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   Promoting Trade


Agriculture negotiations currently focus on:

    • market access of agriculture products;

    • reducing subsidies (domestic support) provided to the agriculture sector to ensure a level playing field for products without subsidies; and

    • elimination of export subsidies and export financing support.


Tariff Reduction Formula (TRF)


  • In order to reduce the overall level of bound tariffs, the draft modalities outline the 4-band approach, referred to as the tiered formula for tariff reduction (tiered formula). The proposed cuts:

Developed countries 

Developing countries

Tiers (%)

Cuts (%)

Tiers (%)

Cuts (%)

0 - 20


0 - 30


>20 - 50


>30 - 80


>50 - 75


>80 - 130


> 75


> 130


  • For developed countries:

    • The minimum average cut on bound tariff is set at 54%, across the board inclusive of cuts in Sensitive Products, tariff escalation and tropical products; and

    • Reduction of tariff to be undertaken in equal annual instalments over five years.

  • For developing countries:

    • Quantum of tariff cuts will be two-third of cuts undertaken by developed countries;

    • The maximum overall average of cuts on bound tariffs is 36%, across the board inclusive of treatment of Sensitive Products; and

    • Reduction of tariff to be undertaken in equal annual instalments over ten years.

Sensitive Products (SeP)


  • Members can designate selected existing Tariff Rate Quota (TRQ) products which will take lesser cuts, than that required under the tiered reduction formula. For these TRQ products, the draft modalities proposed o n selection or designation of SeP:

  • For developed countries:

    • Up to 4% of tariff lines as sensitive products; and

    • Addit ional 2% tariff lines if more than 30% of tariff lines are in the top band of the tariff reduction formula must be compensated through tariff rate quota (TRQ) expansion of 0.5%.

  • For developing countries, can designate one-third more tariff lines than developed countries.

  • The modalities require the following tariff rate quota (TRQ) expansion to be undertaken based on the quantum of deviation from the tiered reduction formula:

  • For developed Countries:

    • One -third deviation, TRQ expansion will be 3%;

    • One-half deviation, TRQ expansion 3.5%; and

    • Two -thirds deviation, TRQ expansion 4%.

  • For developing Countries:

    • TRQ expansion will be 2/3 of that for developed countries.

  • Alternative options which do not require TRQ expansion:


No Years




1/2 of SeP



1/3 of SeP



1/4 of SeP

    • For the remainder of SeP lines, developing Members may undertake full formula cut with longer implementation period of additional 3 years or apply tariff quota expansion.

  • On the possibility of creating new TRQ, the Chair propose for either:

    • No tariff line may be declared sensitive and subject to a tariff quota for sensitive products unless that tariff line was already subject to a pre-Doha tariff quota; or

    • Members are entitled to declare sensitive any tariff line, irrespective of whether that tariff line was already subject to a pre-Doha tariff quota.

  • On Tariff Capping issue, the Chair proposed tariff capping for non-sensitive products excluding Special Products:

    • 100% for developed; and

    • 150% for developing.

Special Products (SP)


  • Developing Members can designate some products as Special Products guided by indicators for reasons of food security, livelihood security and rural development. These products will be subject to lesser tariff cuts, than that required under the tiered reduction formula. For these products, the draft modalities propose:

    • 12% of tariff lines available for self designation as Special Products.

    • On treatment or reduction in tariff:

      • 5% or less of lines may be exempted from tariff cuts; and

      • The overall average cut shall be 11%.



Special Safeguard Mechanism (SSM)


  • The SSM is introduced to allow developing countries to undertake safeguard measures to temporarily protect domestic producers from sudden import surges and price declines. The draft modalities propose:

    • On selection: SSM can be invoked for all products, including Special Products. However, number of products to be limited to no more than 2-6 products in a given twelve- month period.

    • Price and volume triggers shall not be used simultaneously to avoid abuse of SSM when there is increase in price and decline in volume of imports for the products concerned in that particular SSM period.

  • On trigger levels and remedy:

    • On volume trigger:

Per cent of base imports (Volume)

Maximum Additional Duties (Remedy)

>110 and <115

•  25% of current bound tariff; or
•  25% points,
whichever is higher.

> 115 and <135

•  40% of current bound tariff; or
•  40% points,
whichever is higher.


•  50% of current bound tariff; or
•  50% points,
whichever is higher.

    • On price trigger, option proposed:

      • Trigger price of 85% and below from the most recent 3 years sourced price; and

      • The remedy should be additional duty not exceeding 85% of the difference between the import price and the trigger price.

  • On the remedy breaching pre-Doha (Uruguay Round - UR)bound tariffs, the DG proposed:

    • Volume based SSM is applicable for 12 months;

    • SSM trigger calculated based on 3 years rolling average and if SSM was in force within 3 years, the monthly average of the imports of the SSM application shall be calculated and applied as the proxy imports for the months SSM was in force, unless actual imports are higher;

    • If volume of imports between 120-140%, maximum additional duty to be imposed shall not exceed 1/3 of current bound tariff or 8% points, whichever is the higher;

    • If volume of imports exceed 140 %, maximum additional duty to be imposed shall not exceed 1/2 of current bound tariff or 12% points, whichever is the higher;

    • Maximum number of tariff lines allowed for above bound rates is 2.5% in a year;

    • Remedies only applicable when domestic price is actually declining; and

    • Once SSM is triggered, it may be applied for maximum of [4/8] months, and shall not be re-applicable until an equivalent period of months has elapsed.

  • To tighten the disciplines in SSM and avoid potential abuse, Chair proposed cross checking mechanism that prohibit Members from taking recourse to price-based SSM when the imports concerned is declining.


Overall Reduction


  • In order to reduce the level of Overall Trade-Distorting Domestic Support (OTDS), the draft modalities outline a 3-band approach, as follows:


(US$ billion)

Reduction Options (%)



> 60






US, Japan (75%)





  • For developing countries, quantum of tariff cuts will be two-third of cuts undertaken by developed countries in band 3.

  • OTDS reduction on first day of implementation:

    • Band 1 & 2 : 1/3 reduction;

    • Band 3 : 1/4 reduction; and

    • Developing countries: 1/5 reduction.

  • Remaining reductions shall be reduced in equal instalments over 5 years for developed and 8 years for developing Members.


  • On export subsidies, draft modalities propose elimination of all forms of export subsidies by the end of 2013 for developed and 2016 for developing countries.

  • However, developing countries shall furthermore continue to benefit additional time period i.e. 5 years after the end of implementation period based on Agriculture Agreement Article 9.4.

  • On export financing support (export credits, export credit guarantees and insurance programmes), negotiations focus on the modalities for terms and conditions relating to:

    • maximum repayment period for financing support of 180 days. However, developing Members, will have a longer time frame of 4 years to comply with this requirement; and

    • self-financing, ability to recoup operating costs of a programme and not run at a loss, within 4 years from the start of programme. For developing Members, the period will be 6 years from the start of a programme.


Last Updated 2016-12-16 09:01:07 by Mangaleswari Arjunan

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