April 8, 2005










“EU and US Responses to Developing Country Challenges on Trade Policy:
The Doha Round and Beyond” 
Séamus Ó Cléirea?áin

Purchase College, SUNY
Institute for the Study of Europe, Columbia University





















A revised version of a paper presented at the European Union Studies Association Ninth 
Biennial International Conference, Austin April 2, 2005. This paper has benefited from 
the constructive comments of Glenda Rosenthal and Gerrit Faber.  Their generous 
contributions are acknowledged.




This paper examines the changing nature of EU and US trade policy toward developing countries.  While 
previous GATT and WTO rounds of trade negotiations had been largely dominated by EU-US bilateral 
bargaining in a multilateral context, much of the Doha Round agenda has seen the EU and US face the need 
to respond to developing country calls for reductions in EU and US trade protection and export 
subsidization.  This paper 1) outlines asymmetries in the changing nature of EU and US trade protection 
against developing country imports; 2) examines commonalities in EU and US Doha Round negotiating 
positions towards developing countries and 3) discusses EU and US responses to recent WTO decisions in 
cases brought by developing countries.



I. Background
	While all WTO members may participate, the current Doha Round is dominated 
by two actors—the US and EU25.   Although no agreement will be possible without the 
acquiescence of all participants and although a range of other countries are important role 
players, the large US and EU share of world trade ensure that EU-US transatlantic 
differences have always dominated the agenda in GATT and WTO trade rounds.   Much 
of the negotiations deal with issues in which developing countries have a strong interest.  
In particular, the labor intensive sector of textiles and the natural resource intensive sector 
of agriculture, both feature prominently.
	The current Doha Round was launched in 2001 as the “Development Round” and 
while developing countries are playing a more active part than in the past, the current 
Round continues the pattern of US-EU dominance of the agenda.  Indeed, as Charlton 
and Young point out, the current US and EU negotiating priorities are not those which 
would produce the largest welfare gains for developing countries.   Most of any welfare 
gains from developed country agricultural liberalization are likely to accrue to developed 
countries themselves, particularly the EU and US, as they remove their own economic 
inefficiencies.  Negotiations on reductions in restrictions on labor migration through the 
temporary movement of natural persons, the area in which Charlton and Young posit that 
developing countries stand to receive their largest share of any welfare gains, have seen 
limited progress.  
	While much of the market access issues in past rounds were dominated by US-EU 
negotiations over market access to each other’s markets, the market access negotiations 
in the current round are heavily focused on the extent to which the EU and the US will 
each provide more generous market access to the exports of developing countries -- and 
what they will each insist upon as quid pro quo.  In addition to market access issues, the 
negotiations hold the prospect of the elimination of developed country agricultural export 
subsidies.  MFN-based tariff cuts improve market access but also reduce the margin of 
preference previously enjoyed by countries receiving preferential access.  An end to 
agricultural export subsidies will drive up world prices for food.  Not all developing 
countries will benefit from these effects.
	Developing countries, like all countries, have different national interests.  
Countries which have few export-oriented industries, and which have heavily protected 
tradable sectors, will tend to come to trade liberalization negotiations with a “defensive” 
posture.  Countries with diversified economies may strike defensive poses on sectoral 
issues in which they seek to retain as much as possible of their present protection of 
uncompetitive industries while striking offensive poses in sectors where their exports are 
being restricted by barriers to market access elsewhere.
	The Doha Round negotiations have seen developing countries coalesce into a 
number of groupings.  The collapse of the Cancun Ministerial, and the success of 
developing country coalitions at Cancun, have been analysed by Narlikar and Tussie.   
They describe developing country fears of US-EU collusion on agriculture and how a 
variety of developing country coalitions were formed around specific issues to reorient 
the negotiating agenda toward issues of developing country interest. A variety of 
taxonomies have been used by analysts to identify groupings of developing countries 
sharing common interests.  In the case of negotiating positions on agriculture, Barichello, 
McCalla and Valdes identify three heterogeneous subgroups: food exporting countries, 
food importing countries, and low income food deficit countries.   The food exporting 
countries seek greater market access and an end to export subsidization.  The food 
importing countries face welfare losses with the ending of export subsidies, although 
their indigenous producers should gain from higher prices and an end to subsidized 
competition.  In addition, these countries are likely to rely on the WTO’s Special and 
Differential Treatment which, by limiting the obligations of poorer countries, allows 
them to continue to protect their domestic producers.  Many of the low income food 
deficit countries not only currently benefit from US and EU subsidized food exports, but 
are also recipients of a variety of US and EU preference programs.
	The Africa Group, including some members of the overlapping ACP Group and 
the Least Developed Countries have formed into the G90.  It is mainly composed of 
smaller developing countries.  Many of its members are simultaneously involved in 
negotiations with the EU on the EU’s proposed Economic Partnership Agreements 
(EPAs) and some of them risk seeing their preferences in the EU and US markets eroded 
by Doha Round liberalization or by US and EU compliance with recent WTO Panel 
decisions.  In some instances, the gainers will be other members of the same group.  In 
other instances, the gainers will be more developed developing countries.  These middle 
income, more industrialized developing countries, including Argentina, Chile, China, 
Brazil, India, Egypt, Nigeria, Pakistan and South Africa belong to the Group of Twenty 
(G20).  Members of this group have targeted US and EU agricultural subsidies.  In doing 
so, there interests are frequently in conflict with many of the least developed of 
developing countries.  LDCs which are food-importers are likely to be hurt by increases 
in world food prices associated with any reductions in US and EU agricultural export 
subsidies.   Many of these same countries face US and EU requests that they lower their 
high manufacturing tariffs and that they open up the service sectors of their economies, 
including banking and insurance.
	In addition to developing country coalitions there are coalitions cutting across 
levels of development such as the Cairns Group of seventeen temperate foodstuffs 
agricultural exporters.   Some members of the Cairns Group also belong to the G20.  
With the exception of South Africa, none of them is an ACP member.  The Cairns Group 
played an important part in the Uruguay Round agricultural negotiations and has long 
opposed the trade effects of the CAP, sometimes in alliance with the US.  Continuing the 
role it played in the Uruguay Round, the Cairns Group is pressing the EU and US on 
providing greater market access and an end to subsidies.  To date, the Cairns Group and 
the US have resisted EU efforts to include geographical indications in the negotiations.  
Examples of geographical indications are champaign, port, camembert etc.
	The post-Uruguay road has been littered with accidents, including the disastrous 
1999 Seattle Ministerial meeting and the stalemated 2003 Cancun Ministerial.  Launched 
in Qatar in November 2001, the Doha Round’s original timetable called for countries to 
have produced ”modalities” of  their commitments by March 2003, draft commitments, 
based on these “modalities” for the Cancun meeting of September 2003, and negotiations 
to be completed by January 2005, a timetable which has long ago slipped away. With the 
limited outcomes of the Ministerial meetings, the Round was put back on track in 2004 
with smaller meetings in Geneva of negotiators representing various coalitions.  This 
culminated in adoption of the Doha Framework Agreement of 31 July 2004. The next 
WTO Ministerial is scheduled for Hong Kong in December 2005 at which a “modalities 
text” is due to be agreed.  This would then be used as the basis for a final round of 
negotiations on offers.

The Original Doha Agenda
	The Doha negotiating agenda includes four broad sectors: agriculture, industrial 
goods, services and trade rules.  The service sector negotiations have faced the largest 
delays to date.  The EU and US have strong interests in obtaining greater market access, 
particularly in developing countries, for their financial and business services sectors.  On 
the other side of the coin, a service sector area of particular interest to developing 
countries, such as India, is the provision of temporary services through migration, the 
issue of temporary movement of natural persons under the General Agreement on Trade 
in Services (GATS) Mode 4 provision of services.  However, the recent member state 
reaction to the Commission’s use of the country of origin principle in its draft directive 
on liberalizing the services market gives an indication of likely EU receptiveness to 
developing country proposals to relax immigration controls.  In addition to negotiations 
on these three sectoral issues, an additional negotiating item is reform of WTO rules, 
including limiting the use of so-called Trade Defence Instruments, such as anti-dumping 
measures.  This has become an objective of both the US and EU as producers in 
developing countries have sought increased reliance in recent years on contingency 
protection policies traditionally associated with their developed country counterparts.  In 
the years since the round’s launch, negotiations have increasingly been focused on a 
narrower range of issues culminating in the July 2004 Framework Agreement.

The July 2004 Framework Agreement  
	Following the failure of the Cancun Ministerial, less stage-managed negotiations 
on a way forward led to the July 2004 Framework Agreement for further negotiations.   If 
there is a final Doha Round Agreement, it will likely be based on filling in the details to 
the “framework for establishing modalities” contained in the July 2004 Package.   Among 
the agreements to be included in any final Doha Round outcome was the following non-
exhaustive list.

*	Least Developed Countries (LDCs) would be exempted from all tariff reductions 
but are expected to substantially increase their commitments to tariff bindings..
*	Developing countries should have a longer time table for implementing any 
reductions or eliminations of agricultural subsidies.
*	The EU offer to phase out all agricultural export subsidies and the US offer to 
eliminate its export credits led to an agreement that all developed country 
agricultural export subsidization would end at some date to be determined. Food 
aid which displaces commercial production would also be eliminated as would all 
food aid “not in conformity with operationally effective disciplines to be agreed.”  
*	The EU’s position that some agricultural subsidies, termed Blue Box subsidies by 
the Uruguay Round Agricultural Agreement, be retained was included in the 
package.  However, the package sought to limit Blue Box subsidies by restricting 
them to no more than 85% of any Blue Box production base and to no more than 
5% of the value of total agricultural production in some base period yet to be 
determined.  Blue Box subsidies are defined in the discussion on the URAA 
below.
*	The framework for establishing modalities in agriculture also calls for the use of a 
tiered formula for cutting another broad category of trade distorting domestic 
agricultural subsidies, termed Total Aggregate Measure of Support (AMS).  The 
formula, yet to be agreed upon, would require larger cuts to be made by countries 
with higher levels of these subsidies.  
*	It was agreed that developed countries would cut these subsidies by 20% in the 
first year of any agreement.
*	In seeking to reduce agricultural protection and improve market access, the 
package calls for “substantial overall tariff reductions” to be achieved by all 
participants except LDCs, again using a tiered tariff-cutting formula to achieve 
some harmonization and reduce tariff peaks.
*	Agricultural tariff quotas would see a reduction or elimination of in-quota tariffs 
and “operationally effective improvements in tariff quota administration” to 
increase export opportunities particularly for developing countries.
*	A yet-to-be-negotiated number of agricultural “sensitive sectors” could be 
excluded from the agricultural tariff reductions.
*	The work programme explicitly recognized the importance of cotton for 
developing countries and a special sectoral subcommittee on cotton would work 
to ensure the sector got priority in general negotiations on market access, 
domestic subsidies and export subsidies.
*	Tariffs on non-agricultural products would be cut using a formula to be applied to 
bound rates and, in the case of unbound rates, the formula would be applied to 
[twice] the level of MFN applied rates in place in November 2001.
*	All non-ad valorem duties would be converted into ad valorem equivalents 
(AVEs) and bound using a methodology to be negotiated.
*	The Singapore issues were reduced to one issue—trade facilitation, i.e. customs 
procedures, “with a view to further expediting the movement, release and 
clearance of goods, including goods in transit” . The Singapore issues had 
become a matter of great contention during the miscalculations of the Cancun 
Ministerial where the EU sought initially to include all four topics in the 
negotiations, eventually settled on two, but developing countries refused to 
include any of them in the negotiating agenda at the time.  
 
	The July 2004 Package is far from an outcome to a Doha Round but it sets an 
agreed set of parameters for further negotiations.  In doing so, it reprised some Uruguay 
Round issues.  The EU had failed during the Uruguay Round to have US export credits 
defined as subsidies, and thus included in the cuts of the URAA.  Part of the price paid by 
the US in getting EU acceptance of a Doha Round goal that all export subsidies should be 
ended eventually was the inclusion of export credits in the Work Programme.  Still to be 
negotiated are various formulae to be applied to tariff and subsidy cuts.  Also still to be 
negotiated is the number of “sensitive” categories which would be excluded from deeper 
tariff cuts but all products presently sheltered by tariff quotas would see the quotas 
increased.  While the package’s Framework for Establishing Modalities in Market Access 
for Non-Agricultural Products exempts LDCs from tariff cuts, it requires them to increase 
substantially the number of product categories for which they have established tariff 
bindings.

