PART TWO
COUNTRY CASE STUDIES

CHAPTER 1. BANGLADESH ¹

I. INTRODUCTION

Agriculture is the single most important sector of the economy. It is the major source of livelihood in the rural areas, where almost 80 percent of the population live; approximately two thirds of the labour force is employed in agriculture. Although its share is predictably declining, agriculture (crops, livestock, fisheries and forestry) accounts for one third of GDP and agricultural products constitute 32 percent of the total value of exports.

The crop sector, in particular food crops (mainly rice and wheat), plays a dominant role and represents about 76 percent of the value added in agriculture, although the share of non-crop agriculture, particularly livestock and fisheries, has increased steadily in recent years. Rice is the predominant crop, covering 75 percent of the cropped area and accounting for 70 percent of the value of crop output.

Output in agriculture, particularly of food, has increased steadily. Net domestic foodgrain (rice and wheat) production increased from about 14.5 million tonnes in 1984/85 to 17.6 million tonnes in 1992/93. While this increase of 21 percent exceeded the growth in population of 17.2 percent it was clearly inadequate to make an impact on poverty.

Raw jute and jute products, frozen shrimp and fish, and tea are the major agricultural export commodities. Foodgrains (rice and wheat), edible oil and oilseeds, raw cotton, milk and milk products, spices, sugar and coconut oil are the main agricultural imports. While the volume of agricultural exports (except raw jute and jute manufactures) has remained stable, frozen shrimp, frog legs and fish have emerged as significant export items. Imports of edible oil and oilseeds have surged, while rice imports have been declining. The country receives about one million tonnes of wheat in food aid.

In 1979-81, 42 percent (or 37 million) of Bangladesh's total population was estimated to be undernourished. The proportion fell to 36.5 percent in 1995-97, but the absolute number of the undernourished rose to 44 million as total population increased. This situation contrasts with that of South Asia as a whole, where undernourishment has fallen markedly, from 38 percent to 23 percent, over the same period. Thus, the challenge for reducing poverty and undernourishment remains daunting for Bangladesh. Food insecurity is closely related to poverty, and at the country's current level of development, it is agriculture which essentially holds the key to poverty reduction.

Bangladesh has a good potential for agricultural development. It is endowed with fertile alluvial soils and ecological diversity, and has vast untapped surface and groundwater resources for irrigation. Nutritional demand and supply projections, assuming plausible scenarios of population and income growth and expansion of irrigation, indicate that the country could generate a foodgrain surplus.

II. EXPERIENCE WITH IMPLEMENTING THE AGREEMENT ON AGRICULTURE

2.1 Market Access

Over the past decade or so Bangladesh has undertaken wide-ranging trade policy reforms. The tariff structure has been considerably simplified, reducing the number of duty slabs, bringing down tariff rates and narrowing their dispersion among similar commodities. As regards non-tariff barriers, the focus has been on deregulation of import procedures and elimination of quantitative restrictions. As a result, by 1994 trade in all agricultural commodities, with the exception of three HS lines (see below), were free of quantitative restrictions.

In the UR, Bangladesh offered ceiling tariff bindings of 200 percent ad valorem on all products covered by the AoA, with the exception of 30 lines for which the bound rate was 50 percent.¹ In addition, "other duties or charges" were bound at 30 percent on all these products, so that the overall bound rates were 230 percent on most products and 80 percent on the 30 tariff lines.

As of July 1999, trade-related quantitative restrictions remained on imports for three products: eggs, except hatching eggs (HS 0407.00), tendu leaves (biri leaves) (HS 1404.901), and all goods including lard stearin but excluding non-edible tallow and RBD palm stearin (HS 1503.001). One other area where some difficulties were encountered was in fully complying with WTO customs valuation provisions in the case of some agricultural products as a result of the problem of under-invoicing of imports. For these products, customs valuations are set administratively, rather than on the basis of the invoice.

As regards experience with border protection, applied rates have been very low during the past five years, ranging for the major imported products from 7.5 percent to 60 percent, compared with the bound rate of 200 percent, having been reduced considerably since the mid-1980s (Table 1).

