Sensitive and Special Products - A rice perspective^[17]

Concepción Calpe and Adam Prakash

This article examines the prospect of rice being designated as a special or sensitive product and looks at the possible implications this could have under liberalisation of the international rice market. Using an Armington-type model, it was found that the designation of rice as special or sensitive by key countries considerably diminishes the effects of reform, particularly when no concessions are required to be made upon designating rice so. The paper also discusses the criteria that could serve to guide the selection of rice products as sensitive or special.

1. INTRODUCTION

The July 2004 agreed Framework for Establishing Modalities in Agriculture (hereafter referred to as the "July Package") introduces three novel elements to the Market Access pillar aimed at mitigating the impacts of mandatory tariff cuts: (i) "Sensitive Product" (SSP) and (ii) "Special Product" (SPP) exceptions and (iii) a new Special Safeguard Mechanism (SSM). The SPP and SSM pertain to the Special and Differential Treatment provisions for use by developing countries only, while both developed and developing countries can resort to the SSP provision. While the SSM envisages equipping developing countries with a set of new rules to protect themselves against commodity import surges, designating a product as "sensitive" or "special" would provide exemption from the full application of the agreed upon tariff rate cutting formula, thereby facilitating the adoption of more ambitious market access provisions for the rest of agriculture.

This article looks at rice as a potential candidate for designation as an SPP or an SSP and examines the possible implications this could have for reform of the international rice market. In the absence of a final agreement on the modalities that will drive the liberalization process under the WTO Doha Round and on the rules that would govern SPPs and SSPs, crude assumptions had to be made in carrying out the analysis.