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Implications of a Doha Implications of a Doha Agreement for Agricultural Agreement for Agricultural

Markets in SudanMarkets in Sudan

Imad Eldin Elfadil Abdel KarimImad Eldin Elfadil Abdel Karim

University of Khartoum - SudanUniversity of Khartoum - Sudan

David AblerDavid Abler

Penn State University - USAPenn State University - USA

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The latest round of multilateral trade The latest round of multilateral trade negotiations was launched at the ministerial negotiations was launched at the ministerial meeting of the WTO in Doha, 2001.meeting of the WTO in Doha, 2001.

Agriculture is a major item on the agenda Agriculture is a major item on the agenda for the Doha Round. The primary focus is on for the Doha Round. The primary focus is on the three “pillars” of the Uruguay Round the three “pillars” of the Uruguay Round agreement—domestic support, market agreement—domestic support, market access, and export competitionaccess, and export competition..

The framework for a final agreement was The framework for a final agreement was finalized in July 2004, it contains few details finalized in July 2004, it contains few details on modalities (e.g., the formula to be used on modalities (e.g., the formula to be used for reductions in tariffs/increases in tariff-for reductions in tariffs/increases in tariff-rate quotas, quantitative limitations on rate quotas, quantitative limitations on domestic support, and the schedule for the domestic support, and the schedule for the elimination of export subsidies)elimination of export subsidies)

Introduction: Doha AgendaIntroduction: Doha Agenda

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Detailed proposals on a number of Detailed proposals on a number of these issues were put forward in these issues were put forward in October 2005 by the European Union October 2005 by the European Union and the United States, in addition to and the United States, in addition to the G10 and G20 groups of countries.the G10 and G20 groups of countries.

In this paper we analyzed the In this paper we analyzed the implications of the provisions of a implications of the provisions of a Doha agreement on agricultural Doha agreement on agricultural markets in Sudan. More specifically, markets in Sudan. More specifically, the impact of the US, EU, and G20 the impact of the US, EU, and G20 proposals on agricultural markets in proposals on agricultural markets in Sudan was analyzed. Sudan was analyzed.

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Agriculture in Sudan Agriculture in Sudan (background)(background)

Agriculture is the main sector of economy.Agriculture is the main sector of economy. The agricultural sector contributed about The agricultural sector contributed about

40% of the GDP (1994-2006)40% of the GDP (1994-2006) Agricultural exports were the main sources Agricultural exports were the main sources

of foreign currency before exploitation of of foreign currency before exploitation of oil e.g. during the period 1994-1998, oil e.g. during the period 1994-1998, agricultural commodities represented agricultural commodities represented about 88.6% of the total country’s exports, about 88.6% of the total country’s exports, this share declined to only 6.0% in 2006. this share declined to only 6.0% in 2006.

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Sudan is not a currently member of the Sudan is not a currently member of the WTO although it has been in the WTO although it has been in the accession process since 1994accession process since 1994

Sudan undertake reforms of its all Sudan undertake reforms of its all commercial laws to bring all its trade-commercial laws to bring all its trade-related laws, regulations and procedures related laws, regulations and procedures into conformity with WTO requirements.into conformity with WTO requirements.

Assuming that Sudan continues outside Assuming that Sudan continues outside of WTO membership, its trade policies of WTO membership, its trade policies will not be directly affected by a Doha will not be directly affected by a Doha agreement. But Sudan could be affected agreement. But Sudan could be affected significantly by changes in global significantly by changes in global agricultural markets. agricultural markets.

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MethodologyMethodology The analysis is based on the Partial Equilibrium The analysis is based on the Partial Equilibrium

Agricultural Trade Simulator (PEATSim) Agricultural Trade Simulator (PEATSim) developed by the Penn State University in developed by the Penn State University in collaboration with the Economic Research collaboration with the Economic Research Service of the U.S. Department.Service of the U.S. Department.

The model is dynamic, multi-country, multi-The model is dynamic, multi-country, multi-commodity covers 35 of the major traded commodity covers 35 of the major traded agricultural commodities and contains a agricultural commodities and contains a detailed representation of markets and policies detailed representation of markets and policies in twelve countries/regions that are particularly in twelve countries/regions that are particularly significant for world agricultural tradesignificant for world agricultural trade

Sudan was included in the model to depict the Sudan was included in the model to depict the potential impact of trade liberalization on its potential impact of trade liberalization on its agriculture. agriculture.

