Bridges Weekly Trade News Digest • Volume 8 • Number 44 • 22nd December 2004

WTO Agriculture Negotiations: Members To Agree On ‘Pre-Modalities’ By August 2005

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On 17 December, delegates wrapped up their final "agriculture week" of the year, with Chair Tim Groser of New Zealand calling for agreement on "pre-modalities" by mid-2005, so that Members can strike a deal at the sixth WTO Ministerial Conference in Hong Kong in December 2005. The agriculture week was the third set of agriculture talks since the July Package (WT/L/579), and started off with informal talks from 13-15 December (see BRIDGES Weekly, 15 December 2004). Among issues discussed during the week were the tariff reduction formula and a paper submitted by the G-33 ("friends of special products") on the special safeguard mechanism (SSM) for developing countries.

Groser highlights progress, process

At the formal meeting of the special (negotiating) session of the Committee on Agriculture (CoA) that concluded the week’s negotiations on 17 December, Chair Groser summarised the discussions and gave some pointers to what is needed to move the process ahead. He said that although significant technical work had taken place since July, more was needed. In order to focus the process and achieve tangible results, he proposed that Members produce a "first approximation," or sketch, of the modalities (formulas for negotiations) before the 2005 annual WTO break in August. This would then feed into an agreement on the actual modalities, to be agreed at the Hong Kong Ministerial Conference in December. This would be in line with a timeline previously proposed by the EC, Japan, and the G-20 (which includes Brazil, India and China). Urging Members to shy away from political rhetoric at this stage, Groser commented that "behind every technical issue lies a political question, but underlying every political issue are technical issues which our ministers cannot possibly be expected to resolve".

The negotiations during the agriculture week took place in three different settings: in an informal negotiating session open to the full Membership that allowed for general statements on issues under review; in more focused open-ended technical consultations that delved deeper into the issues; and in small group consultations involving technical experts. Groser specified that this set-up sought to respond to the conflicting objectives of transparency and efficiency. Providing their reactions, a number of Members supported the process. Some called for more transparency, suggesting that some of the small group technical discussions be video-linked to another room in order for other delegates to listen and learn, or that written reports of the meetings be provided.

No progress on tariff reduction formula

In informal discussions leading up to 17 December, Members discussed — for the first time since the July Package — issues related to the tariff reduction formula. Delegates reportedly stuck to their old positions, with countries such as the US and G-20 members supporting the "Swiss" harmonising formula (which would see higher cuts in higher tariffs) and the EC and G-10 group of developed country agricultural importers favouring the "Uruguay Round" formula, which sets an average tariff cut with a minimum reduction per tariff line. In the July Package, Members agreed to build on a "banded" or "tiered" approach, which classifies tariffs into various bands for reduction from bound rates, with higher tariffs being cut more than lower ones. In addition, the G-20, supported by the US, stressed that non ad-valorem tariffs (tariffs based on factors other than price, such as volume) must be converted into ad valorem (tariffs based on price) equivalents before the final formula can be agreed. The EC and the G-10 disagreed, arguing that this would slow down the process too much.

G-33 outlines special safeguard mechanism, special products

At the beginning of the agriculture week, the G-33 submitted a paper on the special safeguard mechanism (SSM), which will provide developing countries with protection against sudden import surges. The paper notes that existing safeguard provisions have been inadequate "to address the concerns of developing country Members related to stabilising domestic markets and avoiding sudden increases of imports that threaten to disrupt domestic production and employment." Therefore, the SSM must be an improvement upon existing safeguards. The paper goes on to highlight developing country Members’ experiences with existing safeguards, noting that such countries often lack the capacity to follow their rigorous procedures, and that in a situation where most farmers are small subsistence farmers, it is difficult to establish the necessary causal link between imports and injury. The paper also noted other built-in constraints of the existing safeguard mechanisms.

Therefore, the paper proposes "building on the flexibilities embedded in the existing safeguard provisions [in the Agreement on Agriculture] rather than extracting from them." It provides the following general parameters for negotiations on SSM modalities: the safeguard measure should be automatically triggered; it should be available to all agricultural products; both price and volume-triggered safeguards should be considered; both additional duties and quantitative restrictions should be considered as response measures; and the mechanism should be simple, effective and easy to implement.

Kenya, the Philippines, China, and Brazil supported the paper, with Kenya adding that no limitations should be placed on the SSM so as to allow countries to effectively address import surges and price fluctuations. Developed country Members, including the EC, the US and New Zealand, had some comments and objections. The EC and the US did not support the extension of the SSM to all agricultural products, preferring to negotiate criteria to for how to limit its coverage. Under such a scenario, the SSM might apply only to staple food products or products necessary for food security. The countries added that the SSM might apply to products that already have low tariffs in order to facilitate the overall liberalisation process.

The next agriculture week is scheduled to begin on 7 February 2005.

ICTSD reporting; "WTO Agriculture Chair Cites Need For Modalities ‘Outlines’ by Summer," WTO REPORTER, 20 December 2004; "G33 presents detailed paper on Special Safeguard Mechanism (SSM)," TWN, 14 December 2004.