Table 1: Bound and applied tariffs for selected agricultural product groups (percent ad valorem)

Source: IFDC, Implications of the Uruguay Round Agreements for Agriculture and Agribusiness in Bangladesh, International Fertilizer Development Centre, Muscle Shoals, Alabama, United States, June 1999.

Bangladesh took advantage of the option given to LDCs in the AoA to offer ceiling bindings instead of following the tariffication process. Tariffication - i.e. fixing base tariffs on the basis of computed tariff equivalents -would have been disadvantageous, since tariff equivalents were very low, even negative in many cases. The current 200 percent binding should also be useful when proposals for further reducing bound tariffs are negotiated in the next round.

Table 2: Estimated tariff equivalents on imported agricultural commodities: 1995-96 and 1986-87

	1995-96							1986-87
Commodity	Wholesale price (Tk/tonne)		Import parity price (Tk/ tonne)	Total tariff equi-valent (%)	Applied customs duty (%)	Tariff equi-valent of NTB (%)	Total tariff equi-valent (%)
Rice	12 580		11 930	5	30	-25	22
Wheat	8 992		7 902	14	30	-16	13
Oilseed	19 270		18 230	6	60	-54	49
Edible oil	39 230		29 000	35	60	-25	6
Lentils	33 360		18 200	83	100	-17	25
Onions	11 420		8 400	36	100	-64	-18
Potato	6 530		12 870	-49	100	-149	-76
Sugar	27 540		21 704	27	100	-73	85
Milk powder		224 000	119 120	88	60	28	58
Cotton	24 293		83 111	-71	30	-101	-51

Source: Z. Bakht, op. cit.

Note: Total tariff equivalent (TE) is computed as: TE = [(Pd - Pp)/Pp]*100, where Pd is domestic wholesale price, Pp is import parity price (import price adjusted for transportation, handling cost and marketing margin between the border and the wholesale market). The exchange rate used is adjusted by the Standard Conversion Factor (SCF). The tariff equivalent of the NTB is the difference between total tariff equivalent and applied duty.

A recent study of tariff equivalents for Bangladesh (see Table 2) showed that for most agricultural commodities they were positive (an unweighted average of 37 percent) but lower than their applied tariffs (68 percent) in 1995-96.² This suggests that the applied tariffs were not fully effective in influencing domestic prices. Various reasons have been offered to explain this. One possible explanation is that there could have been widespread unrecorded imports from neighbouring countries which depressed domestic prices because they entered without payment of duty. Also, the equivalent domestic products may have been of inferior quality. Similarly, it is possible that applied duties were simply non-operative for several products where self-sufficiency rates were closer to 100 percent, because imports did not take place. The same study also showed that the tariff equivalents of NTBs were negative in all but one case (milk powder), which could be a reflection of the dismantling of most NTBs.

Judging from the information on applied tariffs and computed tariff equivalents for recent years, it appears that Bangladesh should have enough flexibility for border protection even if current bound rates of 200 percent were lowered considerably, e.g. to 120-125 percent. Because of the importance of tariff bindings in the WTO context, caution may need to be exercised in approaching tariff reductions. Consideration could be given to offering different rates of binding for different products, unlike what was done in the UR. In that event a distinction would need to be made between "sensitive" and other products, based on in-depth analysis of the importance of individual commodities for the economy and its farming sector.

2.2 Domestic Support

In the UR, Bangladesh did not submit detailed commitments on domestic support measures, essentially claiming that all support measures belonged to the exempted categories (e.g. the green box and the SDT) and/or the outlay on trade-distorting support measures fell within de minimis levels.

A recent study of domestic support levels basically confirmed the above by showing that the bulk of the support to farmers is granted through non-trade-distorting measures such as research, extension and infrastructures, etc. (green box measures).³

As regards trade-distorting (amber box) measures, estimates of the AMS through input subsidies for both the base period (1986/87-88/89) and for current years showed that as a proportion of the value of agricultural production it rarely exceeded 2 percent, which was well within the 10 percent de minimis level for developing countries (Table 3). Fertilizer subsidies amounted to less than 2 percent of the value of agricultural production while irrigation subsidies rarely exceeded 1.5 percent. The situation was similar for seed subsidies, with the exception of maize, where the AMS percentage for some recent years exceeded 10 percent of the value of maize output. Even here, there was a good justification not to count maize subsidies for AMS purposes as this subsidy mostly goes to resource-poor farmers (exempted from reduction by the AoA).