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Production and/or consumption of Production and/or consumption of 15 of the 35 products in PEATSim 15 of the 35 products in PEATSim are negligible in Sudan: soybeans, are negligible in Sudan: soybeans, soybean oil, soybean meal, soybean oil, soybean meal, sunflowerseed oil, sunflowerseed sunflowerseed oil, sunflowerseed meal, rapeseed, rapeseed oil, meal, rapeseed, rapeseed oil, rapeseed meal, pork, butter, rapeseed meal, pork, butter, cheese, nonfat dry milk, whole dry cheese, nonfat dry milk, whole dry milk, and other dairy products milk, and other dairy products

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Treatment of TradeTreatment of Trade Raw milk, fluid milk, and other dairy Raw milk, fluid milk, and other dairy

products are treated as non-traded products are treated as non-traded commodities. The other 32 commodities commodities. The other 32 commodities are traded internationallyare traded internationally

The model is non-spatial, meaning that it The model is non-spatial, meaning that it does not distinguish a region’s imports by does not distinguish a region’s imports by their source or a region’s exports by their their source or a region’s exports by their destination.destination.

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Policy CoveragePolicy Coverage The model incorporates a wide range of The model incorporates a wide range of

domestic and border policies in agriculturedomestic and border policies in agriculture The core set of policies for all countries The core set of policies for all countries

includes both specific and ad valorem includes both specific and ad valorem import tariffs, tariff-rate quotas (TRQs), import tariffs, tariff-rate quotas (TRQs), and producer and consumer subsidies.and producer and consumer subsidies.

Other types of domestic policies and Other types of domestic policies and programs are also included. For example programs are also included. For example for the EUfor the EU the model includes intervention the model includes intervention prices, variable import levies, prices, variable import levies, compensatory payments, acreage set-compensatory payments, acreage set-asides, base area bounds. asides, base area bounds.

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Model Structure and ParametersModel Structure and Parameters a reduced-form economic modela reduced-form economic model The behavioral equations in the model are largely The behavioral equations in the model are largely

constant-elasticity in nature constant-elasticity in nature The structure of the behavioral equations is the The structure of the behavioral equations is the

same for all countries in the model same for all countries in the model The model includes five types of consumption The model includes five types of consumption

activities: food/consumer demand, feed demand, activities: food/consumer demand, feed demand, crush demand, dairy processing demand, and crush demand, dairy processing demand, and other use demand.other use demand.

A number of restrictions were imposed on the A number of restrictions were imposed on the model's elasticities to ensure that requirements model's elasticities to ensure that requirements of economic theory are satisfied at the baseline of economic theory are satisfied at the baseline values for the datavalues for the data

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WTO ScenarioWTO Scenario

The impact of US, EU, and G20 proposalsThe impact of US, EU, and G20 proposals (on market access, export subsidies and (on market access, export subsidies and domestic support) on agricultural market domestic support) on agricultural market of Sudan was analyzed.of Sudan was analyzed.

Market Access - The tariff cuts for the US, Market Access - The tariff cuts for the US, EU, and G20 proposals as they are EU, and G20 proposals as they are simulated in this scenario are presented in simulated in this scenario are presented in the next table:the next table:

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US ProposalEU ProposalG20 Proposal

Developed CountriesAVE Tariffs

within Band

Percentage Cut in AVE

AVE Tariffs within Band

Percentage Cut in AVE

AVE Tariffs within Band

Percentage Cut in AVE

Band10-2055-65%0-3035%0-2045%

220-4065-75%30-6045%20-5055%

340-6075-85%60-9050%50-7565%

460+85-90%90+60%75+75%

Tariff Cap(%) 75%100%100%

Sensitive Products (% of Tariff Lines)

1%8%1%

Developing CountriesUS ProposalEU ProposalG20 Proposal

Band10-2037-43%0-3025%0-3025%

220-4043-50%30-8030%30-8030%

340-6050-57%80-13035%80-13035%

460+57-60%130+40%130+40%

Tariff Cap(%) 100%150%150%

Sensitive Products (% of Tariff Lines)

1%8%1%

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Export Competition - Export Competition - The three The three proposals analyzed include the elimination proposals analyzed include the elimination of export subsidiesof export subsidies

Domestic Support – Domestic Support – For the purposes of For the purposes of this paper, the EU’s Single Farm Payment this paper, the EU’s Single Farm Payment (SFP) and US direct payments are (SFP) and US direct payments are assumed to remain in the Green Box. The assumed to remain in the Green Box. The PEATSim model also assumes that these PEATSim model also assumes that these payments have no impacts on production. payments have no impacts on production.