II. Changes in the Trading System since Uruguay
	While the July 2004 package has established a “framework for establishing 
modalities” in negotiations, a final Doha Round Agreement will be shaped by a number 
of structural changes that have occurred in the trading system since the Uruguay Round.  
Many of these structural changes are the result of US or EU policies in the interim.  
These include the following:

*	EU enlargement has expanded the constituencies represented by the 
Commission’s trade negotiators.
*	In the interim, the US has assembled a growing network of preferential 
arrangements with its trading partners which, though not as extensive as the 
preferential arrangements of the EU, is a marked departure from the US’s 
previous reliance on multilateralism.
*	Even though there are a shrinking set of other issues, agriculture appears likely to 
play an even bigger part in any final Doha Round Agreement than it did in the 
Uruguay Round
*	Many developing countries had not participated actively in past rounds (or even 
belonged to the WTO) and whose interests were frequently ignored, have become 
more assertive and are playing a major role in the current round.  Leading 
developing countries such as Brazil, India and South Africa have now been joined 
by China, participating in its first round as a recent WTO member.  
*	In shaping a Doha Round outcome at a time when they are also making other 
changes in their own trade policies, the EU and US face a growing problem that, 
despite the existence of the formidable Group of Twenty coalition of developing 
countries which is united on issues such as WTO governance and reducing 
agricultural subsidies, some proposed changes will benefit some developing 
countries at the expense of others.
*	Recent developing country victories in WTO dispute settlement procedures 
involving US cotton and EU sugar policies pose painful political choices for the 
two losers and also for less competitive developing countries which benefited 
from some preferential treatment. Sectors such as bananas, cotton, textiles and 
sugar are obvious examples of sectors where US and EU trade liberalization pits 
not only domestic producers against importers but also pits one group of 
developing countries against another.
*	Simultaneous with the round has come the ending of the quota-ridden global 
system of textile protection which has existed since the mid-1960s.  While textile 
markets are still protected by tariffs and by the threat of contingent protection, the 
arrival of China as the dominant textile producer poses a competitive threat not 
only to US and EU textile producers but to the developing country beneficiaries 
of the previous system of quotas. 

III. US and EU Preferential Arrangements
	Almost all of the developing countries participating in the Doha Round are 
recipients of preferences from both the US and the EU.  However, even as recipients of 
preferences, these countries face high barriers to market access in both US and EU 
markets, particularly in textiles and agricultural products which are viewed as ‘sensitive 
products” and where limits are set on the quantity of imports, thus eroding the value of 
preferences.  Moreover, while preferences generate rent transfers from developed country 
consumers, a variety of studies have cast doubt on the value of preferences as a tool to 
stimulate development.   As Panagariya points out, between 1976 and 1998 the ACP 
share of EU imports fell from 6.7% to 3%, with a mere ten products accounting for 60% 
of total ACP exports to the EU .  Nevertheless, in the mercantilist world of trade 
negotiations, preferences are defended by those receiving them and compensation is 
sought for their erosion.

EU Preferences
	The fine discriminatory distinctions in the EU’s treatment of its trading partners 
have been outlined by Sapir.  The specific preferences granted to developing countries 
have also been examined by Panagariya .  EU preferential arrangements, each with its 
own degree of preference, include customs unions (Andorra, San Marino, Turkey), the 
European Economic Area, Euro Med, Western Balkans, Pan European System, ACP, 
OCT, GSP and Everything But Arms (EBA).  Of the 148 members of the WTO in 
February 2005, all but 9 receive some form of preferential treatment from the EU.   
Indeed, apart from exceptions such as non-WTO member N. Korea, the WTO’s Most 
Favoured Nation (MFN) treatment is almost the worse treatment afforded its trading 
partners by the EU.
	EU preferences to developing countries are found largely in its Cotonou 
Agreement with 77 African, Caribbean and Pacific (ACP) countries and its EBA program 
for which all LDCs, including ACP, are eligible.   The EBA program came into effect in 
March 2001 and provides duty-free entry into the EU for almost all LDC exports, 
including agricultural products.  It amends the EU’s GSP scheme and adds roughly 10% 
more tariff lines to the product coverage for imports from those LDCs which are not ACP 
countries.
	Only a handful of LDCs are not ACP countries and hence had relied on the EU’s 
GSP program.  Most of these are in South Asia and while they receive GSP treatment, 
they do not receive the additional ACP preferences. Three agricultural products are 
initially excluded from full duty-free treatment. Bananas are to be phased in by 2006, 
sugar and rice by 2009, with an EBA duty-free quota for both sugar and rice established 
in the interim.  While the list of country beneficiaries is similar, the product coverage of 
EBA is considerably broader than the GSP of the US.   Prior to EBA, the most important 
non-ACP GSP beneficiary was Bangladesh.
	The EU’s GSP scheme offers preferences to some 178 developing countries.  The 
preferences take the form of either duty free entry or reduced tariffs.  In many instances, 
there are volume restrictions on the trade flows receiving the preferences.  In 2003, the 
EU reported GSP imports of €52 billion, considerably larger than US GSP imports of €16 
billion.   With its previous 1995-2005 GSP scheme expiring, the Commission had 
proposed a shorter, four-year life for a replacement scheme due to run from 2005-2008.  
It had also proposed that the existing five levels of GSP preferences, some based on 
labour rights, environmental standards or anti-drug conditionality, be simplified to three 
levels—a general scheme, a “GSP Plus” for especially vulnerable countries with special 
development needs, and the EBA.  EBA preferences are available to the Least 
Developing countries.  GSP Plus would be available to countries with undiversified 
economies, defined as having more than 75% of EU imports of their GSP exports 
concentrated in five product categories.  In addition, qualifying countries should account 
for less than 1% of total EU GSP imports.  Finally, GSP Plus countries would be required 
to ratify a list of 27 international conventions on human rights, labour, environment and 
governance standards by the end of 2008.
	The new scheme extended the product coverage qualifying for GSP treatment to 
include 7200 tariff lines of the approximately 9000 non-zero MFN tariff lines.  The 
Commission’s proposals also introduced a new graduation criterion under which 
countries attaining a market share of 15% (12.5% for textiles) for a product would 
become subject to MFN treatment for that product.  As a result, China, which accounted 
for 36% of all EU GSP imports in 2003, would find itself graduating out of GSP in many 
product categories.  The Commission estimated that 80% of past Chinese GSP imports 
would now be subject to MFN treatment.  A number of member states were reported to 
wish to see India, with an 11% market share, join China in graduation from GSP 
treatment of its textiles and clothing products and sought a 10% market share criterion for 
this sector.
	Concurrent with its Doha negotiations, the EU is negotiating a set of Economic 
Partnership Agreements (EPAs) with the ACP countries to replace the Cotonou 
Agreement which expires in 2008.   While Cotonou and its predecessors provided 
unilateral preferential access to the EU market, the EPAs would be a system of reciprocal 
free trade agreements.  In addition to providing reciprocity to the EU through greater EU 
market access to the ACP countries, the EPAs would include South-South liberalization.  
Faced with developing country resistance to inclusion of the Singapore Issues in the 
Doha Round at the Cancun ministerial, the Commission has sought to include these 
issues in its EPA discussions with the ACP countries.  As Young points out, the EU had 
long championed inclusion of the Singapore Issues, in part driven by its internal social 
agenda.   However, in March 2005, the UK’s Department of Trade and Industry issued a 
policy paper calling for removing the Singapore issues from EPA negotiations unless 
their inclusion is specifically requested by ACP countries.   In the non-trade sphere, in 
this year’s negotiations reviewing the operation of the EU’s Cotonou Agreement, the EU 
has sought allies in difference with the US on the International Criminal Court (ICC), by 
seeking to have all ACP countries ratify the ICC.  In the event, a compromise solution 
was reached, with ACP countries “seeking to take steps” rather than “agree to take steps” 
toward ICC ratification. 
	The margin of preference provided to EPA members, and the degree of 
discrimination against non-members, will be influenced by the extent to which the Doha 
Round produces cuts in MFN tariffs. The EU seeks to maintain preferential access after 
Doha.  In particular, it wants continued sugar preferences in any reformed sugar regime 
and wants traditional suppliers such as Bangladesh and India to continue to have textile 
preferences in the EU’s GSP.


Table 1:  EU Regional Agreements, May 2004


Type of trade regime
Name of agreement
Countries involved
Single market
European Economic Area 
(EEA)
Iceland, Liechtenstein, 
Norway
Customs union

Turkey, Andorra, San 
Marino
Free-trade area

Bulgaria, Chile, Croatia, 
Faroe Islands, FYROM, 
Israel, Jordan, Lebanon, 
Mexico, Morocco, 
Palestinian Authority, 
Romania, South Africa, 
Switzerland, Tunisia
Partnership and cooperation 
agreements (MFN treatment)

Russia and other former 
Community of Independent 
States countries
Non-reciprocal: contractual 
preferences
Mediterranean Agreements, 
Cotonou Agreements
African, Caribbean and 
Pacific countries, Algeria, 
Egypt, Syria
Non-reciprocal: autonomous 
preferences
Generalized System of 
Preferences (GSP), and 
Stabilization and Association 
Agreements.
Other developing countries 
and members of the 
Commonwealth of 
Independent States 
Albania, Bosnia and 
Herzegovina, and Serbia and 
Montenegro (including 
Kosovo)
Purely MFN treatment

Australia; Canada; Chinese 
Taipei; Hong Kong, China; 
Japan; Republic of Korea; 
New Zealand; Singapore;  
and the United States.
Source:	WTO WT/TPR/S/136 p.23.

US Preferences
	In a reversal from its long-standing practice, the western side of the Atlantic has 
begun to mirror the EU’s use of a sophisticated web of preferential trading arrangements, 
particularly in trade with developing countries.  This trend accelerated under the guidance 
of US Trade Representative Robert Zoellick who negotiated twelve PTAs during 
President Bush’s first term.  These moved the US far down the road pioneered by the EU 
in establishing a web of preferential trade agreements with various trading partners.
	Today, in addition to NAFTA and unilateral preference schemes such as its GSP, 
the Caribbean Basin Economic Recovery Act (fourteen countries), and the African 
Growth and Opportunity Act (AGOA) (37 countries) , the US has negotiated FTAs with 
thirteen countries – Israel, Jordan, Bahrain, Morocco, Chile, Costa Rica, Dominican 
Republic, El Salvador, Guatemala, Honduras, Nicaragua, Singapore and Australia.   In 
addition, four countries (Bolivia, Colombia, Ecuador and Peru) are covered by the 
Andean Trade Preference Act (ATPA).  Negotiations for other FTAs are in progress, or 
planned, with the five countries of the Southern African Customs Union (SACU), the 
UAE and Oman, Thailand, Colombia, Ecuador, Panama and Peru.
	Though not as extensive a network as the EU’s, the US provides similar 
gradations in its margin of preferences.  Average tariff rates for products covered by 
unilateral preferences such as the CBI or AGOA are below the MFN rate but higher than 
the rates used in the FTAs with Canada, Mexico, Israel, and Jordan.
	The AGOA was introduced in December 2000.  In 2003, thirty seven of the 48 
countries in Sub-Saharan Africa (SSA) met the political conditions for AGOA eligibility.  
AGOA extends the US GSP scheme by providing duty free entry into the US for selected 
countries in sub-Saharan Africa (SSA) for a wider range of exports than is available to 
other LDCs qualifying for GSP treatment. In particular, AGOA countries are not subject 
to the usual export limits on GSP treatment for many products.  However, excluded from 
AGOA are some agricultural and food products, and some textiles and clothing products.  
To qualify for duty-free and quota-free treatment, AGOA has a two-step system for 
country of origin rules for textiles and apparel with the low income SSA LDCs 
temporarily exempt from these rules and more developed SSA countries subject to an 
85% US-SSA origin rule. Rules of origin are particularly important in determining 
whether a product qualifies for a degree of preferential treatment. 
	In 2004, US imports from SSA countries eligible for AGOA treatment amounted 
to $34.4 billions of which $26.6 bl. received AGOA or GSP treatment.  However, oil 
imports accounted for $23 billion or 87% of covered imports with Nigeria providing 
$15.4 of these oil imports, Angola $4.3, and Gabon $1.9 bl.  
	US imports from LDCs were a little over $7 billion in 2001.  In that year, the 
coverage rate of the US GSP was only 44% and the utilization rate was 96%.   Almost 
$3 billion of US imports from LDCs consisted of mineral products, including oil.  Indeed, 
UNCTAD estimates that if Angolan oil is excluded from the calculations only 4% of US 
imports from LDCs are covered by the US GSP scheme and the value of the trade 
actually utilizing preferences is a mere $122 million.   Textiles and clothing, with an 
average MFN tariff of 15.5% and footwear, with an MFN tariff of 37%, are excluded 
from the US GSP except for AGOA countries.  Non-African LDCs exporting these 
sensitive items, in particular Bangladesh which has an export structure heavily 
concentrated on the excluded products, pay the MFN rate.
	A number of AGOA countries have rapidly built up apparel exports to the US.  
However, while apparel exports have grown, it would appear that not all of the tariff rents 
attributable to AGOA preferences are being captured by producers in AGOA countries.  
In a perfectly competitive market, a group of exporters receiving a tariff preference 
would be able to raise their prices by the amount of the tariff.  Olarreaga and ?zden have 
used data on the post-AGOA price increases received by seven SSA textile exporting 
nations and compared them with the MFN tariff to calculate the distribution of the tariff 
rent.  They report that, on average, only a third of the tariff rents accrue to AGOA 
producers and that while S. Africa is able to capture 80%, some other countries (Malawi 
and Lesotho) capture less than 20%.
	In 2003, total US merchandise imports from SSA were $33 billion of which 44%, 
or $14 billion (95% of total imports from AGOA countries), were duty-free imports from 
AGOA-eligible countries.  Imports from SSA account for approximately 2% of total US 
imports.  The EU reports only a slightly marginally higher percentage. AGOA 
preferences are concentrated in a small number of product categories including mineral 
products (largely oil). Textile imports are tightly controlled with a utilization rate in 2001 
of 35.8%, a rate similar to that found for textiles in the EU’s GSP, but by 2003 this had 
risen to over 90% for a select group of beneficiary countries. 

