Bridges Weekly Trade News Digest • Volume 8 • Number 7 • 26th February 2004

Agriculture Negotiations: Signals Of Renewed Momentum Cropping Up


New signs of movement in agriculture negotiations — the key element of the Doha round — are cropping up after a period of scant progress following the collapse of trade talks in Cancun in September 2003. Due to a number of high-level meetings between individual trade ministers and groups of ministers over the past weeks (see BRIDGES Weekly, 19 February 2004), there are new signs that agriculture talks may be picking up speed. Key actors such as the US, the EC and the G-20 group of developing countries have signalled a renewed commitment to the round and a willingness to compromise. Recent remarks from both the EC and the US suggest that the task of reaching an agreement on at least a framework for agriculture modalities could be accomplished by August. Geneva observers have, however, cautioned against too much enthusiasm at this point, waiting to see concrete results at the next Committee on Agriculture (CoA) special (negotiating) session. The CoA’s newly nominated Chair, New Zealand’s Timothy Groser, has scheduled new WTO agriculture negotiations for 22-26 March in Geneva.

First CoA special session scheduled

Trade sources reported on 20 February that the newly designated Chair of the special session of the WTO Committee on Agriculture (CoA), New Zealand’s Timothy Groser, has set 22-26 March as the dates for the first post-Cancun agriculture negotiation session, thus formally relaunching the WTO agriculture negotiations that had come to a complete standstill after the Cancun collapse last September.

In a message sent to delegations, Groser explained that he would try to strike a balance between providing opportunities for Members to consult and negotiate among themselves during the session, and the need to ensure a transparent process. Brief formal meetings will only be held at the beginning of the session — mainly to formally appoint Tim Groser as Chair of the special session — and at the very end of the session to conclude the week of negotiations. Half-day informal special sessions are scheduled for day three and day five for reporting back and stocktaking purposes. During the rest of the session, participants will be given the opportunity to discuss and negotiate in bilateral and plurilateral mode. Groser reportedly intended to limit plenary discussion to a minimum, as delegations already have made their initial negotiating position abundantly clear. "Little purpose would be served by yet more extensive formal statements addressed to the Chair," Groser told delegates. But Groser also said he was generally available to attend bilateral and plurilateral consultations, upon invitation and only as an observer.

US putting pressure on EC

The US has recently been playing an active role seeking to move agriculture talks forward, in marked contrast to its positioning in the lead-up to the Cancun ministerial conference. In a press conference on 20 February in Geneva, US Trade Representative (USTR) Robert Zoellick said that if the EC and the G-10 countries (which includes Members such as Japan, Switzerland and Norway who maintain relatively high protection for their farm sectors) accepted to eliminate agricultural export subsidies, the US could agree "tomorrow" to "eliminate the subsidy element of export credits" and to discipline its food aid programmes. Zoellick also stated that the US was comfortable with the idea of capping product-specific Amber Box support, a proposal put forward by many non-subsidising WTO Members that found its way in the Derbez agriculture framework text drafted in Cancun (see BRIDGES Daily Updates, 14 September 2004). "We can support that, I don’t know whether Europe can," Zoellick said. On a different note, the USTR made clear that the US was still sticking to its original proposal to eliminate the Blue Box (partly decoupled support linked to production limitation programmes), but he again questioned whether the EC could agree to this point. "If Europe can eliminate the Blue Box, that is great, we don’t use it," Zoellick said. In contrast, in its agricultural framework text jointly tabled with the EC prior to the Cancun meeting (BRIDGES Weekly, 21 August 2003), the US had supported maintaining the Blue Box, capping it at five percent of the total value of agricultural production.

Zoellick’s remarks came as a follow-up to a letter he had sent to WTO Members on 11 January where he urged them not to let 2004 become a wasted year for the WTO negotiations (BRIDGES Weekly, 14 January 2004). Zoellick has also been touring the capitals of a number of key WTO Members to discuss the Doha round (see BRIDGES Weekly, 19 February 2004), and attended a larger gathering in Kenya — with 15 African trade ministers and the EC’s Pascal Lamy — which wrapped up on 19 February with some cautiously positive signals of progress.

EC still on the defensive

While EC Trade Commissioner Pascal Lamy generally welcomed the US initiative, Agriculture Commissioner Franz Fischler criticised the language chosen in Zoellick’s letter for giving the impression that the only "precondition" for completing the agriculture talks would be for Europe to phase out its export subsidy programmes. He replied by reiterating the general EC approach that the talks should not only focus on export subsidies, but also on export credits, state trading mechanisms and surplus disposal in the guise of food aid — export competition tools not used by the EC, but employed by the US, Canada and Australia.

Nevertheless, there have been recent signs that the EC could show more flexibility than in the pre-Cancun agriculture negotiations. For example, Fischler, on a visit to Washington, DC from 19-20 February, noted that "without progress in agriculture, there won’t be any progress". Furthermore, trade sources reported that Lamy had recently indicated — for the first time — that the EC would be prepared to consider the elimination of agricultural export subsidies.