Table 3: Aggregate Measurement of Support through agricultural input subsidies (percentage of total value of agricultural production)

Year	Seeds	Fertilizers	Irrigation
1986/87	n.a	0.33	1.01
1987/88	n.a	0.60	1.34
1988/89	n.a	1.25	1.28
1990/91	0.16	n.a.	n.a.
1991/92	0.16	n.a.	n.a.
1992/93	0.18	n.a.	n.a.
1993/94	0.20	0	0.81
1994/95	0.1	0	1.06
1995/96	n.a.	0	0.83

Source: Asaduzzaman, op. cit.

As regards product-specific AMS, support price schemes existed for rice and wheat only. Estimates showed that AMS levels were very small and typically negative (because support prices were lower than import parity prices). In sum, therefore, these estimates show that Total AMS for Bangladesh is very small, amounting to less than 3.5 percent of the value of agricultural output. Since that is well within the 10 percent de minimis limit there is much scope for increasing support without contravening WTO provisions.

It can thus be concluded that for Bangladesh the main issue is not so much of complying with WTO rules - easy enough, at least until the end of the implementation period - as of how to raise the level of support to agriculture in an efficient manner, since the current level is very low compared with the needs of the sector.

Some issues were identified in a Round Table held in Dhaka in July 1999 on this subject^.4. One was the need for reviewing policy measures, again not so much to comply with the AoA as to attain greater efficiency in resource use, e.g. providing subsidies on electricity directly at the source rather at the final stage. It was also noted that there might be some risk that the revision of policy measures to bring them into conformity with WTO provisions would render them less environment-friendly. Third, some participants wondered whether the WTO-compatible criteria of decoupled support measures were the most efficient ones for Bangladesh, given that the focus of the AoA was on reducing excess production in developed countries, which was not a relevant concern for Bangladesh. Fourth, the meeting also stressed that subsidies and price supports had a role to play in an agrarian economy like Bangladesh, provided that they were granted at the right time, to the right extent and in the right areas. In the WTO context, what mattered therefore was safeguarding the option to provide such supports if the resources to do so became available in the future.

While hardly an issue currently, it is nonetheless possible that Bangladesh may feel constrained by WTO rules in the future, e.g. if the AoA provisions are tightened further in the next round, or if budgetary resources make it possible to increase subsidies. Given the immense importance of agriculture for the economy, Bangladesh needs to ensure that it is not constrained in support for agriculture in the future, and that calls for its active participation in the next round of WTO negotiations.

2.3 Export Competition

Liberalization of Bangladesh's export regime was fairly advanced by the time the WTO was established. The bulk of the export trade was in private hands, and there were few export duties. The small number of commodities in the negative list for exports (restricted items) included oilseeds, jute seed, wheat, brown sugar, lentils, onions, fresh shrimp, rice husk, bamboo, cane, timber, frog and frog legs, raw and wet-blue leather and cow horns. Some of these restrictions were on environmental and health grounds while others were intended to raise the domestic value added.

In the UR, Bangladesh did not reserve the right to provide export subsidies in the future - and indeed could not do so, since it did not notify the existence of any export subsidies during the base period (1986-90).

The Government occasionally implements some export incentive programmes, such as cash compensation and tax breaks and export promotion measures to facilitate the growth of exports, on a selective basis. These schemes are addressed in the WTO Agreement on Subsidies and Countervailing Measures and it is not as yet clear whether resort by a least developed country to such forms of subsidy under that Agreement is permissible, given that all forms of agricultural subsidization are prohibited by the AoA. On the other hand, like any other country, Bangladesh is entitled to provide subsidies to reduce the cost of domestic marketing and international freight and it makes some use of these provisions.