Table 2: US Imports under Tariff Preference Programs 2003 ($ billions)
      
      NAFTA		207
      GSP			21.3
      Andean 		5.8
      Caribbean Basin	2.9
      US-Israel FTA		2.1
      
       Source: US International Trade Commission Value of US imports for consumption, duties 
collected, and ratio of duties to values 1891-2003. February 2004.


Measuring the Generosity of US and EU Preferences for LDCs
	While both the EU and US have widened the scope of their preferential treatment 
of LDCs, several characteristics of their respective schemes limit their generosity.  A 
variety of reasons may be advanced.

*	Producer interests in sensitive sectors such as agriculture, textiles and 
clothing, and footwear ensure that in both the EU and US there are limits to 
the range of products covered by the schemes and, even when product 
coverage is broad, there are frequently physical restrictions in the form of 
quotas.
*	Complicated Country of Origin procedures ensure that not all products 
shipped from a beneficiary country are deemed as having sufficient local 
content or other characteristics to merit receiving preferential treatment and 
hence escape MFN tariffs or other barriers.  As a result, utilization of 
preferential quotas may be less than 100%.  In product ranges where 
utilization rates are 100%, it may be safely assumed that some form of import 
restriction is limiting further LDC exports. On the other hand, it should also 
be recognized that low utilization rates may not always be due to obstacles 
limiting qualification for preferential treatment but may merely be an 
indication of the lack of export capacity of LDCs and their inability to fill a 
preferential quota.  Finally, as Krishna points out, Rules of Origin are a form 
of hidden protection, having tariff-like effects by raising the price of 
intermediate inputs.   Moreover, as she points out, there is plenty of scope for 
any well organized industry to arrange that the rules are devised to provide 
insulation from the effects of a preferential trade agreement. 
*	Growing energy imports by both the US and EU at a time of rising oil prices 
have recently inflated the value of the imports covered by the schemes, 
disguising the fact that oil imports from a small number of LDCs are 
responsible for the vast bulk of preferential trade.  The heavy concentration of 
the value of US and EU preferential imports on a narrow product range such 
as oil and minerals, to the exclusion of the so-called sensitive sectors, and the 
small number of LDCs responsible for these imports, may not be widely 
recognized.

Table 3: US and EU15 Imports from LDCs under Preferential Arrangements


Value $ 
billion
Coverage rate 
%
Utilisation rate 
%
US Imports



From LDC under GSP 2001

7.2
44
96
From SSA under AGOA 2001 
17.7
69
44




EU15 Imports



From LDC members of  ACP 2001 
8.1
100
76
From LDC under GSP 2001
4.4
99
47
From all LDC under EBA 2002
12.9
100
39
From LDC members of ACP under 
EBA 2002
8.5
100
3
From non-ACP LDC under EBA 2002
4.4
100
57
Source: UNCTAD 2003.
	EU15 imports from ACP LDCs are heavily concentrated in a small number of 
product categories.  In 2001, mineral products (oil) and precious stones accounted for 
31% and 23% of total EU15 imports from ACP LDCs.  EU15 imports under GSP are also 
concentrated.  In 2001, textiles and clothing accounted for $3.3 billion of the $4.4 billion 
total – a 75% share.  In addition to the product concentration, Panagariya sees a 
concentration of benefits with only “a handful of countries –Ivory Coast, Mauritius, 
Zimbabwe and Jamaica—have benefited perceptibly from preferences” 
	In the case of the US, petroleum accounts for approximately 90% of the trade 
value covered by the US GSP and 80% of US imports under AGOA.   Indeed, of the 
$7.2 billion of US imports from LDCs in 2001, the two categories of textiles and clothing 
($3.5 bl.) and mineral products ($2.9bl )--largely oil-- accounted for the vast bulk of the 
total.  
	Table 3 indicates that, with the EBA extension of the EU’s GSP, a notable gap 
was opened in the product coverage of the US and EU preference schemes for LDCs.  
However, a deeper look at relative range of coverage would need to look at coverage 
ratios based on product categories rather than mere import values.  If it enters duty free 
and if there are severe limitations on other product categories, the value of EU-LDC trade 
covered by GSP and AGOA preferences may be reported as high even while many 
product categories representing potential LDC and/or SSA exports are excluded.  
Similarly, if US oil imports from LDCs are excluded from the calculation, the coverage 
calculation for the US would drop from 44% to 4%   Yu and Jensen report the results of 
a number of studies which have sought to measure the welfare gains accruing to LDCs 
from the EBA program, with a number of estimates approximating $400 million.   Their 
own estimate of the welfare gains to LDCs of EBA is quite modest, with welfare gains 
for all LDCs of less than $300 million.
	Even for those LDCs which are ACP members, thus qualifying for more 
preferential treatment than other LDCs, Table 3 shows that almost one quarter of the 
preferences offered were not availed of in 2001.  Thus, approximately one quarter of the 
EU’s recorded imports from ACP countries which were LDCs was subject to the EU’s 
MFN tariff wall. Non-ACP LDCs fared even less well under the EU’s GSP which, with a 
similar average coverage rate to that available to ACP countries, had an average 
utilization rate of only 47% in 2001.  
	The EU’s EBA amendment to its GSP program expanded the product coverage of 
the EU preferential scheme with improved LDC GSP market access for agriculture and 
textiles.  However, while the EBA extended the product coverage by allowing duty-free 
imports of qualifying textiles, rigorous enforcement of country of origin rules resulted in 
only 56% of EBA country textile exports escaping the average 10% MFN tariff in 2002.  
Indeed, after the introduction of EBA, most LDC ACP countries continued to export to 
the EU under their long established ACP preferences rather than switch to the new 
customs formalities attached to EBA.

Doha Round Potential Impact on Transatlantic Preferences to Developing Countries 
	Developing countries have faced erosion of preferences after every GATT or 
WTO trade round.  However, the stakes are considerably higher with Doha, particularly 
for developing country preference erosion in the US and EU markets.  The US now has a 
more elaborate system of preferences than when it participated in earlier rounds.  An IMF 
submission to the WTO points out that textiles and agriculture account for a large part of 
the present preferences enjoyed by developing countries and that the erosion of 
preferences could be substantial for about two dozen developing countries. 
	The Doha stress on agriculture and the simultaneous end of textile protection with 
the expiration of the Agreement on Textiles and Clothing (ATC) has introduced new 
competitive pressure in two sectors of particular importance to developing countries. Cuts 
in MFN tariffs in agriculture, where tariffs are particularly high, and continued 
liberalization in textiles and clothing where China has rapidly gained market share, will 
have a particular impact on developing countries.  As discussed below, while the 
Uruguay Round was the first to include agriculture, the outcome of the round did not 
involve enormous reductions in US or EU agricultural protection and hence little erosion 
of preferences.  The Doha Round agricultural package promises to be more substantial.
	Apart from its other negotiating objectives, the EU may be expected to wish for a 
Doha Round outcome which, like earlier Rounds, maintains its use of preferential trading 
arrangements.  This becomes more difficult as each Round’s liberalization reduces 
preferential margins and leads to calls for compensation from ACP countries finding the 
value of their preferences reduced. With its extensive network of preferential 
arrangements, all but nine WTO members face lower tariffs than the MFN rate.  The 
nine, listed in table 1 accounted for 34% of EU15 merchandise imports in 2002.  
	The negative impacts of preference erosion depend in part on the extent to which 
existing preferences were being utilized prior to tariff reduction.  The granting of 
preferences does not ensure that they are utilized.  In many instances, developing 
countries have not been able to make full use of the preferences on offer.  Capacity 
constraints may limit export potential, particularly for the Least Developed Countries, a 
category which includes many ACP countries and many beneficiaries of both the EU and 
US GSP schemes.  Complicated country of origin rules, and their rigorous interpretation, 
also serves to limit utilization.   According to UNCTAD estimates, only 40% of the 
preferences available under the GSP systems of developed countries are utilized.  
	While US and EU tariff cuts will erode preferential margins, there is a further 
erosion in preferential margins likely to occur as the EU’s CAP continues to move away 
from price supports.  A number of developing countries have benefited not only from 
preferential access to the EU market, but from the high internal prices associated with the 
CAP.  The shift to the EU’s Single Payment and away from price supports will entail 
welfare losses for those developing countries previously included in the common market 
organizations of the CAP.  
	As the US and EU reduce their barriers to market access in agriculture and 
textiles, some of the current beneficiaries of preferences face potential losses of export 
revenue as they are displaced by more competitive developing countries.  The IMF’s new 
lending facility, the Trade Integration Mechanism, introduced in March 2004, is one 
attempt to provide a lending facility designed to cope with resultant balance of payments 
problems.  The new facility provides temporary balance of payments financing for 
problems associated with the implementation of WTO agreements.  The financing would 
also be available to assist with balance of payments problems caused by developing 
countries engaging in trade liberalization as part of their WTO commitments. 


IV. Two Key Sectors
	While there are other sectoral issues included in the July 2004 Framework 
Agreement, agriculture is clearly the key sector.  Lying in the background is a second 
sector, textiles, where all participants are grappling with the consequences of the Uruguay 
Round’s Agreement on Trade in Textiles which required the ending of textile quotas by 
January 2005. The textile sector is now fully under the WTO regime and hence is a sector 
subject to tariff negotiations on manufactures.  While the EU and US (and many other 
developed and developing countries) have high protection on textiles, developing 
countries, including the Big Emerging Market countries included in the G 20, tend to 
have high protection of all their sectors—agriculture, manufacturing and services.  

Agriculture 
	Agriculture has figured prominently in transatlantic maneuverings in multilateral 
trade negotiations since the Kennedy Round and the launch of the CAP in 1962. Until the 
Uruguay Round, the EU had resisted US efforts to have agriculture included in the 
Kennedy or Tokyo Rounds in any meaningful way. However, the Uruguay Round 
coincided with the McSharry reforms of the Common Agricultural Policy and made it 
possible for the EU to finally acquiesce to US efforts to have agriculture included in the 
scope of the negotiations. The McSharry reforms initiated the twin processes of moving 
most EU agricultural prices downwards toward world levels and shifting subsidies 
toward income support rather than price support.  By bringing EU prices closer to world 
levels, the incentives which lead to production surpluses were reduced and the size of the 
export subsidies needed to sell those surpluses abroad was also reduced. 
	While the Cairns Group of exporters of temperate foodstuffs played an important 
part in the Uruguay Round agricultural negotiations, the outcome was largely the result of 
US-EU agreement.  In the Doha Round, while the US and EU remain dominant, a larger 
group of countries have a stake in the outcome.  Diao et al. have estimated that developed 
country protectionism and subsidization costs developing countries at least $24 billion 
annually in lost agricultural and agro-industrial income and that removal of all protection 
and subsidization would triple developing country net agricultural exports.   They 
attribute more than half of the displacement of agricultural trade to the EU’s trade 
distorting policies, with the US responsible for less than a third. Two developing country 
members of the Cairns group, Argentina and Brazil, particularly stand to benefit from 
reductions in US and EU agricultural export subsidies.  Table 4 lists the top 15 
agricultural exporters and importers in 2003.  China and Russia appear on both lists.  
Many of the G-20 developing countries seeking to curtail US and EU agricultural 
subsidies are included in the list of top exporters. 

	Table 4: The Top 15 Agricultural Exporting and Importing WTO Members, 2003


Value 
$bn
Share in world 
%

Value 
$bn
Share in world 
%
1.1	Exporters


1.2	Importers


EU members (15)
284.14
42.2
EU members (15)
308.87
42.8
 EU to rest of world
73.38
10.9
 EU from rest of world
98.11
13.6
United States
76.24
11.3
United States
77.27
10.7
Canada
33.69
5.0
Japan
58.46
8.1
Brazil
24.21
3.6
China
30.48
4.2
China
22.16
3.3
Canada c
18.02
2.5
Australia
16.34
2.4
Korea, Rep. of
15.56
2.2
Thailand a
15.08
2.2
Mexico
13.85
1.9
Argentina b
12.14
2.1
Russian Fed. a
13.73
1.9
Malaysia
11.06
1.6
Hong Kong, China
10.81
-
Mexico
9.98
1.5
 retained imports
6.47
0.9



Taipei, Chinese
7.96
1.1
Indonesia
9.94
1.5
Switzerland
7.12
1.0
New Zealand
9.60
1.4
Saudi Arabia
6.26
0.9
Russian Fed. a
9.37
1.4
Thailand a
5.72
0.8
Chile
7.47
1.1
Indonesia
5.44
0.8
India a
7.03
1.2
Turkey
5.22
0.7






Above 15
548.44
81.8
Above 15
580.44
80.4
Source: WTO, “Agriculture Negotiations Backgrounder: The issues and where we are now”  Dec. 1 2004

	The Doha Round agricultural discussions pick up where the URAA left off.  
While the Uruguay Round brought limited cuts in the subsidization and protection of US 
and EU agriculture, it had been successful in bringing tariffication to market access 
barriers in agricultural trade.  By replacing non-tariff barriers by a numerical equivalent, 
URAA tariffication allows much of the Doha Round negotiations to focus on the use of 
tariff-cutting formulae of the type so successful in reducing manufacturing tariffs in 
earlier rounds. 