G-20 countries consulting in two directions

At an informal 12-13 February meeting in Geneva between the G-20 and EC representatives, discussions mainly focused on the agriculture negotiations. According to sources, the talks did not yield substantive results but the atmosphere was positive. The EC showed no new flexibility, reiterating its offer to eliminate export subsidies on products of interest to developing countries, while making clear that these would not, for the moment, include sensitive commodities such as sugar, dairy and beef. The G-20 coalition reiterated its call for the elimination of all export subsidies and for substantive decreases in Blue and Amber Box support. Market access was not discussed in detail. However, European sources reported that key G-20 members had indicated that they could agree to an EC demand that major agriculture exporting developing countries — such as Brazil — be granted less special and differential treatment (S&D) than other developing countries. On the margins, sources reported, the G-20 also held informal talks with G-10 countries Switzerland, Norway, Japan, South Korea and Israel, which have positions close to the EC.

At a 23-25 February meeting of the Cairns Group of agricultural exporters in Costa Rica, several G-20 members (the two groups partially overlap) met with key trading partners representing the more ambitious camp in agriculture negotiations. According to trade sources, Cairns Group members decided to collaborate more closely and come up with a new negotiating position. The Cairns Group, traditionally a very active alliance comprising, inter alia, Australia, Canada, New Zealand and South Africa, has been less active recently, especially since the emergence of the G-20. The eight developing country Cairns Group members Argentina, Bolivia, Brazil, Chile, Indonesia, Paraguay, the Philippines and South Africa are also members of the G-20.

The most visible divergence in the two camps’ positions is in the area of market access, where the Cairns Group calls for substantially increased market openings in both developed and developing countries. Countries such as India, Pakistan and South Africa would, however, only accept making much less ambitious commitments in terms of market access than what they are demanding from their developed country trading partners. In a joint communiqué released on 25 February, Cairn Group ministers agreed to continue pushing for "ambitious cuts in domestic support and the elimination of all forms of export subsidies," adding that this would "permit a more ambitious outcome on the market access pillar by developing countries". Moreover, the Group acknowledged that developing countries should be granted "special flexibility" allowing them "to take into account the particular challenges they face, such as food and livelihood security and rural development". Ministers also "agreed that the concepts of special products and a special safeguard mechanism for developing countries are to be elaborated as part of the approach in the market access area".

WTO Director-General Supachai Panitchpakdi, newly-appointed Chair Groser of the special session of the WTO CoA, USTR Zoellick and Mexico’s Foreign Minister Luis Ernesto Derbez also attended the closed meeting.

Will the political statements translate into progress in Geneva?

In terms of timing, Zoellick, supported by the EC and others, has proposed holding a mini-ministerial or high-level General Council meeting in Geneva this summer to agree on negotiation frameworks. The proposal is making its way through the corridors at the WTO. "Our goal would be to try to get done this summer what we didn’t get done in Cancun," Zoellick told a news conference in Singapore on 13 February. Lamy said on 19 February that he saw a "window of opportunity" to resume the Doha negotiations between now and August.

Many delegations in Geneva indicate, however, that such a meeting would be premature, unless there was prior agreement on key issues between the US, EC and the G-20. A developing country source noted that the recent consultations between the three key actors had been "all but successful" and that much of the "recent statements and rumours" did not necessarily reflect the degree of convergence in Geneva-based consultations. He said Members needed to translate recent political rhetoric in new negotiation positions. Another source said that any forecasts made at this stage could only be highly misleading, and recommended waiting for the formal statements in the forthcoming agriculture week. Several delegates acknowledged that no major progress could be expected after the summer break, with the EC appointing a new commission in November, and the US largely absorbed by the upcoming presidential elections in autumn.

ICTSD reporting; "Agreement in WTO Talks This Year Unlikely, Supachai Says, but July ‘Framework’ Possible", WTO REPORTER, 24 February 2004; "Press briefing by U.S. Trade Representative Zoellick", Geneva, 20 February 2004; "EU will not revisit its negotiating position on farm trade before WTO talks next months", WTO REPORTER, 23 February 2004; "New WTO agriculture chair fixes March dates for next negotiating session", WTO REPORTER, 20 February 2004; "U.S. seeks to inject momentum in WTO talks", UPI, 20 February 2004; "Zoellick World tour on the Doha Round", GENEVA WATCH, 20 February 2004; "EU’s Fischler urges U.S. to move in WTO talks as vital to success", WTO REPORTER, 20 February 2004; "Zoellick seeks to revive dialogue", THE WASHINGTON TIMES, 7 February 2004; "Developing countries cool to U.S.-EU plan for early WTO ministerial to spur trade talks", WTO REPORTER, 18 February 2004; "EU, G-20 hold meeting on jump starting Doha round talks, cite ‘good atmosphere’", WTO REPORTER, 17 February 2004; "Lamy backs scrapping export subsidies, but EU members need push, USTR says", WTO REPORTER, 25 February 2004.