It is hard to say whether the ineligibility to subsidize agricultural exports will at any time in the future impose a constraint on trade policy - for example, if the budgetary situation improves or some subsidies are considered desirable from a strategic trade policy standpoint. Perhaps some flexibility in this area (e.g. de minimis rate of subsidization) should be sought by developing countries in the next round, at least for LDCs. In all probability that would not pose any particular problem.

As regards the limitation of exports, since Bangladesh is not a net exporter of basic foodstuffs (as Pakistan is for rice), it is entitled as a developing country to resort to export restrictions or prohibitions in accordance with Article 12 of the AoA.

2.4 Other Provisions

Special agricultural safeguards (SSG)

Bangladesh has no access to SSGs and so has no experience with these or with general WTO safeguards.

Tariff rate quotas (TRQs)

Bangladesh did not have to open TRQs to others and thus has no experience of their administration. Its experience with accessing global tariff quotas offered by others is yet to be documented.

SPS and TBT Agreements

These Agreements are viewed as positive outcomes of the UR as they should minimize disguised protectionism in the name of health and food safety. This is especially so as tariffs decline progressively. The Agreements should also protect the interests of countries like Bangladesh with small economic clout against the actions of richer trading partners in the event of trade disputes.

The key challenge in this area is to upgrade sanitary and phytosanitary standards in order to be able to export agricultural products to countries where standards are already high. It is recognized that this challenge has to be faced sooner rather than later because there is very little room for manoeuvre. The country has some experience in this area, reported by participants in the Round Table held in July 1999. Some importing countries were reluctant to accept safety/standards certifications issued by the relevant Bangladesh authority. In some cases, importing countries also interpreted "equivalency" as "identical inspection and certification system", which was neither called for by the Agreements nor was feasible. A disturbing trend, which seemed to be on the rise, was trade "harassment" on SPS/TBT grounds, as importers interpreted some of the "grey" area provisions of the SPS/TBT Agreements to their advantage. It was also said that it was not always feasible to resolve such differences formally through the WTO disputes settlement process, especially for countries lacking financial resources. Similarly, it was noted that the transition period granted to LDCs to implement the SPS/TBT Agreements was too short.

Bangladesh has also some unfavourable experiences on the import side.⁵ Some imports that have threatened the health and safety of the population have been able to enter the domestic market in the absence of adequate regulation and inspection systems, in part due to delays in updating domestic food law. The Pure Food Ordinance 1959, which constituted the basic food legislation of the country, was revised and updated in 1994 to accommodate Codex Standards and Guidelines, but has not yet been enacted.

Finally, Bangladesh has little experience of the various technical and financial assistance provisions contained in the SPS/TBT Agreements.

Marrakesh Ministerial Decision:

Bangladesh is classified as a beneficiary with respect to this Decision, but has little experience of any benefits. The volume of food aid received has fallen over time, for cereals from 66 percent of all cereal imports in 1986-88 to 38 percent in 1994-96.

Dispute settlement

Bangladesh had not been involved so far, either directly or as a third party, in any trade dispute in the WTO.

III. EXPERIENCE WITH FOOD AND AGRICULTURAL TRADE

3.1 Agricultural Trade

Food products account for some 80 percent of total agricultural imports and only a small proportion of total agricultural exports. Jute and tea alone account for over 80 percent of all agricultural exports, most of the remainder being composed of five products or product groups: fruit and vegetables, tobacco leaves, various crude organic materials, hides and skins and live animals.

Figure 1 shows that agricultural exports declined steadily during 1985-94, from an annual average of US$190 million in 1985-87 to a trough of US$103 million in 1994. Thereafter, they rose by 25 percent in 1995, fell again in 1996 by 18 percent and rose rather sharply (by 34 percent) in 1997 and again (11 percent) in 1998. Despite this more recent upward trend, average annual exports in 1995-98, at US$134 million, were much the same as in 1990-94 (Table 4), although they were 58 percent (US$50 million) higher when measured against the declining trend. Thus, while there was no net gain in exports in the post-1994 period, there was a reversal of the declining trend.