The Uruguay Round Agreement on Agriculture 
 	The Uruguay Round Agreement on Agriculture (URAA) dealt with the same 
three areas as the Doha Round—market access, domestic support and export competition. 
Two out of the three dimensions of the URAA package were consistent with the direction 
in which the CAP was already evolving.  However, improved market access has not been 
a notable feature of CAP reform programs. 
	The URAA market access provisions called for converting agricultural trade 
barriers into tariff-equivalents, with developed countries cutting the resulting tariffs by an 
average of 36%.  In addition, a minimum degree of market access would be available for 
all products.  This minimum was enforced through the use of tariff quotas under which 
limited quantities would enter a market at a lower tariff rate.  The export competition 
provisions called for a 36% cut in the value of subsidies from 1986-90 levels and a 21% 
cut in the volume of subsidized exports.  The agreed cuts had been fully implemented by 
developed countries, including the EU and US, by the end of 2000.  In addition to 
seeking to control export subsidies, the URAA sought to control domestic subsidies, 
termed Aggregate Measure of Support (AMS).  The URAA cuts are detailed in Table 5. 


Table 5: Uruguay Round Agricultural Agreement

 
Developed 
countries 
6 years: 1995-2000
Developing 
countries 
10 years: 1995-2004
Tariffs 
 
 
Average cut for all agricultural products 
-36%
-24%
minimum cut per product
-15%
-10%
Domestic support
 
 
total AMS cuts for sector (base period: 1986-88)
-20%
-13%
Exports
 
 
Value of subsidies
-36%
-24%
subsidized quantities (base period: 1986-90)
-21%
-14%
Source: WTO, “Understanding the WTO” http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm3_e.htm


The Boxes
	The URAA introduced a traffic light classification of green, amber and red 
“boxes” into which domestic agricultural subsidization policy instruments could be 
placed.  An all important Blue box is also part of the system. Policies considered to be 
already WTO-incompatible (and hence not the subject of negotiation) are placed in the 
Red Box.
	Policies which are not trade distorting, or have minimal distorting effects, are 
considered to be acceptable.  These are placed in the Green Box and were not the subject 
of URAA reductions.  Examples include environmental protection programs, regional 
development subsidies and direct income support to farmers where the payments are 
“decoupled” from current production levels or prices.
	With a few exceptions, all domestic subsidies which distort production or trade 
fall into the Amber Box.  These subsidies, termed the Total Aggregate Measurement of 
Support (AMS), became the subject of the URAA reduction of a 20% cut from the 1986-
1988 levels of AMS.
	Domestic support which was not decoupled from production (and thus would 
normally join other support measures in the Amber Box) but where the subsidy is linked 
to production for the purpose of reducing production and hence reducing trade distortion 
was placed in the special Blue Box.  Blue Box subsidization, as Green Box subsidization, 
had no spending limits under the URAA. The current CAP reform Single Payment is 
designed to conform to the Green Box.

The URAA’s Limited Outcome  
	As this discussion should make clear, WTO members which wish to continue to 
subsidise their farmers without facing WTO constraints need to redesign their support 
systems so that the subsidies fall into the Green or Blue Boxes.   CAP reform is based on 
this premise with, to date, restraints on spending consisting of the reported France-
German agreement that CAP spending will not be reduced through the end of the next 
Financial Perspective in 2013.
	The URAA has been far from dramatic in its impact on US and EU farm 
protection and export subsidization.  At least three reasons may be advanced.

1.	The years chosen, at French insistence, to act as the base years from which export 
subsidies would be cut were years when the level of subsidization was far above 
that prevailing in the years when the cuts were actually implemented.  Thus, the 
actual reductions in subsidization were quite small.
2.	In the process of converting existing quotas into tariffs, many agricultural tariffs 
were raised to ensure that the 36% cut had very little impact on the barriers to 
market access.
3.	Confinement of URAA reductions to export subsidies and to the AMS, exempting 
Green Box and Blue Box support, provides a further ready explanation for why 
transatlantic agricultural support remains at such a high level years after the full 
implementation of the URAA.

	The continued high level of developed country, including EU and US, trade 
barriers against agricultural exports and their continued reliance on subsidization of the 
sector has undoubtedly had an impact on the exports of developing countries.  
Developing country shares of world agricultural exports have remained relatively 
constant at 36-37% over the past twenty years while their share of world manufacturing 
exports have grown from 19% to 33%.   

Transatlantic Agriculture Now
	While the URAA has brought greater transparency to the agricultural policies of 
both the US and EU, it has not brought much greater market access to either each other or 
developing countries.  It has also not brought much reduction in total subsidization of 
transatlantic agriculture.  The particular choice of the base years from which to make the 
AMS cuts, and the many exceptions from the domestic support cuts, particularly the US’ 
ultimate acceptance of the EU’s invention of the Blue Box, and the EU’s ultimate 
acceptance that US export credits would not be included, resulted in an URAA outcome 
in which both sides of the Atlantic not only continue to protect their agriculture to a 
considerable extent but also provide large subsidies to the sector.  EU border protection is 
a multiple of US protection and its subsidization contains a larger export element than the 
US.   Table 6 indicates current levels of protection and subsidization.  Of course, 
budgetary expenditure on subsidies represents but a fraction of total agricultural support.  
The OECD’s measure of support, the Producer Support Estimate (PSE), which measures 
the percentage of producer value added attributable to government programs whether 
budgetary or otherwise, is found in table 7.
 

Table 6:  US and EU Protection and Subsidisation Rates in Agriculture (%)

				Border Protection	Subsidies
US					10.8		18.8
EU					34.3		21.7
Source: Aksoy, Ataman M. and Beghin, John C. Global Agricultural Trade and Developing Countries 
(World Bank, 2004)

	Between 1995 and 2000, as the URAA cuts were being implemented, WTO 
members spent $36 billion on export subsidies alone, with the EU accounting for 90% of 
the total and the US for 2%.  The US is the largest user of export credit programs. 
According to Josling and Hathaway, in the years leading up to the 2000 URAA 
implementation deadline, US export subsidies were largely concentrated on dairy 
products while EU export subsidies were concentrated on butter, beef and skimmed milk 
powder, although wheat and other grains had also received export subsidies.
	The EU pattern has changed in recent years. The €3.4 billion of EU export 
subsidies in 2002 were concentrated on two commodity categories: sugar (€1.4 billion) 
and milk and milk products (€1.2 billion)  Total export subsidies accounted for 8% of 
the €43.2 billion CAP Guarantee spending in that year.  Appendix A.5 contains the 
product coverage of EU budgetary commitments for agricultural export subsidies. Table 
7 indicates recent transatlantic trends in total agricultural producer support, in dollars and 
euro, as well as the percentage PSE. Details by individual commodities may be found in 
Appendices A1 and A2.  As table 7 illustrates, the overall degree of EU subsidization of 
agriculture, as measured by %PSE, is twice that of the US and shows little indication of 
falling in the years since the URAA was implemented.  The US, on the other hand, shows 
a marked decline.


Table 7: Transatlantic Agricultural Producer Support Estimates

1986-88
2001-03
2001
2002
2003p
EU $bl
95.6
101.7
88.9
94.8
121.4
€bl
86.9
102.7
99.3
100.6
108.3
% PSE
39%
35%
34%
35%
37%






US $bl
41.8
44.2
53
40.9
38.9
€bl
38.4
45.7
59.2
43.3
34.7
% PSE
25%
20%
23%
19%
18%
Source:. OECD, Agricultural Policies 2004 at a Glance Table I.3




	Bouët, Antoine et al. have calculated the average bilateral tariff rates being 
applied by the US and EU25 in the agricultural sector.   Table 7A shows their results.  In 
both cases, the averages are the result of the commodity composition of their agricultural 
trade with particular suppliers and the individual tariff rates applied to specific 
commodities.  Their results are not always completely comparable to other published 
results.  Nevertheless they show the same genera pattern of clear differences between the 
two sides of the Atlantic.  In particular, the table indicates the extent of EU protection 
against the exports of Cairns Group countries, both developing and developed country 
members.

Table 7A: Transatlantic Pre-Doha Round Agricultural Tariff Protection %


EU25
US
EU25

5.8
US
16.2

Asia Developed
12.5
3.7
EFTA
7.9
3.9
Cairns Group Developed
25.9
3.4
Mediterranean
7.3
4
Sub-Saharan Africa
6.7
3
Cairns Group Developing
18.3
3.8
China
13.5
5.1
South Asia
14.4
1.8
Rest of World
15.1
2.1
Average
16.7
4.7
Source: Bouët, Antoine et al., “Multilateral agricultural trade liberalization: The contrasting fortunes of 
developing countries in the Doha Round” Centre d’Etudes Prospectives et d’Informations Internationales, 
Paris CEPII Working Paper no. 2004-18, p. 21.

	
EU Agricultural Protection
	With an EU tariff structure containing an average applied MFN tariff rate of 
approximately 6.5% in 2004, but with individual tariff rates ranging from 0% to 209.9% 
(on some milk products), agricultural products still attract the highest rates following the 
tariffication of agricultural protection introduced by the URAA.   The average tariff rate 
on agricultural imports is 16.5% while the average tariff on non-agricultural imports is 
4.1%. Moreover, agricultural tariffs are bolstered by the use of tariff quotas which have 
an average fill rate of approximately 67%.
	The EU’s barriers to market access for agricultural products are complex and 
extremely sophisticated. CAP barriers on market access include tariff quotas, i.e. 
restricted quantities that can be imported at lower than normal-often prohibitive-tariff 
rates, on 89 separate agricultural products.  Twenty of these 89 tariff quotas are based on 
a first-come-first-served basis.  Twenty two others are based on historic levels of imports 
and the remaining 47 are based on a mixture of allocation methods.   On average, only 
about two thirds of the available tariff quota is utilized.
	In addition to ad valorem tariffs and tariff quotas, the EU tariff structure includes 
widespread use of specific duties, i.e. duties not based on the value of imports.  Many 
agricultural products face not only an ad-valorem duty but an additional complicated 
specific duty levied on several of the individual ingredients used in the production of the 
imported product.  Entry of fruits and vegetables is controlled by a system of minimum 
entry prices.  Potential imports arriving at an EU border are levied a flexible tariff to raise 
their price to the entry price and then are levied the fixed MFN tariff.  The effect is to 
continue the sheltering of EU producers from low priced imports.  EBA countries do not 
face these restrictions.  The EBA provides for duty-free imports and abolition of the entry 
price restrictions.
	The URAA and CAP reform have included some small reduction in agricultural 
import barriers. Tariffs on agricultural imports averaged 10% - 16.5% in 2004, with tariff 
peaks rising up to a rate of 209.9%.   The total amount spent on the CAP still represents 
over 40% of Community expenditure. 
	While the bulk of EU15 imports from ACP countries are not agricultural products 
(only 22% in 2003), the agricultural imports are concentrated in a narrow range of 
products with cocoa and cocoa preparations accounting for 30% of EU15 agricultural 
imports from ACP countries, edible fruits and nuts 18%, sugars and confectionery 9%, 
beverages 8%. 

 US Agricultural Protection
	While the average US MFN tariff was just over 5% in 2002, the average on 
agricultural products was 10%.  As with the EU, the highest tariffs, whether ad valorem 
or ad valorem equivalent rates, are on agricultural products which are of particular 
interest to developing countries. Some products, including tobacco, peanuts, certain dairy 
products and sugar receive tariff protection in the 50-350% range.   The 2002 tariff on 
tobacco was 350%, on peanuts 164%.  By comparison, the highest non-agricultural tariffs 
are on footwear at 58.5%. 
	As with the EU, US agricultural protection includes a considerable reliance on 
tariff quotas.  These are detailed in Appendix A.1.   As Appendix A.1 shows, the 
administration of tariff quotas frequently involves preferential access to the quota for a 
select group of countries.  For example, imports of blue cheese are restricted to four 
countries:  the European Union, which gets 96% of the quota with Chile, the 
Czech Republic and Argentina sharing the remainder.  Argentina is the favoured supplier 
of peanuts, holding 84% of that tariff quota.  Sugar, as with the EU, is also quota 
controlled.
	The Farm Security and Rural Investment Act of 2002 strengthened the extent to 
which US government crop payments are related to prices.  This was the opposite of the 
strategy which a new Secretary of Agriculture, Ann Veneman, had laid out in 2001.  
Veneman sought to restructure US agricultural support away from the limits imposed by 
the URAA amber box commitments.  However, agricultural interests in Congress had 
other ideas and the Farm Security and Rural Investment Act (FSRIA or Farm Act) of 
2002 reversed the trend introduced by the 1996 Federal Agriculture Improvement and 
Reform Act of 1996 (FAIR Act) which had moved US agricultural support away from 
Amber Box production-distorting subsidies and toward income supplements.  FSRIA 
expires in 2007.


