Bridges Weekly Trade News Digest • Volume 12 • Number 19 • 28th May 2008
Cautious Welcome, Some Criticism, for Revised WTO AG Text
Many WTO Members extended a cautious welcome to the latest revision of a draft Doha Round agriculture deal circulated on 19 May by the chair of the farm talks (see Bridges Weekly, 21 May 2008). However, some also offered criticisms of parts of the draft that they felt were unbalanced, and called for a further revision of the text to be issued soon.
The new text has been seen as a crucial stepping stone on the path towards a much-delayed ministerial meeting that Members say would be needed to resolve outstanding political disagreements over issues such as the percentage cuts in overall trade-distorting subsidies, or the reductions to be faced by the highest tariffs. Many negotiators suggest that ministers must meet soon if the Doha Round is to be concluded by the end of the year.
While some, such as the EU, would like the meeting to be held as soon as the fourth week of June, developing countries have instead emphasised that progress on the substance of the talks must take precedence over arbitrary deadlines. While recent intensive informal consultations at the WTO have focused on accommodating developed country sensitivities, said one negotiator, many issues of concern to developing countries have yet to be discussed in comparable detail.
Two large developing country groups explicitly called for a further revision of the draft before senior negotiators begin discussing possible trade-offs between agriculture and other negotiating areas such as industrial tariffs. These were the African, Caribbean and Pacific (ACP) group, and the G-33 group - composed of some 42 developing countries that favour flexibilities to protect small farmers and rural communities.
The G-20 developing country coalition, which favours reform of developed world agriculture, welcomed the text as “a good basis to build on,” saying that the group, which includes Brazil, India, and China, was “prepared to work hard this week to improve it and narrow the differences.” The bloc told the chair that new elements resulting from this process could then “be incorporated in your document.”
Earlier comments from individual trade ministers seemed more critical, however. A statement from Brazilian Foreign Minister Celso Amorim on 20 May said that “much work needs to be done in coming days to improve the texts,” and, on 22 May, Indian Minister of Commerce and Industry Kamal Nath criticised the allowed levels of subsidy spending that the text proposes. Gerry Ritz, Canadian Minister of Agriculture and Agri-Food also said on 20 May that Canada had “serious concerns” with some elements of the new draft.
Soaring food prices spark calls for steeper subsidy cuts
At a 26 May meeting that was open to all WTO Members, several participants made reference to the dramatic increases in international prices for a number of basic agricultural products, with many calling for steeper cuts in farm subsidies. As high prices have reduced the need for many developed country governments to step in and help farmers, leading to record lows in spending levels, the G-20 said that “current food price levels will require significant reductions of subsidy levels to meet the commitment to make effective cuts.”
In a separate earlier statement, Indian trade minister Nath also pointed out that actual US subsidy spending was at around half of the proposed US$13 billion cap that would result from the steepest proposed cut in the chair’s text. “Where is the need for 100 percent headroom as a cushion?” he reportedly asked.
Others, such as the G-10 group of countries with highly protected farm sectors, emphasised the need for tighter controls on export taxes, which a number of countries have introduced in response to the rising prices. Two of the group’s members, Japan and Switzerland, circulated a proposal on this issue at the end of April.
Some net food-importing developing countries suggested that constraints on export competition should be relaxed, to ensure that cheaper agricultural products remain available for their consumers.
One delegate who was present at the meeting noted that, ironically, while various negotiating blocs had referred to the rising prices, they had also used them to justify sometimes contradictory proposals, which tended not to differ from countries’ established negotiating stances.
US farm bill could lead to subsidy increases, warn Members
Several Members also referred with concern to the possible impact of the US farm bill, which has recently been approved by Congress (see related story, this issue). Canada in particular warned that support for particular commodities could exceed the proposed limits in the chair’s draft text.
Members nonetheless acknowledged that the draft language on domestic subsidies and on export competition had ’stabilised’; the overall structure had remained relatively unchanged since the chair’s original draft in August 2007, largely because Members were awaiting ministers’ decisions on issues such as the precise percentage cut for overall trade-distorting subsidies.
The chair of the agriculture negotiations, Ambassador Crawford Falconer (New Zealand) also convened informal meetings among some three dozen delegations on 27 May. These aimed at making headway on proposed rules for domestic subsidies that are given for specific products in the trade-distorting ‘amber’ and ‘blue’ boxes at the WTO, which are expected to affect the US in particular. Delegates familiar with the discussions said no progress was achieved.