Table 4: Agricultural trade in 1990-94 and 1995-98 (average annual value, in million US$, and percentage change)

Period	Imports	Exports		Net imports
		Incl. jute	Excl. jute
1990-94 actual (a) 1995-98 actual (b) 1995-98 extrapolated (c)1 (b) - (a) 2 (b) - (c) 2	680 1 250 646 570 (84 %) 604 (93%)	134 134 85 0 (0%) 49 (58%)	53 52 41 -2 (-3%) 11 (27%)	546 1 116 561 570 (105%) 554 (99%)

¹ Extrapolated value based on 1985-94 trend.

² Numbers in parentheses are percentage changes over (a) and (c) respectively.

Source: Computed from FAOSTAT data. Agriculture excludes fishery and forestry products.

Figure 1: Agricultural trade, 1985-98 (in million US$; thick lines are actual values, thin lines are trends for 1985-94 extrapolated to 1998)

Source: FAOSTAT

Since jute accounts for roughly 60 percent of total agricultural exports, trade in jute strongly influences the overall agricultural export performance. Jute is not covered by the AoA and faces few tariff and non-tariff barriers in the major importing markets. In the AoA context, then, a pertinent question to ask is what was the experience with non-jute agricultural exports? As regards the remaining roughly 40 percent of exports, covered by the Agreement, the statistics show that in 1995-98 they were 3 percent lower than in 1990-94, but 27 percent (US$11 million) higher than the extrapolated trend figure for 1995-98 (Figure 2 and Table 4). Thus, export performance was less satisfactory when jute is left out of account.

Figure 2: Agricultural exports excluding jute, 1985-98 (US$ million)

Source: FAOSTAT.

The behaviour of agricultural imports follows broadly that of food imports (discussed below) since food predominates in the total. The average value of agricultural imports in 1995-98 was 84 percent higher than in 1990-94 and 93 percent above the extrapolated trend level (Table 4).

As a result of these movements, the value of net agricultural import (i.e. deficit) rose markedly in 1995-98, to reach a level 105 percent (US$570 million) higher than in 1990-94. The performance was roughly similar (an increase of 99 percent) when measured against the trend.

Table 5 shows export performance for major products. Of the two major export items, there was no change in the value of jute exported despite the 37 percent rise in export volumes as prices collapsed. By contrast, export value of tea suffered on account of volume. For the simple aggregate of jute, tea, fruit and vegetables and tobacco leaves, there was a 32 percent rise in export volumes but the value of export did not change as export prices fell by 26 percent. The export performance was impressive for the rest of the agricultural products taken together, but they account for only 6 percent of the total.

Table 5: Exports and export unit values of major agricultural products in 1990-94 and 1995-98 (annual average)

		Actual value		Trend value 1	Percentage change
Product	Unit	1990-94	1995-98	1995-98	(b/a)	(b/c)
		(a)	(b)	(c)	(d)	(e)
Jute	million US$	81	82	44	1.6	86.9
	000 tonnes	261	358	199	36.9	79.8
	US$/tonne	308	232	231	-24.8	0.4
Tea	million US$	39	35	36	-10.4	-3.0
	000 tonnes	26	24	27	-10.6	-13.3
	US$/tonne	1 492	1 485	1 325	-0.5	12.1
Fruit and	million US$	7	6	4	-0.3	84.4
vegetables	000 tonnes	3	2	1	-23.7	215.4
	US$/tonne	2 426	2 302	2 725	-5.1	-15.5
Tobacco	million US$	2	2	2	8.1	1.5
leaves	000 tonnes	1	2	1	41.3	33.2
	US$/tonne	1 887	1 743	2 008	-7.6	-13.2
Subtotal	million US$	129	126	86	-2.0	46.9
	000 tonnes	291	385	228	32.1	68.9
	US$/tonne	442	328	377	-25.8	-13.0
Other agri.
products	million US$	6	8	-1	41.2	-933.0
All agri.
products	million US$	134	134	85	-0.1	58.1

¹ See note 1 to Table 4.

Source: Computed from FAO data.

3.2 Food Trade

While food products bulk large in agricultural imports (about 80 percent) they are far less important in exports. Total food imports increased by 76 percent from an average of US$567 million in 1985-87 to US$998 million in 1996-98. Five commodity groups accounted for roughly 90 percent of all food imports in the latter period: vegetable oils, oilseeds, wheat and flour, rice and miscellaneous food products. Of these, imports of vegetable oils and oilseeds and miscellaneous food products in particular have increased sharply since 1985-87.