US Export Subsidies
	The US makes little use of direct export subsidies of the type found in the CAP. 
Instead, it relies on export credit programs to promote agricultural exports.  Details of the 
product coverage of US export subsidies are found in Appendix A.5. In 2002, export 
credits were $3.4 billion with South America, Mexico, Turkey, and South Korea as the 
top export markets.   In 2002, US agricultural exports were US$53 billion, amounting to 
24% of total US agricultural production.  Imports were US$42 billion.  Soybeans were 
the single largest export category at $5.5 billion.  Red meats, corn, and vegetable 
products, each recorded 2002 exports levels over $4 billion each.  Agricultural sectors 
with the greatest dependence on exports are rice, wheat, cotton and soybeans.  In 2000, 
the share of exports in the value of production was 42% for rice, 48% for wheat, 39% for 
cotton, and 37% for soybeans.   The largest import categories were fruit products and 
vegetable products, each with levels over $5 bl.

The Blue Box Lives
	While the Doha Round may have embraced a goal of eliminating agricultural 
export subsidies eventually, there is not yet a reason to anticipate that the round’s 
outcome will see dramatic reductions in the actual level of US and EU domestic 
agricultural support.  One reason is because, just as in the Uruguay Round, the 
negotiations are based on the maximum Aggregate Measure of Support (AMS), not on 
the far lower actual AMS.  Thus, as in the Uruguay Round, it is possible to have a result 
in which significant cuts in maximum AMS are associated with little or any cuts in actual 
AMS.   A further reason is the likely continuation of the Blue Box, albeit with the 
limited controls agreed in the July 2004 Doha Framework Agreement discussed earlier.  
The EU accounts for the bulk of WTO Blue Box spending.  Several of the new member 
States—Czech Republic, Estonia, Slovakia and Slovenia were already using Blue Box 
policies prior to accession. The US has reported no use of the Blue Box to the WTO since 
1995.  CAP reform consists of moving from price support to income support through the 
“single payment” which is decoupled from production, effective, in some member states, 
from January 1, 2005. Decoupling puts subsidies in the Blue Box where they join Green 
Box subsidies outside the reach of any agreed Doha Round AMS agreed cuts.  According 
to Commissioner Mandelson “The mid-term review of the CAP decouples payments to 
farmers from production for at least 70% of their output. Nobody can deny that there are 
still problems with our dairy and beef regimes.”  
	 


Table 8: Transatlantic Blue Box Agricultural Support


EU15 (€ml.)
% of EU15 Value of 
Total Agricultural 
Productiona
US ($ml.)
% of US Value of 
Total Agricultural 
Productiona
1995
20,845.5
10.1
7,030
3.7
1996
21,520.8
9.8
0
0
1997
20,442.8
9.4
0
0
1998
20,503.5
9.6
0
0
1999
19,792.1
8.5
0
0
2000
22,222.7
9.1
0
0
2001
23,725.9
9.6
0
0
Source: WTO Secretariat TN/AG/S/14 Jan 28, 2005


Two Important WTO Panel Reports
	Even as the Doha Round has proceeded, a range of developing countries have 
used the Dispute Settlement Mechanism of the WTO to target specific agricultural 
policies of both the US and EU.  Developing countries (and the US) had successfully 
attacked the EU banana regime as incompatible with EU WTO obligations.  A 1997 
WTO Appellate Body report upheld an earlier panel report supporting the complaints 
filed by Ecuador, Guatemala, Honduras and Mexico. The successful complaint pitted the 
producers and distributors of one group of developing countries against another, less 
competitive but more privileged, group. The EU is due to finally scrap its quota-ridden 
banana importation policy and move to a tariff-only banana regime no later than January 
2006.
	Caught between the demands of its traditional ACP suppliers and dollar zone 
producers fresh from their WTO Panel victory, the EU announced in January 2005 that it 
would replace its present three-part quota system with a new single tariff regime using a 
MFN tariff level of €230 per tonne, triple the current tariff level of €75 per tonne.  The 
EU also intends to maintain a margin of preference for ACP producers who had sought to 
convince the EU to adopt an MFN tariff of €275 per tonne which would have provided an 
even larger margin of preference over “dollar zone” producers.  ACP producers are not 
the only ones interested in limiting market access from dollar zone producers.  Two 
member states, Spain, with production in the Canary Islands, and France, with production 
in some overseas territories, had strongly supported ACP demands.  Under the WTO 
waiver for the Cotonou Agreement, agreed in Doha at the launch of the round, this level 
of banana protection is subject to arbitration between the EU and the banana producing 
countries affected by the proposed new preferences.  Led by Ecuador, seven Latin 
American producers have rejected the EU’s proposed new regime and, in the event of 
WTO arbitration, the US, which brought the original 1995 complaint to the WTO is 
likely to be an interested party.  Chiquita Brands and Dole Food each are responsible for 
approximately one quarter of international banana trade.     
	
US Cotton Policy	
	US cotton policy and EU sugar policy have been particular targets of developing 
country complaints to the WTO.  In October 2002, Brazil initiated a complaint against the 
US claiming, inter alia, that US cotton subsidies exceeded the level to which the US had 
agreed under the URAA and that United States domestic support measures were export 
subsidies.  The US provides over $3 billion annually in domestic support to 25,000 cotton 
farmers. Other developing countries joining the Brazilian complaint were a mix of middle 
income developing countries and some least developed African countries --- Argentina, 
Benin, Chad, China, India, Paraguay and Taiwan. Canada and the EC also were parties to 
the complaint. A WTO panel found that $3.3 billion of cotton subsidies and $1.6 billion 
of export credits for cotton and other products contravened US WTO obligations. The US 
appealed the decision but in March 2005, the WTO Appellate Body upheld Brazil’s 
complaint.     The unsuccessful US appeal was supported in a number of its arguments 
by the EU which argued that the US domestic support belonged in the URAA Green 
Box.   As mentioned earlier, the Doha Round Framework Agreement has established a 
special cotton subcommittee to ensure that the sector is given priority in any Doha Round 
outcome. 

EU Sugar Policy
	The EU has not fared any better in defending its agricultural policy against 
developing country recourse to the WTO Dispute Settlement Mechanism.  An October 
2004 panel found that EU sugar export subsidies exceeded its URAA limits.   This 
dispute was initiated by Brazil, Thailand –and Australia. Other countries expressing an 
interest in the case were Barbados, Belize, Brazil, Canada, China, Colombia, Côte 
d'Ivoire, Cuba, Fiji, Guyana, India, Jamaica, Kenya, Madagascar, Malawi, Mauritius, 
New Zealand, Paraguay, Saint Kitts and Nevis, Swaziland, Tanzania, Thailand, Trinidad 
and Tobago, --- and the United States.
	The submissions of the US in the dispute supported the complainants.  The 
submissions of the ACP countries and India (countries which benefit from the present 
sugar regime and face the loss of sugar regime rents) supported the EU.  Much of the 
dispute hinged on the interpretation to be placed on a footnote which the EU had attached 
to its schedule of commitments when the URAA was negotiated.  The EU, supported by 
the ACP countries and India, argued that the footnote had been inserted with the intent of 
limiting its export subsidy reduction commitments by excluding from URAA reductions 
a volume of subsidised sugar equivalent to its imports from ACP countries and India. The 
adverse finding has major implications for the direction of reform of the EU sugar 
regime, a sector which has escaped inclusion in CAP reform to date. Eventual sugar 
reform and compliance with WTO obligations will require bringing internal prices down.  
ACP countries have already asked for compensation against price and income losses 
likely from reform.  Meanwhile, other ACP countries and EBA countries have sought 
sugar quotas.  The current sugar regime expires in July 2006.  The WTO Appellate Body 
report in this case is expected in late April 2005.  
	The EU is a major producer of sugar, with the EU15 accounting for 13% of world 
production, 15% of world exports and 5% of world imports.   Approximately 20% of 
EU15 sugar production is exported.  Currently the sector is sheltered behind post-URAA 
tariffs averaging 23.6%, but with tariff peaks rising up to 114.4%. The most recent 
enlargement added seven more sugar producers to the EU (all of the ten new members 
except Estonia, Cyprus and Malta). Poland is the largest producer of the new entrants.  
The Copenhagen summit established initial production quotas for all seven with the 
understanding that these quotas, both A quota and B quota sugar, would be cut in line 
with cuts by all member states to ensure the EU met its URAA obligations on both value 
and volumes of subsidized exports.
	As an unreformed sector which escaped CAP reform to date, the EU sugar regime 
is characterized by high support prices which have recently been two to three times the 
level of world prices, preferential market access to a handful of developing countries 
which receive the high CAP prices, a complex system of import and production quotas, 
and considerable domestic overproduction with the resultant need to dispose of the 
surpluses through export subsidies.  Widely recognized as unsustainable in the post-
URAA world, the regime has been the subject of a variety of reform proposals yet to be 
implemented.
	The current EU sugar policy has its origin in UK accession to the EEC, bringing 
with it its Commonwealth Agreements on sugar imports to the UK.   These agreements 
were incorporated in the Sugar Protocol to the Lomé Agreement in 1975 which provided 
import quotas to ACP countries. India, a non-ACP country but a traditional UK supplier, 
signed a similar agreement and received an import quota. With Finnish accession, two 
traditional Finnish suppliers, Brazil and Cuba, also received small import quotas.  More 
recently, as part of its policy toward the Balkans, the EU has accepted a low level of 
sugar imports from the former Yugoslavia.  All these imports enter duty-free and receive 
the high EU support price.
	Nineteen ACP countries are signatories to the EU-ACP Sugar Protocol.  Of the 
nineteen, only six are LDCs—Belize, Madagascar, Malawi, Tanzania, Trinidad &Tobago 
and Zambia.  In the 2003/2004 marketing year, fifteen ACP countries and India shared a 
total ACP/India import quota of 1.3 ml. tonnes.  According to Oxfam, five countries—
Mauritius, Fiji, Guyana, Swaziland and Jamaica take up 80% of the total quota.   None 
of these five are LDCs and some are high cost producers likely to be threatened by an EU 
switch to support prices closer to world levels.  In addition to the restricted entry 
available through the Sugar Protocol, the EBA provides for further market access for a 
small group of LDCs, though the EBA sugar quota is extremely small and will only reach 
197,355 tonnes in 2009, after which all EBA sugar imports will be duty free.  Again, 
according to Oxfam, only five LDCs –Madagascar, Malawi, Mozambique, Tanzania and 
Zambia benefit from the Sugar Protocol or Special Preferential Sugar arrangements and 
have only 4% of the total sugar quotas.  Some of these LDCs are low cost producers and 
are likely to be highly competitive in the future but to date have been discriminated 
against in favour of other high cost ACP producers.
	Reform proposals have carried the expectation that there would be compensation 
for the developing countries presently enjoying market access.  Commissioner Boel has 
announced that she is seeking a political agreement on a new sugar regime by December 
2005, which would coincide with the Hong Kong Ministerial.   In the meantime the 
Commission has drafted an Action Plan for the affected countries.  The plan calls for 
including preferential sugar access clauses in the EPAs presently under negotiation and 
providing development aid to promote diversification away from sugar and to cushion the 
effects of the future lower prices.  This preferential access would continue to be at the 
expense of the low cost sugar producers who filed the WTO complaint—producers such 
as Brazil, Thailand and Australia.  In addition, the design of any preferential access also 
places the EU in an unenviable position between high cost ACP countries seeking 
continued high prices and restricted entry, and some other low cost ACP countries able to 
compete at low prices but previously limited in their market access to the EU.
	. 
Textiles
	While agriculture is of great interest to developing countries, so too are textiles.  
This manufacturing sector is finally coming under full WTO disciplines. The Doha 
Round has coincided with the end of US and EU quota protection of their textile 
producers.  The Agreement on Textiles and Clothing (ATC) expired at the end of 2004, 
bringing to an end forty years of a formal multilaterally negotiated quota-based system of 
protection of developed country textile industries, particularly those of the EU and US.  
From 1974-1994, US and EU clothing and textile industries were protected by the quotas 
of the Multifibre Agreement (MFA) which had been negotiated bilaterally between 
importing and exporting countries outside the legal confines of the GATT. The MFA 
replaced the earlier 1965 Long Term Cotton Agreement which served a similar purpose.  
Introduced in 1995, the WTO ATC called for a ten year transition period to phase out 
quota protection.
	Although textile quotas have ended, US and EU textile protection of their 
domestic producers has not.  Domestic markets are still protected by tariffs and by the 
threat of contingent protection.  Both the US and EU have made clear that they will 
continue to protect their domestic producers if they face a sudden surge in textile imports.  
A variety of WTO-compatible temporary measures are available to them to achieve this 
purpose.  Of most immediate import is the Textiles-Specific Safeguard Clause (TSSC) 
inserted into China’s protocol of accession to the WTO in 2001.  The clause allows any 
WTO member experiencing market disruption from imports from China to seek 
consultations with China with a view to China limiting its exports of specific textile 
products to the level recorded during the first twelve of the fourteen months prior to a 
complaint plus 7.5% .  In the event that China did not restrict its exports, the TSSC 
allows the complaining country to impose import quotas for a twelve-month period.  The 
clause contains an injury test which must be met prior to invoking the clause.  This 
requires the importing country to show that the imports are causing market disruption 
which would “impede the orderly development” of the sector. The TSSC expires at the 
end of 2008. At that time, textile importing countries would still have recourse to the 
normal temporary safeguards provisions of Article XIX.
	The ending of the old quota system has had an additional complication for both 
the US and EU in their relations with third countries.  The arrival of China as the 
dominant WTO textile producer poses a competitive threat not only to US and EU textile 
producers but to the developing country beneficiaries of the previous system of quotas.  
The ATC quota system provided a number of individual developing country textile 
producers with a guaranteed, albeit extremely limited, share of the transatlantic textile 
and clothing market.  The ending of the quota system opens these previously sheltered 
developing country producers to new competitive pressures, particularly from China.  
Quota rents previously accruing to quota-owning developing country producers or their 
distributors are threatened.  So too are non-China production, export and employment 
levels.  In the absence of contingent protection measures aimed at China, other traditional 
suppliers to both the US and EU face a loss of market share.
	In April 2005, the Commission announced what it described as “guidelines” it 
would use to determine whether the TSSC should be invoked.  This early warning system 
established a sliding scale of limits on the growth in imports from China based on 
China’s share of the EU market in 2004.  For products where China’s market share was 
already in excess of 35%, imports in excess of  10% of the 2004 would trigger 
Commission action in any of the years from 2005-2008. For products where China’s 
2004 market share was 7.5% or less, imports in excess of 100% of the 2004 would trigger 
similar Commission action.  In drawing up its guidelines, the commission had made clear 
that the TSSC would be invoked if a textile surge from China threatened not only EU 
producers but the market shares of either Euro-Med suppliers or other countries which 
had previously had a quota share of the EU market. 
	As a relatively footloose industry, trade and investment patterns in clothing and 
textiles have long been very responsive to changes in quota allocation or country of 
origin rules.  Even with the shifts in the locus of production the destination of the quota 
rents may not have changed.  If a large number of developing country producers face a 
limited number of large importing firms, it may be safely assumed that the quota rents do 
not all accrue to the exporting firms. 
	While the EU and US textile producers share a common interest in having 
governments maintain protection, the EU also possesses a very competitive high-value 
component to its textile industry.  This is largely located in Italy and while the EU runs 
an overall trade deficit in textiles, several member states--Italy, Portugal and Belgium-- 
run trade surpluses in textiles.  Thus, obtaining greater market access for EU textile 
exports is among the negotiating objectives of the EU in the Doha Round.  Textiles are 
also of particular concern to the new members.  Moreover, textiles and clothing are a 
major component in Euro Med country preferential exports to the EU.
  	The textile and clothing sector is of roughly rather similar economic importance 
on both sides of the Atlantic, with a slightly greater importance in the EU25 than in the 
US.  EU enlargement increased the share of the sector in EU25 employment since the 
new members have a greater reliance on the sector as a job source than EU15. US textile 
and apparel industries employed 816 thousand workers, or 6% of manufacturing 
employment in 2003, producing 3% of manufacturing value added.  On the eastern side 
of the Atlantic, the textiles and clothing sector accounts for approximately 5% of 
manufacturing output in the CEEC10 and 4% in the EU15.   Employing 3.3 million 
workers in 2001, the sector accounts for 9.5% of EU25 manufacturing employment and 
5% of manufacturing value added.   Just as the sector is heavily concentrated in a small 
number of states in the US, a similar pattern is obvious in the EU. Several of the 
peripheral and new member states are particularly dependent on textile employment.  In 
2001, the sector accounted for over 30% of manufacturing employment in Portugal and 
25% in Lithuania.  It provided 17% of manufacturing jobs in Italy. 
	Together, the EU and US account for over 40% of world imports of clothing and 
textiles, with the US holding a 22% share of world imports in 2003 and the EU holding a 
20% share. Two-way trade in textiles and clothing is a major component of EU trade, 
accounting for just under 6% of EU15 trade in 2002.  The EU15 was already the world’s 
largest importer of textiles and clothing and the largest exporter of clothing. The EU25 
has a growing trade deficit in textiles, with China, Turkey, India, Tunisia and Romania 
accounting for 46% of EU15 imports in 2002 .  China’s share of the EU15 market had 
already reached 20% in that year.

