Bridges Weekly Trade News Digest • Volume 7 • Number 6 • 19th February 2003
Agriculture: Harbinson’s Modalities Draft Receives Mixed Reactions
Within the last week, key WTO Members, farmers associations and NGOs have been reacting strongly to Stuart Harbinson’s first draft proposal on modalities for the WTO agriculture negotiations. The modalities draft — setting out the scope of the negotiations, the methodology to be followed during the actual process, and the end-results expected — was first circulated on 12 February (see BRIDGES Weekly, 12 February 2003). While the US and the Cairn Group of 15 agricultural exporting countries expressed disappointment with the draft, focusing on its lack of ambition regarding the proposed cuts in tariffs and trade-distorting support, the EU complained that the draft modalities were biased towards agricultural exporting countries such as the US and those of the Cairns Group. Moreover, the EU said the text would not sufficiently take into account agricultural non-trade concerns (NTCs) such as environment and food safety. For their part, developing countries such as India, Kenya and Nigeria welcomed Harbinson’s proposal, noting that it would provide poorer countries with the flexibilities they needed to address their developmental needs.
Modalities draft features at Tokyo mini-Ministerial
Stuart Harbinson, Chair of the special (negotiating) session of the WTO Committee on Agriculture, released his eagerly awaited first modalities draft just two days ahead of a 14-16 February informal Ministerial meeting hosted by the Japanese government. The meeting aimed to find common ground on some key issues in the current negotiations under the Doha mandate, such as agriculture and the provision of cheap generic drugs to developing countries (see related story, this issue). Nevertheless, Japan’s Foreign Minister Yoriko Kawagushi stated after the meeting that — expectedly — "a wide and huge diversity of views" remained on how to set parameters for further reducing agricultural tariffs, export subsidies and trade-distorting domestic support. But, Kawaguchi added, "the Harbinson paper was very successful in the sense that it motivated discussions and helped crystallise our thought". EU Trade Commissioner Pascal Lamy shared this view, stating that "it was there to provoke reaction, and it did provoke reaction!"
US, Cairns want more
The US Trade Representative (USTR) applauded Harbinson for suggesting full elimination of export subsidies within nine years, but demanded that this would be flanked by deeper cuts in tariffs as well as in Amber Box (trade-distorting domestic support) and Blue Box (only partly de-coupled support under production-limiting programmes) subsidisation. "To be fair, these reforms must go much, much further toward harmonisation by narrowing the vast disparities among countries in subsidies and tariffs," USTR spokesperson Richard Mills said on 12 February.
Australian Agriculture Minister Warran Truss, speaking on behalf of the Cairns Group, identified "some good elements" in the draft modalities text, but said it lacked in ambition with regard to improving market access and substantially cutting "the outrageous levels of domestic support" provided by the EU, the US, Japan and others. However, while generally welcoming Harbinson’s proposal, Northern Cairns Group member Canada voiced its concern about deep tariff cuts in Canada’s sensitive and highly protected dairy and poultry sectors, noting that these would lead to cheaper dairy and chicken imports flooding the Canadian market. Furthermore, Canada rejected the proposal to further discipline state trading enterprises such as the Canadian Wheat Board.
EU, Japan consider their positions neglected
The EU stated that the Harbison draft appeared "unbalanced, spreading the burden very unevenly amongst developed countries". Gregor Kreuzhuber, spokesperson for EU Agriculture Commissioner Franz Fischler, stressed in particular that competition tools such as export credits and food aid, widely used by the US, would be subjected to laxer disciplines than those applying to export subsidies under Harbinson’s draft. All in all, he said the paper "follows the policy lines proposed by a number of countries primarily interested in exports [such as US and the Cairns Group] to the detriment of Members with other interests". Fischler expressed disappointment at the lack of importance attached to the pursuit of agricultural non-trade concerns (NTCs). "Those concerned about enhancing the provision of public goods, from environment to food safety, see their non-trade concerns ignored and their concerns about the potentially negative impact of trade enhanced," Fischler stated. Furthermore, the Agriculture Commissioner rejected the proposal to bind and reduce EU spending under the only partly trade-distorting Blue Box category, especially when taking into account that Members such as the US would be allowed to provide USD billions of clearly trade distortive support under the "de minimis loophole".
Japan rejected the draft as "unacceptable overall". Japanese Agriculture Minister Tadamori Oshima stated it "includes proposals which are incompatible with those of many nations". Specifically, Japan rejected calls to cut its 490 percent rice tariff by a minimum of 45 percent as well as to expand its mandatory 7.2 percent rice import quota.
Major developing countries pleased, NGOs protest
On the developing country front, the Like-Minded Group (LMG) of countries such as India, Kenya and Nigeria, reportedly celebrated the Harbinson text as a small victory for the coalition of developing countries that have fought hard in the last three years for only further opening up their markets under the condition that their developmental and food security needs were appropriately addressed. Sources indicated that India welcomed the proposed negative-list approach by which developing countries could exempt a number of "strategic products" from general reduction commitments, as well as new flexibilities with respect to domestic support. However, India reportedly rejected the ten-year tariff reduction period for developing countries, regarding it as too short.
However, several NGOs — such as the Bangkok-based NGO ‘Focus on the Global South’ and the Institute for Agriculture Trade Policy (IATP) — criticised the Harbinson text for failing to even out the systemic pro- developed country bias in international agriculture rules. They noted that the draft ignored the proposals made by various developing countries on linking their market access commitments directly to the level of farm subsidisation in Northern countries. "By leaving out key development concerns, this draft creates an incentive for developing countries to stop negotiating in areas of key interest to developed countries such as trade in services and demand redress," IATP’s Trade Information Programme manager, Shefali Sharma, stated. She said the draft gave no reason for the majority of developing countries to make further trade-offs in other areas of the negotiations, let alone expand the agenda into new areas such as investment.
WTO Members will discuss the Harbinson draft informally and formally in the forthcoming negotiating session of the Committee on Agriculture from 24-28 February. Members are scheduled to finalise the modalities negotiations by 31 March this year.
"Japan MP seeks farm trade support in WTO talks," KYODO NEWS, 17 February 2003; "Canada worries about wheat, dairy, poultry at WTO," REUTERS, 17 February 2003; "WTO session unable to close farm trade gaps," JAPAN TIMES, 17 February 2003; "WTO proposal a start but needs to be more ambitious," AUSTRALIAN AGRICULTURE MINISTRY PRESS RELEASE, 14 February 2003; "Developing countries pleased over WTO agriculture draft," ASIA PULSE, 14 February 2003; "Agriculture: Europeans rip Harbinson Ag draft as skewed in favour of US interests," WTO REPORTER, 14 February 2003; "New WTO agriculture text ignores export dumping and developing country proposals," IATP PRESS RELEASE, 14 February 2003; "Agriculture proposal will increase dumping, unemployment and hunger," FOCUS ON THE GLOBAL SOUTH PRESS RELEASE, 13 February 2003; "Japan rejects WTO Farm tariff proposal," AP, 13 February 2003; "Harbinson draft won’t bridge the gaps," EU PRESS RELEASE, 13 February 2003; "Agriculture: WTO’s Harbinson delivers first draft Ag modalities to hailstorm of criticism," WTO REPORTER, 13 February 2003; "Commission reacts to WTO draft on farm trade liberalisation," EU PRESS RELEASE, 12 February 2003.