The overall trend in food imports from 1985 to 1994 was downward, but there was a strong upward surge thereafter: imports in 1995 were double those of the previous year, reaching US$913 million, and rose further, but modestly, in 1996 and 1997, falling slightly in 1998. In consequence, the average value of imports in 1995-98 was 78 percent higher than in 1990-94 (Table 6), but was 98 percent higher than the extrapolated trend value.

Table 6: Food trade in 1990-1994 and 1995-1998
(average annual value, in million US$, and percentage change)

Period	Imports	Exports	Net imports
1990-94 actual (a) 1995-98 actual (b) 1995-98 extrapolated (c)1 (b) - (a) 2 (b) - (c) 2	549 977 493 427 (78%) 483 (98%)	10 8 3 -2 (-19%) 5 (147%)	540 969 490 429 (80%) 479 (98%)

¹ See note 1 to Table 4.

² Numbers in parentheses are percentage changes over (a) and (c) respectively.

Source: Computed from FAOSTAT data. Food excludes fishery products.

Bangladesh is a very small food exporter, with annual exports averaging only US$8 million in 1995-98 compared with US$134 million of total agricultural exports. Although food exports in that period were lower than in 1990-94, they were substantially above the extrapolated trend value. Net food imports in 1995-98 were 80 percent more than in 1990-94.

Figure 3: Food trade, 1985-98 (in million US$; thick lines are actual values, thin lines are trends for 1985-94 extrapolated to 1998)

Source: FAOSTAT

Table 7 shows changes in import bills and their components for all major food products. Increased volumes explain most of the rises in import bills in the case of three main products, namely vegetable oils, rice and oilseeds. This was also the case for all food products shown in the table taken together.

Table 7: Imports and import unit values of major food products in 1990-94 and 1995-98 (annual average)

		Actual value		Trend value 1	Percentage change
Product	Unit	1990-94	1995-98	1995-98	(b/a)	(b/c)
		(a)	(b)	(c)	(d)	(e)
Vegetable	million US$	137	294	121	114.8	142.2
oils	000 tonnes	299	644	306	115.2	110.1
	US$/tonne	461	465	385	0.9	20.9
Wheat and	million US$	161	183	126	13.8	45.6
flour	000 tonnes	1 197	1 262	813	5.4	55.1
	US$/tonne	137	145	153	5.2	-5.2
Rice	million US$	18	187	-32	934.2	-679.5
	000 tonnes	99	1 212	-144	1119.3	-944.6
	US$/tonne	177	194	167	9.8	16.6
Oilseeds	million US$	43	98	71	126.5	37.7
	000 tonnes	137	272	228	97.6	19.0
	US$/tonne	317	356	186	12.1	90.8
Milk	million US$	52	53	54	2.5	-0.8
powder	000 tonnes	24	22	11	-8.8	95.8
	US$/tonne	2 165	2 437	2 793	12.6	-12.7
Subtotal	million US$	411	815	340	98.3	139.7
	000 tonnes	1 757	3 411	1 216	94.1	180.6
	US$/tonne	238	248	267	4.2	-7.4
Other food
products	million US$	138	162	153	16.9	5.3
All food
products	million US$	549	977	493	77.8	98.0

¹See note 1 to Table 4.

Source: Computed from FAOSTAT data.

Finally, Figure 4 shows how total food imports have varied annually in relation to total agricultural exports. In 1985-87, the ratio was 3.0 - i.e. food imports were three times agricultural exports. Thereafter, the ratio rose modestly until 1994 and shot up in 1995 and 1996 before declining again in 1997 and 1998. The average value for 1995-98 was 7.4, almost twice the ratio of 4.2 in 1990-94. Even for 1997 and 1998, when the ratio declined, it still averaged 6.5, or 55 percent more than in 1990-94. There has thus been a clear and significant deterioration in the balance of food imports and agricultural exports.