Sources of US and EU Textile Imports	
	Table 9 shows the major suppliers of textiles and clothing to both the US and 
EU15 in 2003.  Six countries accounted for over half of US imports.  The sources of 
EU15 imports are less concentrated.  Even in the highly mobile world of textile plants, 
AGOA countries are still insignificant suppliers to the US although the exports of some 
AGOA countries such as Lesotho are a significant part of that country’s total exports, 
GDP and employment.    China was the dominant supplier in both markets in 2003 and 
the latest data indicate a dramatic increase in its market share in early 2005 with the 
lifting of quotas.  The US is an important market for the EU.
	These shares are in the process of changing drastically.  China’s share in both 
imports and apparent consumption is rising rapidly as it displaces both domestic 
producers and traditional producers previously protected by possession of the property 
right of a quota. Of course, the end of the ATC’s textile quotas does not mean free trade 
in textiles, because textile imports still face an MFN tariff and still face the risk of 
contingent protection measures if there are sudden surges. However, the MFN tariff 
provides limited shelter to traditional suppliers who benefit from AGOA, ACP or GSP 
preferences in either the US or EU markets.
	The formal end of US and EU quota protection for this sector has seen both sides 
of the Atlantic respond in a similar manner, particularly in their warnings to China that 
textile exports should be restrained in the absence of formal trade US and EU barriers.  
Concern regarding Chinese export surges are not limited to fears of possible damage to 
the textile and clothing sectors of the US and EU textile and clothing industries but 
reflect a broader concern that unrestrained Chinese exports would damage the export 
industries of such low income countries as Bangladesh, Sri Lanka, Mauritius, Morocco 
and Tunisia which have previously benefited from the quota rents attached to the quotas 
they possessed under the previous arrangements.  With its strong use of trade preferences 
as an instrument of foreign policy, this is particularly an issue for the EU.  The ability to 
offer discriminatory sheltered access to the EU market to favoured developing countries, 
particularly ACP countries, is threatened.  It is also an issue for the US whose AGOA, 
Caribbean and Andean regional preferential arrangements provide for duty free and quota 
free imports which, though less than 10% of total US imports in this sector, are of great 
importance to the affected countries.
	A member of the WTO only since 2001, China’s policy response has taken the 
form of imposing export taxes on textiles to discourage “excessive’ exports.  Both the EU 
and US have placed textile imports from China under surveillance with the expectation 
that any sudden surge in imports will be met by the imposition of safeguard measures in 
the form of temporary import restrictions.  The decline in the value of the Yuan against 
the euro since 2002, associated with the Yuan’s peg to the declining dollar, has added an 
additional source of pressure felt by EU, but not US producers.  This exchange rate effect 
has also impacted on some developing country producers serving both the EU and US 
markets.

Table 9: Major Suppliers of Textiles and Clothing to EU15 and US in 2003

EU Imports


US Imports

$ 
million
Share


$ million
Share
EU15
73470
49%

China
15643
19%
China
15128
10%

Mexico
8838
11%
Turkey
10834
7%

EU15
5473
7%
India
4900
3%

Hong Kong, China
4073
5%
Romania
4496
3%

India
3837
5%
Bangladesh
3591
2%

Canada
3705
5%
Tunisia
3326
2%

Korea, Republic of
3046
4%
Morocco
2931
2%

Honduras
2623
3%
Pakistan
2493
2%

Thailand
2601
3%
Poland
2421
2%

Vietnam
2593
3%
Hong Kong, China
2407
2%

Taipei, Chinese
2522
3%
Czech Republic
2057
1%

Pakistan
2451
3%
Indonesia
1998
1%

Dominican Rep.
2256
3%
Switzerland
1734
1%

Bangladesh
2093
3%
Korea, Republic of
1517
1%

Philippines
2091
3%
United States
1369
1%

Turkey
1904
2%
Hungary
1353
1%

Guatemala
1851
2%
Thailand
1343
1%

El Salvador
1795
2%
Bulgaria
1245
1%

Sri Lanka
1625
2%
Taipei, Chinese
909
1%

Macao, China
1351
2%
Slovak Republic
881
1%

Malaysia
1322
2%
Sri Lanka
831
1%

Cambodia
1311
2%
Lithuania
777
1%

Indonesia
1008
1%
Malaysia
750
0.5%

Israel
714
1%
Viet Nam
669
0.4%

Jordan
612
1%
Mauritius
619
0.4%

Costa Rica
604
1%
Egypt
594
0.4%

Egypt
566
1%
Croatia
582
0.4%

Colombia
565
1%
Slovenia
528
0.3%

Russian Federation
530
1%
Japan
524
0.3%

Peru
526
1%
Macao, China
509
0.3%

Nicaragua
498
1%
Ukraine
485
0.3%

Lesotho
419
1%
Cambodia
471
0.3%

Haiti
301
0.4%
Estonia
383
0.3%

Mauritius
286
0.3%
Myanmar
340
0.2%

Singapore
283
0.3%
Source:  WTO International Trade Statistics 2004 Tables IV.60 and IV.68
Conclusion
	Both the US and EU have used trade policy as an instrument in their relations 
with developing countries.  When WTO negotiations, such as the Doha Round occur, the 
two sides of the Atlantic must deal not only with their respective demands vis a vis each 
other but with the demands of other round participants, including developing countries, 
upon whom the Doha Round has been focused.
	While there are a wide range of issues on the Doha Round agenda, this paper has 
restricted itself to examining a number of sectoral issues under discussion in the round, 
particularly agricultural and textiles, and has discussed the manner in which US and EU 
preferences toward developing countries are evolving.  This evolution is also being 
driven by recent defeats suffered by the US and EU at the hands of developing countries 
in WTO panel decisions.  The growing body of WTO case law establishes new 
parameters around negotiating positions by defining new legal limits on discretionary 
policy.  In the case of the Doha Round, a number of recent WTO Panel decisions have 
provided a “helping hand” to the negotiating positions of some agricultural exporting 
developing countries in their negotiations with both the US and EU.
	As the EU and US seek greater market access, particularly to the markets of 
middle income developing countries, each will eventually need to deal with the manner in 
which the preferences built into their respective systems of developing country 
preferences are being eroded, imposing losses on previous beneficiaries.  The gainers 
from these preference erosions are likely to be other developing countries.  In the case of 
textiles, the ending of the ATC exposes previous quota-holding countries, holding either 
US or EU quotas, to further competition from China.  The reform of the EU’s sugar 
regime and its banana regime poses similar threats for existing quota holders.  The new 
gainers will be a different group of developing countries some of whom are not ACP 
members.
	The Doha Round has been a watershed in the development of effective coalitions 
of developing countries.  Past multilateral trade negotiations have been dominated by a 
US and EU agenda.  This time, the negotiating agenda envisaged at the launch of the 
round in Doha in 2001 has been narrowed, particularly in the wake of the Cancun 
Ministerial, which has seen the EU’s request for negotiations on four Singapore Issues 
reduced to a mere one. Regional groupings of developing countries have played a 
particular role to date.  This may be expected to continue as the EU seeks to negotiate 
EPAs with developing countries in the coming years.
	Any Doha Round agricultural agreement that follows the outlines of the July 2004 
Framework for Establishing Modalities and produces an eventual end to EU agricultural 
export subsidies and US export credits will have major effects on developing country 
exporters and importers of the commodities presently subsidized.  Cairns Group and G 20 
developing country exporters, such as Argentina, Chile and Brazil will benefit in third 
country markets currently served by EU and US agricultural exports.  South Africa is the 
lone ACP member of the Cairns Group.  Any ending of these agricultural export 
subsidies is likely to leave net food importing developing countries with higher import 
prices which will have distributional effects on domestic producers and consumers.  
Higher domestic prices will provide an incentive to developing country producers 
currently facing competition from imported subsidized EU and US foodstuffs.  
Meanwhile, any negotiated reduction in EU and US agricultural trade barriers is likely to 
provide an additional benefit to Cairns Group exporters, of whom only South Africa is an 
ACP country.
	The likely impact on EU-ACP relations produced by any eventual Doha Round 
agreement will require offsetting measures on the part of the EU.  Globally, the IMF’s 
new Trade Integration Mechanism will provide loans for temporary cushioning of 
resulting balance of payments difficulties but if the EU seeks to maintain the special 
discriminatory relationships currently in place with ACP and LDC countries, more will 
be required. This need offers a further rationale for the EU’s present program of 
negotiating EPAs, a vehicle allowing continued discrimination against WTO members 
not party to an EPA.  The 2004 WTO Appellate Body ruling in the EC v India case 
provides a legal basis for new EU discrimination in favour of some developing countries 
at the expense of other, more developed, developing countries.   The decision allows 
developed countries to provide differential treatment to developing countries based on 
development, trade and financial needs as long as the differential treatment is subject to 
objective and transparent criteria.  While the ruling would also apply to the US, it is 
unclear whether the US, which has recently vastly expanded its range of preferential 
arrangements, will follow a similar route.


