Bridges Weekly Trade News Digest • Volume 6 • Number 32 • 25th September 2002
Impasse On Farm Subsidies Seen As ‘Step Backwards’ In Agriculture Talks
At a 23-25 September informal negotiating session of the Committee on Agriculture (CoA) on domestic support, no progress was made on most contentious farm subsidy issues. This included an impasse on issues such as whether the so-called Green Box should be made more flexible or be tightened - a development which trade sources evaluated as a "step backwards" in the current agriculture negotiations. Addressing negotiating blocs such as the ‘Friends of Multifunctionality’ and the ‘Cairns Group’ of agriculture-exporting countries, in his conclusion CoA special session Chair Stuart Harbinson pointed to "tendencies to monolithic positions" amongst Members. Harbinson further stated that the "lack of specificity in a number of areas" would exacerbate his attempts to come up with an overview paper on possible negotiating ‘modalities’ options by the end of the year. Sources reported that Harbinson called on Members to "switch their mindsets from portrayal of maximising national positions" to an "effort to compromise and bridging gaps."
"Deadlock" between Cairns and ‘Multifunctionality’ Group?
Following up the discussions held at the 4-5 September intersessional consultation on domestic support (see BRIDGES Weekly, 13 September 2002), Members continued talks on the future of the international agricultural subsidy regime, largely categorised in the so-called Amber Box (trade distortive subsidies), Green Box (non, or at most minimally, trade- distorting support) and Blue Box (subsidies requiring production limitation). ‘Ambitious’ liberalisers — primarily members of the Cairns Group — proposed phasing out Amber Box and Blue Box subsidies as well as restricting the use of the Green Box. More ‘cautious’ Members in the ‘Friends of Multifunctionality’ group including the EC, Japan and Switzerland, however, made it clear that they were only willing and able to negotiate additional reductions in trade distortive support provided the Blue Box was maintained and more flexibility was given on the application of the Green Box.
Criticised by Cairns for not tabling concrete numbers for subsidy reductions, the EC et al. said they needed an incentive for further liberalisation, so that they were not prepared to put forward specific proposals on domestic support unless other Members showed their willingness to negotiate additional rules on non-trade concerns (NTCs). The Friends of Multifunctionality added that this applied to NTCs in the area of agriculture itself as well as in other fields such as labelling, the precautionary principle or geographical indications. At a press conference on 23 September, Swiss Chief negotiator Luzius Wasescha warned that the Cairns Group approach to demand "total liberalisation of agriculture without giving anything in return" would "make any agreement more complicated" and would ultimately "lead to a deadlock" in the negotiations.
Green Box support
The EU, Japan, Korea, Switzerland, Norway, Iceland, and transition economies called for more flexibility, with Switzerland proposing a new paragraph 14 for Annex 2 (the Green Box) to allow for "payments compensating extra costs accruing from higher production standards" under programmes addressing "non-producer concerns" such as animal welfare imposed by consumers and voters. Further, a number of developing countries asked for more flexibility for their developmental concerns including food security and rural development.
The Cairns Group and some others, however, expressed concern that many of the proposals advocating greater leeway would add new trade- distorting subsidies to the Green Box. Instead, Cairns and some developing countries such as India demanded overall caps on Green Box spending (e.g. 5 percent of annual agricultural production), limits on specific types of programmes, or removing some income support programmes from the Box.
Amber Box
The Cairns Group, US, China, India and some others proposed to eventually eliminate the Amber Box, at least for developed countries that exceed their de minimis levels of support of 5 percent of agricultural production. Proposals ranged from elimination for developed countries in three years [China] or five years [Cairns Group and Turkey] to reduction to 5 percent of production in five years plus an agreed date for elimination to be negotiated [US].
Advocates of multifunctionality, including the Europeans, Japan, Korea et al., said the Doha mandate only envisaged "substantial reductions" in Amber Box support, and that elimination would be too drastic to allow them to continue with the reform process. Norway reiterated its position that two different reduction rates should be established: those for products for export and those for domestic consumption. Argentina and others argued, however, that subsidised products sold on domestic markets would harm market access and therefore distort trade. In addition, the debate focused on the question of whether the present system of reduction commitments based on "total aggregate measurement of support" (AMS) should be maintained — as suggested by multifunctionality Members — or whether new cuts should be made on a disaggregated, product-specific basis as proposed by the Cairns Group.
Special & differential treatment (S&D)
During the discussion, newly acceded Members and transition economies repeatedly argued for special and differential treatment (S&D) for developing countries. In particular, Bulgaria called for S&D to be based on "objective criteria" such as level of development and per capita income. Mauritius repeatedly stressed its argument that small vulnerable economies needed special treatment, including trade preferences and longer adjustment periods. Developing countries further stressed the need to maintain AoA Article 6.2 (so-called S&D Box) and to eventually add additional flexibilities.
The Agriculture Committee is holding a regular session on 26 September, followed by a formal special session on 27 September where the Chair will present its summary report of the 23-25 September informal special session. A mid-November meeting will provide Members with the opportunity to address so-called inter-pillar issues.
ICTSD reporting; "Swiss See Deadlock Looming In Farm Reform Talks," REUTERS, 23 September 2002; "Agriculture: Swiss Negotiator Warns Of Deadlock In WTO Agriculture Liberalisation Talks," WTO Reporter, 24 September 2002; "Agriculture: Japanese Official Sets Out Position In Farm Talks, Criticises US, Cairns Group," WTO Reporter, 25 September 2002.