Figure 4: Ratio of the value of total food imports to that of agricultural exports, 1985-98

Source: FAOSTAT

IV. ISSUES OF CONCERN IN THE CONTEXT OF FURTHER NEGOTIATIONS ON AGRICULTURE

The analysis in Section II showed that on the whole the AoA had little direct impact on agricultural policy in Bangladesh during 1995-98. The Government had already unilaterally simplified its import regime, while its tariffs were bound at very high levels and so had no constraining effect on border measures. Expenditures on domestic support measures authorized by the Agreement were well below de minimis levels, so much so that the main issue was that of the low level of support and subsidies and not that of compliance with WTO rules. Export subsidization was also an irrelevant issue. As regards some other areas dealt with in the Agreement, e.g. special agricultural safeguards, the Marrakesh ministerial Decision on food import difficulties for LDCs and NFIDCs, general contingency measures, dispute settlement and TRQs, Bangladesh has had no experience so far. Nor has it had any experience with accessing global TRQs made available by others. On the other hand, it has had some experience with the SPS/TBT Agreements.

There are, however, two compelling reasons why the analysis of the experience with the implementation of the Agreement, and of other WTO Agreements, should not stop there. First, it is necessary to ensure that Bangladesh's agricultural trade interests are fully taken into account in further negotiations on agriculture. Second, Bangladesh needs to assume a proactive role in ensuring that new agreements go beyond the realm of disciplining excessive support and protection of some countries and also address more fully the particular problems of the LDCs, e.g. overcoming constraints on the achievement of their agricultural potential and assuring them their due share in the growth of world trade.

Margin for further reduction of bound tariffs

The experience with applied tariffs and computed tariff equivalents in 1995-98 reveals that there is a good margin for reducing the current rate of binding of 200 percent. It is perhaps possible to reduce it by as much as half, to about 100 percent, as some claim, but before such action were taken it would be necessary to undertake further analysis and verification, especially as regards the possible effects on market stabilization. In further multilateral negotiations, Bangladesh also needs to follow the debate on the tariff-cutting formula and its implications for the country's current bound rates.

In its approach to the negotiations, Bangladesh should consider offering different bound tariffs for different products, unlike in the UR, thus providing greater flexibility. It could draw a distinction between "sensitive" and other products, with lower tariffs on the latter. The results of studies on comparative advantage (see below) should be taken into account, but this primarily economic criterion needs to be supplemented by others , so as to give due consideration to other socio-economic factors, such as employment, poverty reduction and food security.

Domestic support measures

Current AMS levels are well below what is permitted by the AoA. It is highly unlikely that Bangladesh would in the near future run into difficulties on product-specific AMS, while non-product specific AMS could rise if budgetary resources permit. Several developing countries are in a similar position and so have proposed that the provisions of the Agreement should be changed to allow them to aggregate the two AMS components before the AoA restriction is applied, thus providing them with greater flexibility overall. Although this is not the case currently for Bangladesh, it should follow this debate closely and consider supporting the proposal.

Since support for agriculture in Bangladesh is more of an economic and resource issue than one of compliance with WTO-related legal provisions, it is more pertinent to concentrate on the economics of domestic support and to establish a WTO position on that basis. The country's comparative advantage in different products provides the appropriate analytical framework. The most recent study of this nature for Bangladesh shows that wheat has a weak comparative advantage in production, while cotton, onions and potatoes are highly competitive with imports, but not in world export markets.⁶ Similarly, tobacco, pulses, vegetables and tea appear to be strong contenders for export markets. Crops such as oilseeds, chillies and sugarcane hardly displayed any comparative advantage for domestic production. Since WTO commitments have a longer-term, strategic significance, it is not only the static but also the dynamic comparative advantage, based on alternative assumptions on technology and world market conditions, that needs to be considered.

The SPS/TBT Agreements

The challenge to upgrade SPS/TBT standards is daunting, but there is little alternative for Bangladesh if it wishes to take advantage of growing world agricultural trade, especially in processed products. If standards are to be upgraded for external markets, they will also need to be upgraded for the home market itself, which will require first and foremost an effective national strategy on food quality control and safety. There is an urgent need for reviewing and updating food legislation, drawing on the Model Food Law developed jointly by FAO and WHO, the Codex Alimentarius standards, guidelines and recommendations, the reports of the FAO/WHO Expert Committees on Food Additives (JECFA) and Pesticide Residues (JMPR) and on ad hoc expert consultations. Special emphasis should be placed on improving the national export food inspection and certification programme in order to boost importers' confidence. (FAO has assisted many developing countries on this.) Training of governmental and food industry personnel in all aspects of food quality and safety is another priority.