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Appendix A.1 US Agricultural Tariff Quotas
Products covered by tariff quotas, 2002
Products
Average tariff ratea  
2002  (%)
Bound 
import 
quota
Fill rateb 
2000 
(%)
Fill rateb 
2002 
(%)
Partners with reserved access  
(% of WTO quota)c

In-quota
Out-of-
quota




Beef:  fresh, chilled or frozen (mt)
4.5
26.4
696,621
83
83
Canada and Mexico (no limit) AUS 
(57.6) NZ (32.5), Japan (0.03), 
Others (9.9)
Cream ('000 litres) 
2.7
26.8
6,695
51
65
NZ (87.3)
Evaporated/condensed milk  (mt)
4.1
26.6
6,857
86
87
EU (21.8), Canada (17.0) Australia 
(1.5)
Nonfat dried milk (mt) 
2.2
52.6
5,261
60
98
Global, no country allocation
Dried whole milk (mt) 
4.1
53.8
3,321
60
96
Global, no country allocation
Dried cream (kg.) 
16.5
43.1
99,500
10
7
Global, no country allocation
Dried whey/buttermilk (mt) 
7.2
6.8
296
27
22
Global, no country allocation
Butter (mt) 
3.7
59.5
6,977
100
98
Global, no country allocation
Butter oil/substitutes (mt) 
8.0
98.0
6,080
100
100
Global, no country allocation
Dairy mixtures (mt) 
12.9
37.0
4,105
86
100
Australia (27.7), EU (4.2)
Blue cheese (mt) 
14.4
39.0
2,911
99
97
EU (96.1), Chile (2.3), Czech Rep. 
(1.5), Argentina (0.07)
Cheddar cheese  (mt) 
12.0
30.5
13,256
95
98
NZ (56.8), Australia (25.4), EU (8.5), 
Canada (6.4) Others (2.8)
American type cheese (mt) 
14.3
58.4
3,523
89
99
NZ (57.0) Australia (28.5), EU (9.6), 
Others (4.8)
Edam and Gouda cheese (mt) 
12.1
50.3
6,816
98
98
EU (81.2), Costa Rica (10.2), 
Argentina (2.9), Uruguay (2.8), 
Others (3.0)
Italian type cheese (mt) 
13.9
48.1
13,481
93
99
Argentina (51.2), EU (33.5), Uruguay 
(7.1), Romania (3.5), Hungary (2.8), 
Poland (1.8), Others (0.1)
Swiss/Emmenthal cheese (mt) 
6.4
42.4
34,475
90
83
EU (62.6), Norway (20.3), 
Switzerland (10.6), Australia (1.5), 
Czech Rep.(1.0), Hungary (1.0) 
Others (3.0)
Gruyere process cheese (mt) 
9.3
46.7
7,855
75
86
EU (74.1), Switzerland (16.0) Others 
(1.0)
Other cheese NSPF (mt)
10.0
35.7
48,628
90
99
EU (56.7), NZ (25.2), Switzerland 
(3.6), Australia (3.3), Poland (2.7), 
Canada (2.5) Israel (1.5), Others (4.3)
Lowfat cheese (mt)
10.0
32.9
5,475
48
65
EU (74.2), NZ (17.5), Australia (4.4), 
Poland (3.1), Israel (0.9)
Peanuts (mt) 
8.5
139.8
52,906
91
100
Argentina (84.0), Others (16.0)
Chocolate crumb (mt)
4.5
15.1
26,168
81
79
EU (32.1), Australia (8.3)
Low-fat chocolate crumb (mt)
5.9
43.2
2,123
0
0
Ireland (80.1), U.K. (19.9)
Infant formula containing oligo 
saccharides (mt) 
17.5
64.8
100
100
100
Global, no country allocation
Green ripe olives (mt) 
1.3
1.8
730
0
0
Global, no country allocation
Place packed stuffed olives (mt) 
1.1
2.0
2,700
36
31
Global, no country allocation
Green olives, other (mt) 
2.3
2.7
550
73
69
Global, no country allocation
Green whole olives (mt) 
2.2
4.3
4,400
28
19
Global, no country allocation
Mandarin oranges (Satsuma) (mt) 
0.0
0.4
40,000
100
100
Global, no country allocation
Peanut butter and paste (mt) 
0.0
131.8
20,000
85
78
Canada (73.1), Argentina (15.4), 
Others (9.3)
Ice cream ('000 litres) 
20.0
30.4
5,668
59
57
EU (20.0), NZ (11.4), Jamaica (0.7)

Animal feed containing milk (mt) 
7.5
12.3
7,400
0
1
EU (75.1), NZ (24.1), AUS (0.8)
Raw cane sugar ('000 mt) 
3.4
48.8
1,117
88
81
Mexico (2.1), Others (95.3)
Other cane or beet sugars or syrups 
('000 mt)
9.3
49.8
22
159
151
Canada (29.4), Mexico (8.6), 
Others (62.1)
Other mixtures over 10% sugar (mt)
9.2
19.6
64,709
99
99
Canada (91.6), Others (8.4)
Sweetened cocoa powder (mt) 
6.7
18.8
2,313
60
15
Global, no country allocation
Mixes and doughs (mt) 
10.0
25.8
5,398
100
100
Global, no country allocation
Mixed condiments and seasonings 
(mt)
7.5
13.1
689
100
45
Global, no country allocation
Tobacco (mt) 
14.3
350.0
150,700
53
75
Brazil (53.3), Malawi (8.0), 
Zimbabwe (8.0), Argentina (7.1), 
EU (6.6), Guatemala (6.6), 
Others (10.5)
Short staple cotton (mt) 
0.0
13.4
20,207
2
2
Global, no country allocation
Harsh or rough cotton (mt) 
2.7
20.0
1,400
0
0
Global, no country allocation
Medium staple cotton (mt) 
1.3
6.8
11,500
2
7
Global, no country allocation
Long staple cotton (mt) 
0.8
3.0
40,100
24
13
Global, no country allocation
Cotton waste (mt)
0.0
54.4
3,335
0
0
EU (26.3), Japan (5.7), Canada (4.0), 
India & Pakistan combined (1.2), 
China (0.3)
Cotton processed but not spun (kg.)
5.0
29.0
2,500
52
100
Global, no country allocation

a	Average based on ad valorem rates or on ad valorem equivalents provided by the authorities.
b	Calculated as the ratio of actual import volumes to the bound import quota.
c	Data on country allocation based on Schedule XX.
mt	metric tonnes.
Source:	WTO WT/TPR/S/126 Table IV.2 


Appendix A2.  Percentage Producer Support Estimates for EU Agriculture

Commodity
1990
1995
2000
2001
2002
2003
Common wheat
32
40
42
41
37
41
Durum wheat
61
62
65
67
62
64
Maize
51
46
41
36
30
41
Barley
48
58
46
49
49
51
Oats
34
65
71
68
56
62
Rice
56
48
17
41
34
36
Rapeseed
68
49
45
43
33
33
Soybean
61
48
38
38
30
30
Sunflower
60
49
45
42
33
37
Refined sugar
45
59
53
49
57
63
Milk
62
54
42
42
49
51
Beef
54
53
65
72
74
77
Sheep meat
72
69
52
56
45
58
Pig meat
2
14
26
22
21
24
Poultry meat
34
48
36
35
38
37
Eggs
6
9
4
2
3
2
Total %PSE
35
38
34
34
35
37
PSE € billion
88
103
97
99
101
108
Source: Wichern, Rainer, “Economics of the Common Agricultural Policy” European Economy Economic 
Papers no. 211 (August 2004), table A1. 





Appendix A3.   Percentage Producer Support Estimates for US Agriculture 2003

Wheat
25 
Maize
15 
Other grains
29 
Barley
23 
Sorghum
33 
Rice
34 
Oilseeds
19 
Soyabeans
19 
Sugar
61 
Milk
45 
Beef and Veal
3 
Pig meat
4 
Poultry
4 
Sheep meat
12 
Wool
4 
Eggs
3 
TOTAL
                              18
PSE $ billion
                           38.9

Source: OECD


Appendix A.4	US MFN and Preferential Tariffs 2002


Average tariffs (%)

MFN
Israela
Canadaa
Mexicob
Jordanb
CBERAb
CBTPAb
Total
5.1 
0.7
0.7
0.6
2.7
2.4
2.3
By WTO category







Agriculture
9.8 
4.4
4.3
2.7
6.2
5.9
5.9
Non-agriculture (excl petroleum)
4.2 
0.0
0.0
0.2
2.1
1.8
1.6
By ISIC sector







Agriculture and fisheries
5.6 
0.4
0.5
0.4
4.0
3.3
3.3
Mining
0.4 
0.0
0.0
0.0
0.1
0.0
0.0
Manufacturing
5.1 
0.8
0.7
0.6
2.7
2.4 
2.2
Textiles (321)
9.3
0.1
0.1
0.3
5.9
8.1
8.1
Clothing (322)
10.8
0.0
0.0
0.7
6.9
7.6
7.5
By HS section






01
Live animals & prod.
11.4 
8.4
8.0
2.7
7.3
8.4
8.4
02
Vegetable products
4.0 
0.6
0.6
0.6
1.4
0.6
0.6
03
Fats & oils
3.9 
0.2
0.2
0.2
1.3
0.2
0.2
04
Prepared food etc.
13.2 
4.7
4.7
4.5
9.3
8.6
8.5
05
Minerals
0.7 
0.0
0.0 
0.0
0.2
0.2
0.1
06
Chemical & prod.
3.9 
0.0
0.0
0.1
1.7
0.0
0.0
07
Plastics & rubber
3.7 
0.0
0.0
0.0
1.1
0.0
0.0
08
Hides & skins
4.3 
0.0
0.0
0.3
1.5
1.3
0.7
09
Wood & articles
2.2 
0.0
0.0
0.0
0.8
0.2
0.0
10
Pulp, paper etc.
0.5 
0.0
0.0
0.0
0.0
0.0
0.0
11
Textile & articles
9.6 
0.1
0.1
0.4
6.2
8.1
8.1
12
Footwear, headgear
13.5 
0.0
0.0
1.8
9.2
12.0
3.7
13
Articles of stone
5.1 
0.0
0.0
1.0
2.3
0.3
0.3
14
Precious stones, etc.
3.0 
0.0
0.0
0.0
0.6
0.0
0.0
15
Base metals & prod.
2.3 
0.0
0.0
0.2
0.8
0.0
0.0
16
Machinery
1.6 
0.0
0.0
0.0
0.1
0.0
0.0
17
Transport equipment
2.6 
0.0
0.0 
0.1
1.0
0.0
0.0
18
Precision equipment
3.1 
0.0
0.0
0.1
1.3
0.0
0.0
19
Arms and ammunition
1.5 
0.0
0.0
0.0
0.4
0.0
0.0
20
Miscellaneous manuf.
3.2 
0.0
0.0
0.1
1.2
0.0
0.0
21
Works of art, etc.
0.0 
0.0
0.0
0.0
0.0
0.0
0.0



MFN
ATPA 
ATPDEAb
AGOAc
LDCa
GSPa

Total


5.1
2.6
2.4
2.7
3.7

By WTO category







Agriculture

9.8
6.0
6.0
6.2
8.4

Non-agriculture (excl. 
petroleum)

4.2
1.9
1.8
2.1
2.8

By ISIC sector







Agriculture and fisheries

5.6
3.3
3.4
3.6
4.8

Mining

0.4
0.0
0.0
0.0
0.1

Manufacturing

5.1
2.5
2.4
2.7
3.6

Textiles (321)

9.3
8.6
9.0
9.0
9.0

Clothing (322)

10.8
9.6
10.1
10.4
10.4


Source: WTO Secretariat WT/TPR/S/126  p.43 Table III.2
CBERA: Caribbean Basin Economic Recovery Act of the CBI; CBTPA: the United States-Caribbean Basin Trade 
Partnership Act, an expansion of the CBI;  ATPA: the Andean Trade Preference Act; ATPDEA: Andean Trade 
Preference and Drug Eradication Act; AGOA: African Growth and Opportunity Act.


