Bridges Weekly Trade News Digest • Volume 6 • Number 33 • 2nd October 2002
Agriculture: Negotiations Chair Calls On Membership To Meet Deadlines
Speaking to the special (negotiating) session of the WTO Committee on Agriculture (CoA) on 27 September, CoA special session Chair Stuart Harbinson imparted a sense of urgency on progress in the agriculture negotiations. In his summary of the previously held informal negotiations on domestic support, he called on Members to "reflect deeply and urgently on what your delegation can contribute" to reach an agreement on modalities (i.e. negotiating formulas) "acceptable to all by the end of next March." Besides Members’ disagreement on various agricultural subsidy issues referred to by Harbinson, some sources further voiced concern about the newly launched WTO actions by Brazil against the EC on sugar subsidies and against the US on cotton. According to EC agriculture trade negotiator Jesus Zorilla, the Brazilian actions had served to "cloud the climate of the negotiations and radicalise positions".
"The time has now come to gear…"
Stuart Harbinson reiterated his caution on 27 September that the "continuing lack of specificity" and Members’ tendency to repeat existing "maximal" positions would exacerbate his efforts to come up with an ‘overview paper’ summarising all tabled modalities options by the end of the year. These comments mirrored previous conclusions reached by Harbinson after the 23-25 September informal CoA special session on domestic support (see BRIDGES Weekly, 25 September 2002) and the 6 September special session on market access (see BRIDGES Weekly, 13 September 2002). Nevertheless, negotiators would still have the opportunity to overcome these deficiencies during the agriculture meetings to be held in November, Harbinson indicated.
"The time has now come to gear," he said, adding that "the clock is now running fast and the critical period is upon us. We do not have much time in hand if we are to meet the deadlines of 18 December for the ‘overview paper’ and 31 March for establishing modalities". If this goal wasn’t achieved, "the credibility of the round could be undermined," he said.
Brazil-EC sugar dispute
Indirectly related to the ongoing agriculture talks at the CoA under the Doha mandate, Brazil on 27 September challenged the two giants of the global trading system by initiating dispute settlement procedures at the WTO against the US for its domestic cotton subsidies and the EC over its aid to sugar exporters (see related story, this issue). Commenting on Brazil’s request for consultations with the EC (not yet derestricted), EC delegate Jesus Zorilla said that the complaint "comes at a bad time," as the Brazilians had "thrown a case at us that is going to cloud the climate of the negotiations and radicalise positions" on agriculture reforms. According to Pedro Camargo from the Brazilian Agriculture Ministry, the request for consultations, which has been under debate since mid-2002, had indeed been the result of a "difficult decision."
According to sources, the Brazilian complaint focuses on exported EC surplus sugar, or "C sugar," which Brazil says is sold abroad below production costs. Brazil has also targeted export subsidies on approximately 1.6 million tons of sugar imported under preferential terms from African, Caribbean and Pacific (ACP) countries ("ACP sugar") and which is "subsequently re-exported at subsidised prices" after having been refined in the EC. According to Zorilla, the European trade bloc had complied with its trade commitments under the WTO and had further maintained stable sugar production from that time. Trade sources indicated in this context that the EC, in its individual schedule of commitments under the AoA, had clarified in a footnote that its allowed quantity of subsidised sugar exports would "not include exports of ACP and Indian origin and on which the Community is not making any reduction commitment."
A European trade source further stated in this context that it considered the Brazilian move somewhat precarious as it might lead to an open fracture in the developing country WTO Membership between Brazil and other members of the Cairns Group of agricultural exporters, on the one hand, and those countries dependent on preferential market access for their sugar exports to the lucrative EC markets, on the other. "Some of the ACP countries might raise their voice against Brazil and others as it is their expressed intention to scrap the EC- ACP sugar regime," the source said. But a Brazilian source pointed out that if the EC would decrease its domestic sugar production, levels of sugar imports from ACP countries to the EC could be maintained or even increased. "If free trade rules would also apply in the agricultural sector, the EC would produce far less sugar than it currently does," the source said.
Two new papers on domestic support tabled
At the 27 September formal special session concluding the agriculture talks on domestic support, a new paper was tabled by the Cairns Group, and further one by Canada - also a Cairns Group Member but which had not subscribed to the Group submission. Largely confirming oral statements presented at the informal meetings, the Cairns paper called for eliminating the Amber Box (trade-distorting support) within five years and nine years for developing countries, with reductions and an eventual elimination of de minimis support (below 5 percent of production) for developed countries. Furthermore, the Amber Box reductions should be disaggregated and per-product, and developed countries should make an initial downpayment of 50 percent. In contrast, Canada in its individual submission said that the reduction commitments should be calculated on an aggregate basis, and the downpayment should be done by all Members. Further, the de minimis levels should remain unchanged for all, Canada stated. Canada furthermore suggested tightening the applicability of the Green Box (only minimally trade-distorting support), for instance by requiring the amount of compensatory payments under environmental programmes to be "less than the extra costs involved in complying with the government programme" and that it should "not be related to or based on the volume of production."
ICTSD reporting; "Trade: Brazil Launches WTO Actions Against US And EU," IPS, 30 September 2002.