WTO Ministerial Section • Volume 9 • Number 35 • 19th October 2005

Agriculture Week: Members Focus On Lagging Market Access Talks

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WTO Director-General Pascal Lamy identified market access as the most divisive area of the agriculture negotiations in his 13 October report to the Trade Negotiations Committee (TNC). Despite a flurry of new proposals on tariff reduction (see BRIDGES Weekly, 12 October 2005), Members remain deeply divided in this area, and the current ‘agriculture week,’ which began on 17 October, has focused on market access.

In the words of one trade negotiator, there has been no give and take — positions are truly polarised and the various market access proposals floated do not build on one another. In addition, the offers on subsidy reduction by key Members such as the US, are conditioned on a certain level of ambition in market access. Therefore, even the hint of movement in the direction of consensus on domestic support remains fragile, as it is contingent on convergence on market access.

Over the past week, Geneva-based negotiations have continued in various formats, with smaller groups of countries meeting to discuss all of the issues on the table. On 14 and 18 October, agriculture Chair Ambassador Crawford Falconer of New Zealand held meetings for transparency purposes, at which new proposals and developments in the talks were shared with the full WTO Membership.

Meanwhile, ministerial-level negotiations among the US, EU, Brazil, India and Australia (Five Interested Parties, FIPs) are taking place in Geneva from 19-20 October.

France called an emergency meeting of EU foreign ministers on 18 October, at which it insisted that EU Trade Commissioner Peter Mandelson had overstepped his mandate in the WTO talks. However, they were able to defuse the potential crisis, and Mandelson arrived in Geneva on 19 October able to pick up the talks where they had left off.

Lamy focuses on agriculture at TNC meeting

In his remarks to the TNC, Lamy outlined the steps necessary before, at, and after the Hong Kong Ministerial Conference in December to successfully conclude the Doha Round, highlighting the central role of agriculture (see related story, this issue).

Referring to developments in the past week, he said that "the engines of the negotiation plane have been switched on again." Lamy said that following the US offer on domestic support, this area is now "in negotiating shape" (see BRIDGES Weekly, 12 October 2005, http://www.ictsd.org/weekly/05-10-12/story1.htm). The new proposals on market access, however, still show deep divisions among Members (see BRIDGES Weekly, 12 October 2005, http://www.ictsd.org/weekly/05-10-12/story2.htm). Lamy said that Members would have to agree on the general level of ambition they want to see on market access before they can start real negotiations on it. Falconer largely echoed these sentiments in his report to the TNC.

US subsidy offer still not convincing to all

During Falconer’s 14 October ‘transparency clinic,’ several Members remained sceptical about whether the US proposal on cutting domestic support would lead to a real reduction in its subsidy expenditures (see BRIDGES Weekly, 12 October 2005). Indian trade minister Kamal Nath has made clear that developed country subsidies would have to be substantially reduced before developing countries could agree to lower their tariffs. Speaking to reporters in Geneva on 13 October, he said "India cannot open its markets so that the Indian farmer who earns a dollar a day now earns 50 cents a day or nothing. We cannot have the Indian farmer competing against the US government, rather than the US farmer."

At the 14 October meeting, the US insisted that its proposal would require it to significantly reduce subsidies. The US delegate said that a 60 percent cut to trade distorting Amber Box support would leave its subsidy cap at USD 7.6 billion, and halving Blue Box (partially decoupled) support to 2.5 percent of the value of total agricultural production would allow subsidies of up to USD 4.8 billion. These limits would be lower than current US spending on such programmes, including its controversial ‘counter-cyclical’ payments that boost grants to farmers when world prices drop.

At the same meeting, countries such as Costa Rica and Colombia distanced themselves from the US’ proposal to reactivate the so called ‘peace clause,’ under which Members would commit to refrain from challenging each other’s agricultural subsidies through dispute settlement.

At another meeting called by Falconer on 18 October, the group of African WTO Members called for briefings on the various proposals on the negotiating table, so as to be able to engage better in the discussions. Cotton-producing West African countries expressed concerned that the treatment of cotton had barely been addressed in the proposals now being discussed, emphasising the need for a decision on the matter in Hong Kong. Recently acceded WTO Members pointed to special needs resulting from the tough commitments on agriculture that they took on when they joined the global trade body.

Mandelson under fire from member states

On 18 October, European foreign ministers gathered in Luxembourg for a crisis meeting called by France. At the meeting, the French, backed by several other countries, suggested that a special expert committee be set up to review EU WTO proposals on behalf of member states. The idea did not, however, garner sufficient support to go ahead. In the words of British Foreign Secretary Jack Straw, "No negotiations are possible if you have to negotiate with people in the room and at the same time negotiate with your own side… that would make the negotiating team powerless." Mandelson, for his part, said that such a committee would "stop the world trade talks in their tracks."

The same day, US President George W. Bush and EU Commission President Jose Manuel Barroso met in Washington. Among the topics they discussed were the ongoing agriculture negotiations, about which Barroso said "We will be ready to move if there is an ambitious and balanced agreement on other issues." Meeting with Brazilian President Lula da Silva two days before, Barroso had emphasised the same issues, asking Brazil to take the lead in moving forward in areas such as industrial market access and services.

US Trade Representative Robert Portman, however, had said on 14 October that progress on these other issues was unlikely "unless we can untie the Gordian knot of agriculture. And the only way to untie it is for the European Union now to come forward with a substantial market access proposal."

Negotiations continue in Geneva

The FIPs are meeting in Geneva from 19-20 October. Falconer has called a meeting on the morning of 21 October to focus on market access specifically, and will hold a stocktaking session in the afternoon for Members to share information on the talks.

High-level talks are expected from 7-8 November, a week or two before Lamy hopes to table a first draft of the ministerial declaration for Hong Kong.

ICTSD will provide an update on the agriculture negotiations in the next issue of BRIDGES Weekly.

ICTSD reporting; "Lamy says the engines of negotiations are buzzing again," WTO RELEASE, 13 October 2005; "Indian trade minister says U.S. must make improved farm subsidy cuts," ASSOCIATED PRESS, 14 October 2005; "U.S. presses G20 countries for better WTO offer," REUTERS, 13 October 20005; "EU’s Mandelson between rock and hard place on trade," REUTERS, 17 October 2005; "Indian Minister Sees U.S., Not EU, As Problem in WTO Farm Subsidy Talks," WTO REPORTER, 14 October 2005.