LegiStorm

Summary:

The Doha Round of multilateral trade negotiations, launched in November 2001, has been at an impasse since 2009 and presently shows no signs of restarting, despite an interim agreement reached at the December 2013 Bali Ministerial. The goal of the Doha Round's agriculture negotiations is to make progress simultaneously across the three pillars of the World Trade Organization's (WTO's) 1994 Agricultural Agreement—domestic support, market access, and export competition—by building on the specific terms and conditions established during the previous Uruguay Round of negotiations. Negotiators have attempted to maintain a balance across the three pillars by simultaneously achieving concessions from exporters and importers alike in the form of tighter spending limits on trade-distorting domestic support; elimination of export subsidies and new disciplines on other forms of export competition; and expansion of market access by lowering tariffs, increasing quota commitments, and limiting the use of import safeguards and other trade barriers. However, as a concession to poorer WTO member countries, the degree of new conditions is to be less stringent for developing than for developed nations. Substantial progress had been made by 2008 in narrowing differences in Doha Round negotiating positions. As a result, a "modalities framework" (i.e., specific formulas and timetables for reducing trade-distorting farm support, tariffs, and export subsidies, and for opening import markets) was released in December 2008, in an attempt to lock in the status of negotiated concessions, while adding detail to outstanding issues as a basis for further, more specific talks. By 2009, outstanding differences had been reduced to a short list of contentious issues, including designating additional products as sensitive coupled with establishing new tariff quotas, designating developing country products as special and thus exempt from tariff reductions, and allowing developing countries to raise tariffs temporarily to deal with import surges or price declines. However, these differences proved sufficient to deadlock the negotiations. From the U.S. perspective, a successful Doha agreement (under the current negotiating text) would significantly lower allowable spending limits for certain types of U.S. domestic support and eliminate export subsidies, while allowing U.S. agricultural products wider access to foreign markets. Any assessment of the potential effect of the new domestic support programs authorized by the 2014 farm bill (P.L. 113-79) is very preliminary at this time. Many of the new programs have yet to be fully implemented; thus producer participation is uncertain and program outlays hinge on future market conditions. For example, under a relatively high price environment, as existed during the 2010-2013 period, U.S. program outlays could easily fall within proposed Doha Round limits with no or only modest changes. However, if market prices were to decline substantially below support levels for an extended period, then outlays could escalate rapidly and threaten to exceed the proposed spending limits. A concern of U.S. trade negotiators, Congress, and commodity groups is whether the draft modalities include too many exceptions for foreign importers (in terms of their ability to restrict imports) to ensure that an adequate balance will be achieved between U.S. domestic policy concessions and potential U.S. export gains. This report reviews the current status of agricultural negotiations and the modalities framework for domestic support, market access, and export subsidies, as well as the potential implications of a Doha Round agreement for U.S. agriculture.