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Some Selected ResultsSome Selected Results

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Domestic PricesDomestic PricesCommodityUS ProposalEU ProposalG20 Proposal

Rice7.24.75.4

Wheat7.74.55.6

Corn11.97.49.5

Other Coarse Grains10.57.28.6

Sunflower seed3.21.92.2

Cottonseed4.62.53.3

Cottonseed Oil4.62.73.4

Cottonseed Meal2.00.71.6

Peanuts4.22.53.1

Peanut Oil3.62.22.7

Peanut Meal6.63.44.5

Other Oilseeds8.54.05.9

Other Oilseed Oil7.23.95.4

Other Oilseed Meal8.71.04.0

Cotton5.43.14.1

Sugar14.77.411.0

Beef & Veal6.33.14.3

Poultry4.82.63.4

Raw Milk3.12.02.4

Fluid Milk3.22.02.5

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ProductionProduction CommodityUS ProposalEU ProposalG20 Proposal

Rice0.90.60.7

Wheat1.00.50.6

Corn2.61.72.1

Other Coarse Grains2.31.82.0

Sunflowerseed-0.9-0.5-0.7

Cottonseed-0.8-0.7-0.7

Cottonseed Oil-0.40.0-0.2

Cottonseed Meal-0.40.0-0.2

Peanuts-0.1-0.1-0.1

Peanut Oil-0.6-0.4-0.5

Peanut Meal-0.6-0.4-0.5

Other Oilseeds0.80.10.4

Other Oilseed Oil-1.9-1.1-1.5

Other Oilseed Meal-1.9-1.1-1.5

Cotton-0.8-0.7-0.7

Sugar3.61.82.7

Beef & Veal0.3-0.2-0.1

Poultry-0.5-0.6-0.7

Raw Milk0.40.20.3

Fluid Milk0.10.00.1

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ConsumptionConsumptionCommodityUS ProposalEU ProposalG20 Proposal

Rice-0.1-0.1-0.1

Wheat-0.2-0.1-0.1

Corn-1.1-0.7-1.0

Other Coarse Grains-0.8-0.7-0.8

Sunflowerseed———

Cottonseed-0.40.0-0.2

Cottonseed Oil-1.1-0.6-0.8

Cottonseed Meal-0.1-0.1-0.1

Peanuts-0.2-0.1-0.2

Peanut Oil-0.7-0.4-0.5

Peanut Meal-0.5-0.4-0.4

Other Oilseeds-1.9-1.1-1.5

Other Oilseed Oil-2.0-1.1-1.5

Other Oilseed Meal-0.8-0.1-0.4

Cotton-0.1-0.1-0.1

Sugar-0.8-0.4-0.6

Beef & Veal-0.6-0.2-0.4

Poultry0.0-0.1-0.1

Raw Milk0.40.20.3

Fluid Milk0.10.00.1

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CommodityBase Period (2004)Model Baseline (2014)US Proposal (2014)

EU Proposal(2014)

G20 Proposal(2014)

ExportsImportsExportsImportsExportsImports

ExportsImports

Exports

Imports

Rice036036036036036

Wheat0106601067010600106401063

Corn0002000100

Other Coarse Grains1701420315027903000

Sunflowerseed7060606060

Cottonseed03040404

Peanuts3050605050

Other Oilseeds21802730280027502780

Other Oilseed Oil0000000000

Other Oilseed Meal0010000000

Cotton790770760760760

Sugar24174717811764177317

Beef & Veal605020050110

Poultry02170217021702170217

Exports and Imports (1000 MT)Exports and Imports (1000 MT)

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ConclusionConclusion As long as Sudan is not a member of the As long as Sudan is not a member of the

WTO, the major effect of global WTO, the major effect of global agricultural trade liberalization facing it is agricultural trade liberalization facing it is higher world prices and therefore higher higher world prices and therefore higher domestic prices domestic prices

Sudan’s agricultural producers will benefit Sudan’s agricultural producers will benefit from higher prices but consumers will be from higher prices but consumers will be negatively affected negatively affected

Production and exports of major Production and exports of major agricultural commodities are projected to agricultural commodities are projected to increase under the US, EU, and G20 increase under the US, EU, and G20 proposals proposals

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Designing domestic policy that Designing domestic policy that favorable for agriculture is important favorable for agriculture is important for Sudan to maximize its benefits for Sudan to maximize its benefits from global agricultural trade from global agricultural trade liberalization and to maximize its liberalization and to maximize its potential in agricultural production potential in agricultural production

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