitments, no tariff reductions and no TRQs on products designated "Special Products". However, the impact of this consideration on LDC exports should also be assessed.

i) SSM. Given the levels of ambition being pursued in the negotiations and the possible resulting narrowness of the gap between the bound and applied rates that might result for some products, "Special Products" should possibly have access to the SSM.

j) Flexibility for "Special Products" beyond the market access pillar. Given the criteria for "Special Products" and the concentration by many developing on a few exports that are also important food commodities domestically there should be flexibility for "Special Products" that enables diversification and trade expansion. Thus, consideration should be given for flexibility under the domestic support and export competition pillar that facilitates improved supply side capacity and market development. Market protection without incentives for increased productivity and competitiveness is meaningless. In this regard, the negotiated wording on modalities under areas such as "de minimis" and state trading enterprises could make reference to flexibility for the treatment needs of "Special Products".

k) Countries with a Common External tariff (CET) and Free Trade Areas. These countries generally have applied tariffs up to a shared level. For instance, in the CARICOM region for agriculture, all the products to be most protected are set at the 40 percent and we see the majority of applied tariff lines set at this level. There may be the need to give consideration to designating regional "Special Products" that have levels of protection above the CET in order to effectively serve the purposes of both "Special Products" and regional economic community.

REFERENCES

Hoda, A. 2005. "Special Products": Options for Negotiating Modalities. International Center for Trade and Sustainable Development (ICTSD).

Independent Commission of Experts. 1980. North-South: A Programme for Survival (The "Brandt Report"), Pan, London.

Sebastien, J., Laborde, D. & Martin, W. 2005. Sensitive Products: Selection and Implications for Agricultural Trade Negotiations. (Mimeo)

Sharma, R. & Morrison, J.A. 2005. Considerations for the Design of a Special Safeguard Mechanism, IATRC contributed paper.

Tucker, L. & MacCallum, R. 1997. Exploratory Factor Analysis. Ohio State University Press.

WTO Secretariat. 1994. The Results of the Uruguay Round of Multilateral Trade Negotiations. WTO, Geneva.

WTO Secretariat. 2000. Proposal to the June 2000 Special Session of the Committee on Agriculture by Cuba, Dominican Republic, Honduras, Pakistan, Haiti, Nicaragua, Kenya, Uganda, Zimbabwe, Sri Lanka and El Salvador (G/AG/NG/W/13). WTO, Geneva.

WTO Secretariat. 2002. Negotiations on Agriculture - Overview (TN/AG/6). WTO, Geneva.

WTO Secretariat. 2003. Negotiations on Agriculture - First Draft of Modalities for the Further Commitments (TN/AG/W/1/Rev.1).

WTO Secretariat. 2004. Framework Agreement (WT/L/579). WTO, Geneva.

WTO Secretariat. 2005. Past Negotiations and Consultations on Tropical Products (TN/AG/S/17). WTO, Geneva.

WTO Secretariat (various). Trade Policy Reviews for the respective countries. WTO, Geneva.

ANNEX 1

Preferential Products - has generally referred to products that have been granted market entry conditions more favourable than the "most favoured nation (MFN)" status offers. In other words, these products when exported by particular countries enter the markets of their trading partners at rates of duty lower than the same product from other countries competing for the same market. Bananas exported by ACP countries to the EU market is one example of a preferential product.

Sensitive Products - these are products for which countries seek to apply lower disciplines than agreed on in the negotiations. The specific purpose or conditions for seeking or being granted this allowance are not generally articulated. However, ‘non-trade’ concerns (for environmental protection, food safety) are often cited by developed countries as the basis for sensitive products. Basic food products (rice and meat) and tariff revenue products (tobacco and alcohol) are generally listed as sensitive products. "Special Products" are not an option for developed countries and as a result where the objectives with "Special Products" coincide the products are expected to be similar. Both "Sensitive" and "Special Products" are options for developing countries.

"Special Products" - based on an interpretation of the July Framework Agreement, would be products for which countries feel application of the general disciplines agreed in the Doha Round negotiations to these products would undermine achievement of their goals related to ensuring food security, improving livelihood security and advancing rural development. Thus, cereals, sugar, milk and root crops have been identified as "Special Products".

Staple Products - has generally referred to those products that characterise food consumption in a particular country. In the Special Treatment clause at the end of the Uruguay Round some countries were permitted treat products specially (delay tariffication) if the products met certain conditions. One of these conditions for products qualifying for special treatment was that "the commodity concerned must be the predominant staple in the traditional diet". For most of the countries using this option the product was rice, the most important food product in their diet.

Strategic Products - has generally referred to products which countries feel the need to manage for purposed related to national development. They may be both food products and developed products. In the Mauritius TPR, 2001 the report indicates that " several parastatal bodies, including the State Trading Corporation and the Agricultural Marketing Board, purchase, import, and store "strategic" products (including flour, ration rice, petroleum products, cement, table potatoes, onions, and garlic). Price controls, consisting of a fixed maximum price system (on imports and locally produced goods) and a maximum percentage mark-up system (only on imports), are also maintained on some of the strategic products".

Tropical Products - has generally referred to the main agricultural exports from tropical zone countries, historically to products such as coffee, cocoa and tea. In several different Multilateral Negotiation Rounds there have been efforts to define what tropical products are but there has been no consensus. Participants in the Uruguay Round agreed to engage in negotiations seven products groups with the understanding that it was not to be considered a definition of tropical products. The seven products groups were: i) tropical beverages(cocoa, coffee, tea); ii) spices, flowers and plants; iii) certain oilseeds, vegetable oil and oil cakes (e.g. palm and coconut oil); iv) tobacco, rice and tropical roots; v) tropical fruits and nuts (e.g. bananas, pineapples and peanuts); vi) tropical wood and rubber; vii) jute and hard fibres.

ANNEX 2

Country tables with the indicator values for the products qualifying with three or more indicators.

Belize

Egypt

Nigeria

Thailand