While much thus has to be done at home, Bangladesh also needs to participate actively in the debate on this matter in relevant regional and international bodies, as well as in the WTO itself. The SBS/TBT Agreements provide for financial and technical assistance, but the commitments have yet to be implemented effectively. Similarly, more effective participation is required in international standard-setting bodies because that is where minimum standards are set. Bangladesh should join hands with others in proposing financial support for the participation of LDCs in such bodies. Finally, while resort to the dispute settlement process is always an option, a more feasible approach for countries like Bangladesh would be to support the idea of a trade ombudsman in Geneva, within or outside WTO, in order to provide timely assistance to small exporters involved in trade disputes.

Possible consequences for agriculture of the TRIPS Agreement

The possible consequences for agriculture of the provisions of the TRIPS Agreement related to the patenting of biological materials have scarcely been given attention in Bangladesh. This is in contrast to the heightened interest among all who have a stake in this issue, as expressed in the July 1999 Round Table in Dhaka referred to in Section II above. One area where there was much confusion and a sense of uncertainty about the future was the consequences of patenting seeds, plants and animals in respect of such matters as security of seed supply and its cost, sovereign rights over genetic resources, rights of indigenous peoples and local communities, biosafety and food security in general. Obviously, a thorough review of how the relevant Articles of that Agreement could affect Bangladesh deserves high priority. In view of the keen interest in the subject shown by the public, there should be full participation in the review process by all those concerned.

Technical and financial assistance

Various Uruguay Round Agreements provide for technical and financial assistance to developing countries, in particular LDCs. However, since they are "best endeavour" measures and not legally binding, the monitoring of their implementation is often not taken seriously. There is a lot to be gained in this area by joining hands with other beneficiaries in order to improve the position.

Substantial reductions in support and protection by trading partners

One of the lessons to be drawn from the experience of Bangladesh with unilateral trade liberalization and full compliance with the AoA provision, is that such measures are not alone sufficient to allow the country to benefit from growing agricultural trade. It is equally important that similar reforms are made by trading partners, especially the richer ones. In this regard, many developing countries have made proposals for disciplining the policies of those that continue to distort global agricultural markets. One important area is improving market access by sharply reducing tariff peaks and tariff escalation as well as removing non-tariff barriers. Similarly, non-tariff barriers often come in different forms, ranging from unilaterally imposed stringent health, safety and environmental standards, including eco-labelling, in the developed importing countries to the unilateral use of anti-dumping and countervailing measures. As a large and non-subsidizing agricultural economy, it is also in Bangladesh's interest to negotiate for sharp reductions in the high level of domestic support and export subsidies granted by some developed countries.

1 The 30 tariff lines refer to the following 13 products: live horses, live sheep, live fowls, frog legs, human hair, seed potatoes, green tea (non-fermented), black tea, rice in husk, canary seeds, soybeans (seeds), cotton seeds and molasses.

2 Z. Bakht, Report on Border Protection and Export Subsidy, Consultancy report prepared for FAO, BIDS, Dhaka, August 1999.

3 M. Asaduzzaman, The Uruguay Round, WTO Rules and the Bangladesh Agriculture, Consultancy report prepared for FAO, BIDS, Dhaka, August 1999.

4 Report of the Round Table on the Consequences of the Uruguay Round Agreements for Bangladesh Agriculture, Report of a Round Table held in Dhaka, 28-29 July, FAO, 1999.

5 M. Faruque, The SPS and TBT Agreements and the Bangladesh Situation, Consultancy report prepared for FAO, Dhaka, August 1999.

6 Q. Shahabuddin, Comparative Advantage in Bangladesh Agriculture, Consultancy reprot prepared for FAO, BIDS, Dhaka, August 1999.