Appendix A.5: Transatlantic Agricultural Export Subsidies: Budgetary Commitments


US 2004 Budget $million
EU 2004 Budget €million
WHEAT
363.8
1289.7
COARSE GRAINS
46.1
1046.9
RICE
2.3
36.8
VEGETABLE OILS
14.1
82.0
BUTTER AND BUTTER OIL
30.5
947.8
SKIMMED MILK POWDER
82.5
275.8
CHEESE
3.6
341.7
OTHER MILK PRODUCTS
.02
697.7
BOVINE MEAT
22.8
1253.6
PIGMEAT
.5
191.3
POULTRY MEAT
14.6
90.7
LIVE DAIRY CATTLE 
11.9

EGGS 
1.6
43.7
WINE

39.2
FRUIT AND VEG. FRESH

52.8
FRUIT AND VEG. PROCESSED

8.3
RAW TOBACCO

40.2
ALCOHOL

96.1
INCORPORATED PRODUCTS

415.0
Source: WTO Secretariat WT/TN/AG/S/8/Rev/1/Add. 1 Jan 31, 2005.

  Young has examined the role of the EU as an actor in world trade and as a Doha round participant.  See  
Young, Alasdair R. “The EU and World Trade: Doha and Beyond’ in Cowles, Maria Green and Dinan, 
Desmond (eds.) Developments in the European Union vol. 2 (Palgrave Macmillan 2004).
  The EU and US together still account for 31% of world exports and 40% of world imports in 2003.  In 
2003, the EU15 accounted for 19.4% of world merchandise exports.  The US share was 12.7%.  While the 
EU15 was the world’s top exporter, the US was the top importer, accounting for 21.8% of world 
merchandise imports.  The EU15 share was 18.7% (Source: WTO International Trade Statistics 2004 table 
I.6) 
  Charlton, Andrew H., and Stiglitz Joseph E.  “A Development-friendly Prioritisation of Doha Round 
Proposals” World Economy vol. 28 no. 3 March 2005 pp. 293-312.
  Narlikar, Amrita and Tussie, Diana, “The G20 at the Cancun Ministerial: Developing countries and their 
evolving coalitions in the WTO” The World Economy vol. 27 no. 7 (July 2004) pp. 947-966.
 Barichello, Richard, McCalla, Alex and Valdes, Alberto, “Developing countries and the World Trade 
Organization negotiations” American Journal of Agricultural Economics vol. 85, no. 3 (August 2003), pp. 
674-678.
  See Panagariya, Arvind, “Agricultural Liberalization and the Developing Countries: Debunking the 
Fallacies” mimeo Dec. 2004 http://www.columbia.edu/~ap2231/Policy%20Papers/Fallacies_Agriculture.pdf
  The Cairns Group is comprised of Argentina Australia Bolivia Brazil Canada Chile Colombia Costa Rica 
Guatemala Indonesia Malaysia New Zealand Paraguay Philippines South Africa Thailand Uruguay
  WTO,” Doha Work Programme: Decision adopted by the General Council on 1 August 2004” WT/L/579 
2 August 2004.
  Doha Work Programme: Decision adopted by the General Council on 1 August 2004” WT/L/579 2 
August 2004 Annex D.
  These four issue areas, named after a working group established by the 1996 WTO Singapore ministerial 
meeting are: trade and investment relationships; trade and competition policy; government procurement 
transparency; and trade facilitation.  

  See for example, Baldwin, R. and Murray, T., “MFN tariff reductions and LDC benefits under the GSP”, 
Economic Journal vol. 87 (March 1977), pp. 30-47. 
  Panagariya, Arvind, “EU preferential arrangements and developing countries” The World Economy vol. 
25 no. 10 2002, pp. 1415-32.
  Sapir, André, “The political economy of EC regionalism", European Economic Review vol. 42, no. 3-5, 
May 1998, pp. 717-732.  See also Sapir, “EC regionalism at the turn of the millennium: Toward a new 
paradigm?” CEPR Discussion Paper no. 2629 November 2000, and Messerlin, Patrick A., “The EC 
addiction to discrimination: Toward a slow ebb?” In Messerlin, Measuring the costs of protection in Europe 
(Institute of International Economics; Washington DC, 2001) pp. 197-248.  
  Panagariya (2002) p. 1426.
  Australia, Canada, Hong Kong, Japan, S. Korea, New Zealand, Singapore, Taiwan and the U.S.  See EU 
Commission,  DG Taxation and Customs Union.
  In this year’s negotiations reviewing the operation of the EU’s Cotonou Agreement, the EU attempted to 
bolster its position in its difference with the US on the non-trade issue of the International Criminal Court 
(ICC) by seeking to have all ACP countries ratify the ICC.  In the event, a compromise solution was 
reached, with ACP countries “seeking to take steps” rather than “agree to take steps” toward ICC 
ratification.  See Sapp, Meghan, “Developing countries reach compromise with EU” euobserver.com Feb. 
25, 2005
  Bangladesh, Bhutan, Cambodia, Laos, the Maldives, Myanmar, Nepal, and Yemen.  See Yu, 
Wusheng and Jensen, Trine Vig, “Tariff Preferences, WTO Negotiations and the LDCs: The Case of the 
'Everything But Arms' Initiative” World Economy vol. 28 no. 3 March 2005 p. 378.
  EU Commission, “GSP: The new EU preferential terms of trade for developing 
countries” Memo/05/43 February 10, 2005.
 Commissioner Mandelson’s target is to have the EPAs in place before his mandate ends in 2008. 
  Young, Alasdair R., (2004).
  UK Department for Trade and Industry, Department for International Development, “Economic 
Partnership Agreements: Making EPAs work for development”   March 2005. 
  Sapp, Meghan, “Developing countries reach compromise with EU” euobserver.com Feb. 25, 2005.
   Of the 38 countries deemed eligible for general AGOA treatment, by April 2004 24 countries also 
qualified for special treatment for apparel exports.
  The FTA negotiated with Central America and the Dominican Republic is currently awaiting ratification 
by Congress.  
  US International Trade Commission  http://reportweb.usitc.gov/africa/by_sectors_agoa.jsp?sectorcode=EP 
and http://reportweb.usitc.gov/africa/total_agoa_import_suppliers.jsp accessed March 10, 2005.
  UNCTAD 2003, p.11.
  UNCTAD 2003, table 4.
   UNCTAD 2003 p. xi
  Olarreaga, Marcelo and ?zden, Çaglar, “AGOA and apparel: Who captures the tariff rent in the presence 
of preferential market access?” The World Economy vol. 28, no. 1 (January 2005) pp. 63-77.
  USTR , 2004 Comprehensive Report on Trade and Investment Policy Toward Sub-Saharan Africa and 
Implementation of the African Growth and Opportunity Act  p. 2.
  UNCTAD 2003, pp.17-20.
  Krishna, Kala, “Understanding Rules of Origin” NBER Working Paper no. 11150, Feb. 2005.
  Calculated from data on main product categories reported in UNCTAD 2003 p.17. 
  In 2002 the coverage rate for imports from qualifying LDC ACP countries was 97%, with a utilization 
rate of 82% (Source: UNCTAD 2003 p. 37.)
  Panagariya (2002) p. 1426.
  USTR 2004, p. 15.
  UNCTAD 2003, p. 13.
  Yu, Wusheng and Jensen, Trine Vig, “Tariff Preferences, WTO Negotiations and the LDCs: The Case of 
the 'Everything But Arms' Initiative” World Economy vol. 28 no. 3 March 2005 pp. 375-406.
  WTO, WT/L/565. May 7, 2004.
  WTO WT/TPR/S/136 p.37. 
  In assessing preferences, a distinction needs to be made between the product coverage of a preferential 
scheme and the utilization rate of the scheme.  Product coverage ratios are the ratio between imports 
covered by a preferential arrangement and total dutiable imports from a country qualifying for preferences.  
Utilisation rates are the ratio between imports actually receiving preferential treatment from customs 
officials and covered imports. 
  UNCTAD, Trade Preferences for LDCs: An Early Assessment of Benefits and Possible Improvements," 
New York and Geneva, mimeo September 2003 UNCTAD/ITCD/TSB/2003/8
  The Doha Round coincides with the EU’s efforts to reform its sugar regime, a process made more urgent 
by the WTO panel finding which recently ruled against EU export subsidies in this sector.
  Diao, X., E. Diaz-Bonilla and S. Robinson, 'How Much Does it Hurt? The Impact of Agricultural Trade 
Policies on Developing Countries', International Food Policy Research Institute, Policy Brief August 2003.
  The Doha Round July 2004 package introduces some limited discipline on Blue Box subsidies.
  Source: Aksoy, Ataman M. and Beghin, John C. Global Agricultural Trade and Developing Countries 
(World Bank, 2004) 
  Josling, Tim and Hathaway, Dale, “This far and no further? Nudging agricultural reform forward” 
Institute for International Economics Policy Brief March 2004.
  EU Commission, “Agriculture in the European Union: Statistical and economic information 2003: 
Financial Aspects” Table 3.4.4.
  Bouët, Antoine et al.(2004).
  The highest tariffs are imposed on the following agricultural imports: whey and products of natural milk 
constituents (209.9%); edible offal of bovine animals, swine, sheep, goats, horses, asses, mules or hinnies 
(192.2%); meat of sheep or goats, fresh, chilled or frozen (172.9%); garlic (150.1%); meat of bovine 
animals, frozen (149.9%); mushrooms (134.5%); meat of swine, fresh, chilled or frozen (120.8%); bananas, 
including plantains (118.1%); manioc or cassava (117.9%); beet sugar (114.4%); live bovine animals 
(107.8%); milk and cream (103.3%); semi or wholly-milled rice (101.1%). Source: WTO WT/TPR/S/136 
p.45.
  WTO WT/TPR/S/136 p. 90.
  WTO WT/TPR/S/136 p. 84.
  http://www.europa.eu.int/comm/agriculture/agrista/tradestats/2003 
  WTO WT/TPR/S/126 Dec. 17, 2003.
  US Department of Agriculture, Food and agricultural policy: Taking stock for the new century 
September 2001.
  WTO WT/TPR/S/126 Dec. 17, 2003 p. 111.
  WTO WT/TPR/S/126 Dec. 17, 2003 p. 101.
  See Bouët, Antoine et al., “Multilateral agricultural trade liberalization: The contrasting fortunes of 
developing countries in the Doha Round” Centre d’Etudes Prospectives et d’Informations Internationales, 
Paris CEPII Working Paper no. 2004-18, p. 15.
  Peter Mandelson  speech at the London School of Economics Feb. 4, 2005
  EU Commission, Press Release IP/05/118 Jan. 31, 2005.
  Kirk, Lisbeth, “New banana war looms over tripled EU tariffs” euobserver.com Feb. 1, 2005.
  WTO, “United States subsidies on upland cotton” Report of the Appellate Body March 3, 2005 
WT/DS267/AB/R
  The EU is the world's main net importer of raw cotton and accounts for only 2.5% of world cotton 
production which is produced primarily in Greece. The EU post-URAA tariff on cotton averages 6.4%, but 
exports from EBA and Cotonou countries enter duty-free. See WTO WT/TPR/S/136 p. 98.
  WTO WT/DS/267/AB/R  March 3, 2005 pp. 77-79.
  WTO, “European Communities- export subsidies on sugar, complaint by Brazil.  Report of the Panel” 
October 15, 2004 WT/DS266/R
  WTO WT/TPR/S/136 p. 99.  The accession of Poland raises this share of world production to 
approximately 15%. Germany and France produce over 50% of EU15 sugar, with the UK and Italy 
responsible for approximately 8% each. 
  The following description draws upon European Commission, “The common organization of the market 
in sugar” September 2004 AGRI/63362/2004 EN
  European Commission, “The common organization of the market in sugar” September 2004 
AGRI/63362/2004 EN Annex IV.
  Oxfam, “A sweeter future?” Oxfam Briefing Paper no. 70 November 22, 2004, p.10.
  EU Commission Press Release IP/05/85 Jan. 24, 2005.
  The permitted growth rate for wool products is 6%.
  EU Commission, “Guidelines for the use of safeguards on Chinese textile exports to 
the EU” April 6, 2005.
  Goto, J., “The Multi-fibre Agreement and its effects on developing countries”, World Bank Research 
Observer no. 4, 1989 pp. 203-27.
  US Dept. of Commerce Bureau of Economic Analysis  NAICS Data GDP by Industry Data 
http://www.bea.doc.gov/bea/pn/GDPbyInd_VA_NAICS.xls  accessed March 11, 2005. 
  WTO WT/TPR/S/136 p. 110.
  Eurostat,  “The textile industry in the EU” Statistics in Focus 29/2004
  WTO WT/TPR/S/136 p. 113.
  Eurostat,  “The textile industry in the EU” Statistics in Focus 29/2004
  WTO International Trade Statistics 2004 table IV.60
  WTO WT/DS246/AB/R, Appellate Body Report, “EC: Conditions for the granting of tariff preference to 
developing countries” April 7, 2004.
 
 
 
 


4