WTO Ministerial Section • Volume 5 • Number 33 • 2nd October 2001

‘Shadow Boxing’ on Agriculture Negotiations At WTO Continues

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During the 24-28 September sessions of the WTO Committee on Agriculture, Members addressed rural development, domestic support, and geographical indications, though little significant movement in Members’ positions on how to reform the WTO Agreement on Agriculture (AoA) was observed. Meeting from 24-26 September for the third informal Special (negotiating) Session of Phase 2 (March 2001-2002) of ongoing agriculture negotiations, WTO Members discussed rural development, domestic support, special safeguards, and geographical indications while reiterating and developing their already known proposals. EC Agriculture Commissioner Franz Fischler on 26 September called these tactics "shadow boxing", and said this behaviour put the chances to launch a new round in Doha at risk. Rural development In one of the longer debates, Members discussed whether rural development was also a legitimate concern for developed countries. Whereas the EC, various European countries, Japan and Korea supported this premise, developing countries either opposed this position or stressed that there were major differences in the situations prevailing in developed and developing countries. A developing country representative described the distinction as one between "folklore and survival". Several developing country delegates were less condemning, but demanded that actions taken by developed countries to promote rural development must not be used in a protectionist way. Referring to the concept of a Development Box, Indonesia suggested using a ‘positive list’ approach similar to the one provided by the General Agreement on Trade in Services (GATS), where each Member would be allowed to select the agricultural products on which it was ready to make commitments. The Cairns Group, several developing countries, and the US emphasised the need for more market orientation and the removal of distortions, whereas Japan, Korea, European and transitional countries argued that a certain degree of price support to increase farmers’ income was necessary to promote rural development. Domestic support The EC submitted a proposal (available at: http://www.europa.eu.int/agriculture/external/wto/officdoc/green_en.htm) advocating to retain the Green Box (i.e. payments deemed to be least- trade distortive) while suggesting that programmes that reimburse additional costs arising from the protection of animal welfare should be added to the box just as Members are already allowed to compensate for extra environmental costs. The same principle should, according to the EC, prevail for developing countries tackling food security and poverty alleviation. Japan and Argentina principally proposed ways to adjust or fine-tune AoA Annex II wording, agreeing with the Cairns Group, several developing countries and the US that the Green Box needed to be revised in order to ensure non-distortion. Addressing the Blue Box (i.e. payments within production reduction programmes), no new aspects were put forward. Regarding special safeguards (SSG), Japan proposed to add a new safeguard to deal with seasonal and perishable products, whereas a group of five developing countries suggested a new mechanism for developing countries to countervail developed countries’ subsidised exports automatically without requiring any injury test. Countries such as Canada and the US evaluated this approach as "breathtaking" and highlighted that one rather has to cut subsidies rather than countervail them. In the debate on geographical indications, the EC expressed its will to grant greater market access for agricultural products, provided fairer competition was ensured by extending the level of protection to other products. Currently, geographical indications applies only to wine and spirits. Other countries generally shared this view, but argued that this matter is subject to negotiations at the Council for Trade-related Aspects of Intellectual Property Rights (TRIPs) and not the Agriculture Committee. In a 27 September regular Agriculture Committee meeting, Members further discussed the unresolved implementation issues related to export credits (AoA Article 10.2), the Marrakesh Decision for Net Food- Importing Developing Countries, and tariff quota administration. The report on these discussions can be viewed at: http://www.wto.org/english/tratop_e/agric_e/implementation2001_e.htm. The Committee also approved the annual report of its regular meetings, which can be viewed at: http://www.wto.org/english/tratop_e/agric_e/anrep01_gl483_e.pdf. The next agriculture week is scheduled for 3-5 (informal), 6 (regular) and 7 (formal session) December. The informal special session topics will be: environment, trade preferences, food aid, consumer information and labelling, and sectoral initiatives. US highlights environment and health issues in new policy statement Presenting a 120-page policy paper on 20 September, US Agriculture Secretary Anne Veneman said that "a new farm policy must be tailored to reflect the wide difference in farms today." The report reveals that eight percent of US producers of agricultural products — primarily grain and cotton farmers — receive almost half of the federal subsidies. These payments, the paper suggests, should be used to promote sustainable wealth of farmers by addressing, inter alia, farm safety nets, conservation and environment, rural communities, nutrition, and food assistance. "This could be a watershed in agriculture policy if the administration follows through with specific proposals for the new farm bill," the representative of an American environmental organisation stated after the announcement. The full report "Food and Agricultural Policy: Taking Stock for the New Century" can be viewed at: http://www.usda.gov/news/pubs/farmpolicy01/fpindex.htm. "Agriculture: WTO Members Mull Proposed Changes To Green Box, Blue Box Farm Subsidies, WTO REPORTER, 1 October 2001; "WTO Announces Agreement On Issues Concerning Agriculture Implementation," WTO REPORTER, 1 October 2001; "New Farm Policy Emphasizes Conservation, Not Subsidies," ENS, 21 September 2001; "Administration Seeks To Shift Farm Policy From Subsidies," NEW YORK TIMES, 20 September 2001; "Fischler Hits At ‘Shadow Boxing’ On Agriculture’" FT, 27 September 2001. ICTSD Internal Files.