WTO Roundup

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New proposal seeks deal on tropical farm products

Alongside December’s landmark deal on banana tariffs, a new proposal put forward in the WTO’s agriculture talks offers a potential resolution of long-standing differences among exporters of tropical farm products.

The new proposal, which was submitted by the ACP, EU and Latin American countries on 15 December, lists the goods that the members of the group have agreed should benefit from gentler and slower tariff cuts under the proposed ‘preference erosion’ treatment, as well as which goods should be slated for faster and deeper liberalisation as ‘tropical products’. The proposal would take effect under a WTO Doha Round agreement.

The proposal comes on the heels of the December banana deal, officially known as the Geneva Agreement on Trade in Bananas (GATB).

Products such as flowers, sugar, fruits and their juices, arrowroot, peanut oil and tobacco appear on the list of products that the parties to the deal have agreed should receive preferential treatment in the EU and US. The tariffs for these goods would be cut in a manner similar to other developed country imports but would be phased in over a period of ten years rather than five.

Products that meet two criteria - they are “sensitive” and they accounted for more than ten percent of domestic consumption on a given tariff line between 2003 and 2005 - would qualify for preference erosion treatment. Quotas for such products would be expanded in equal annual installments over a period of seven years.

Trade sources told ICTSD’s Bridges that this provision is meant to refer specifically to sugar; however, the language leaves open the possibility that other products, such as beef, could qualify as well. Specifically, if members use a complex methodology called “partial designation” to select very specific products, then it is possible that those goods, which would not otherwise receive preference erosion treatment, might also qualify.

Countries such as Brazil, India, Australia and China did not voice objections to the proposal when it seemed that only sugar would be covered by the sensitive product treatment, according to a delegate. However, those countries are expected to raise objections if additional products of export interest might also be affected by the new language.

Unlike previous versions of the draft text, the new language describes the US and the EU as “preference granting country Members.” This could pose a problem for ACP exporters, sources said, which would thus be left with preferential access to only the EU and US markets. The possibility that some products, such as sugar and beef, could be declared “tropical” in non-EU and US markets would liberalize trade elsewhere and leave ACP producers with only two markets.

Incoming EU Ag Commissioner Fields Questions on Doha

In a hearing on 15 January, Dacian Ciolos, the EU Agriculture Commissioner-designate, outlined his agenda on agriculture trade and subsidy reform in front of the European Parliament.

Responding to an MEP’s question on the WTO’s Doha Round of world trade talks, Ciolos told the European Parliament that the EU “cannot go further” in its offers. He added that he would be tough on trade negotiations and that Europe should not engage in trade agreements “to the detriment of our agriculture.”

Ciolos further argued that “a global [trade] agreement is needed,” but that the EU should “wait for our partners’ proposals.”

Valentin Zahrnt of the European Centre for International Political Economy (ECIPE) told Bridges that officials in Brussels will “carry out domestic reforms without worrying about Geneva,” where the WTO is headquartered. Such an attitude would no doubt do little to mollify those who want to see more progress in the Doha talks.

Perhaps acknowledging those fears, in his written statement to the European Parliament, Ciolos said that he intended to “continue working hard in order to conclude a balanced agreement on the ‘arrangements’ for agriculture under the Doha Development Agenda.”

Trade Facilitation Draft Text Holds Promise for Developing Countries

In December the WTO announced that the Negotiating Group on Trade Facilitation - the committee charged with hammering out regulations to facilitate the movement of goods across national borders - had agreed upon a ‘draft consolidated text’ to guide the group’s negotiations in 2010.

Broadly speaking, the trade facilitation committee has been tasked with slicing through the red tape that causes the movement of goods to slow at international borders. In WTO terms, the group has been mandated to “review and as appropriate, clarify and improve” relevant sections of three articles of the General Agreement on Tariffs and Trade (1994): Article V (facilitating transit and trade), Article VII (limiting border fees and formalities), and Article X (making trade regulations transparent).

Proponents of the trade facilitation talks say that new global trade rules to regulate government policies at the border would make developing countries more attractive to investors and could go a long way toward helping poorer nations play a more active role in the global economy.

The ‘draft consolidated text’ (WTO document TN/TF/W/165) that was released in December reflects all of the proposals that delegations have put forward to date. Now, it only remains for negotiators to bring those elements into focus.

When the trade facilitation negotiations resume during the second week of February, negotiators will have their work cut out for them. While many of the bracketed sections “can probably be resolved pretty easily,” according to a WTO official, some issues could be more difficult to crack. The negotiations on Special and Differential Treatment for developing and least developed countries will also need particular attention in order to ensure that this area of the talks does not “lag behind,” the official added.

This information has been summarised from ICTSD’s Bridges Weekly Trade News Digest.