Cotton: African countries ’sound the alarm’
On 28 May, Falconer convened an informal ‘quadrilateral’ meeting for the C-4 group of four African cotton-producing countries, Brazil, the US and the EU. Participants reported that there was an exchange of views, but no real movement. The C-4 have long insisted on an ‘expeditious’ solution to the problem of developed country cotton subsidies, which they accuse of undermining otherwise competitive small-scale producers in Africa.
One C-4 negotiator reported how the group had had to ’sound the alarm’ at the earlier meeting on 26 May, challenging other Members’ assumption that all was well with the revised draft. The group has become increasingly disillusioned at the continued lack of developed country response to their own negotiating proposal.
A subsequent quadrilateral meeting is now planned for the week of 2 June, at which Falconer is expected to share some initial suggestions for a way forward.
Members re-enact market access battles
The Cairns Group of efficient agricultural exporters and the G-20 both called for the chair to introduce a maximum ‘tariff cap’ which would provide a ceiling for all farm tariffs. The G-10 and the EU both repeated their opposition to any such measure. Currently, the draft includes a compromise option that would require countries to expand tariff quotas for their ’sensitive’ products if they maintain a large number of tariff lines above 100 percent.
Also still controversial were the flexibilities for developing countries’ agricultural ’special products’, which will be allowed more flexible tariff treatment on the grounds of food security, livelihood security and rural development criteria. The G-33 proponents of special products objected to some new elements introduced by the chair, which they claimed had “disrupted the balance of a workable draft text.” They also complained about the way in which the chair had amended draft language on the ’special safeguard mechanism’, a tool that would allow developing countries to raise tariffs temporarily in the event of an import surge or price depression.
In separate comments to Bridges, one G-33 delegate suggested that the chair’s draft did not reflect the current state of the negotiations, as it failed to incorporate new concessions from the exporting countries that in general oppose substantial flexibility in this area. While the draft suggests allowing either forty percent of special product tariff lines to be exempt from cuts - the G-33 position - or none of them, exporters have recently expressed willingness to consider allowing some tariff lines to be exempted, said the source.
Delegates reported that no conclusion had yet been reached in the ongoing informal talks on tropical products and preference erosion. Latin American countries that seek rapid liberalisation for tropical products have been discussing with the EU how specific products will be treated at a detailed tariff-line level; at the same time, the African, Caribbean and Pacific (ACP) group has also been in talks with the EU about enhanced protection for products that could be affected by the erosion of long-standing trade preferences. In some cases, the tropical products proponents are calling for liberalisation for the very same items that the ACP would like to protect, the most controversial cases being bananas and sugar.
EU, Lamy, reportedly press for ministerial
One source told Bridges that Members were divided over the extent to which a ministerial meeting is needed soon. While the EU has been vocal in insisting that ministers be called to Geneva as quickly as possible, perhaps as early as 23 June, many developing countries have emphasised instead the need to “put substance over process.” WTO Director-General Pascal Lamy is nonetheless keen to ensure that the ministerial takes place soon, said the source, and had put pressure on Falconer to issue his latest draft at the time he did.
Only the immediate horizon is clear, however. While a senior officials meeting could take place as early as 9 June, this remains tentative. All Members will be invited to attend a 30 May ‘transparency meeting’, which Falconer will hold to report on the small-group meetings on Tuesday and Thursday of that week. Depending on progress, further consultations with selected delegations could be convened the week of 2 June, although some negotiators have already indicated that they will attend meetings at the OECD and FAO that same week. A formal statement from the G-33 indicated willingness “to engage in intensive negotiations well into the early part of June”.
Several negotiators then expected Falconer to issue a revised version of his draft text, although the timing of this also remains unclear.
ICTSD reporting; “Government of Canada continues to stand up for Canadian agriculture at WTO,” AGRICULTURE AND AGRI-FOOD CANADA, 20 May 2008; “Brazil says WTO revised Doha texts need more work,” REUTERS, 20 May 2008; “Kamal Nath’s statement on the revised agriculture and NAMA texts of May 19 2008, INDIAN DEPARTMENT OF COMMERCE, 22 May 2008.