Bridges Weekly Trade News Digest • Volume 8 • Number 12 • 31st March 2004
WTO Headed For Agriculture Modalities Framework By July
WTO delegates that participated in agriculture negotiations from 22-26 March (see BRIDGES Weekly, 24 March 2004) reported a change of tone in the concluding plenary of the WTO Committee on Agriculture (CoA) special session. Reportedly, the week’s intensive consultations led to a more positive negotiating climate as Members finally started listening to each other, following months marked by a generally negative tone in the post-Cancun agriculture debate. While Chair of the special (negotiating) session ambassador Tim Groser (New Zealand), said in his concluding assessment that Members had not yet reached a "problem-solving mode", he said he had sensed consensus emerging on the aim to agree on a negotiating framework by end-July, which would later be fleshed out to full modalities. Negotiators would act on the "working hypothesis" that the framework text might not include numbers. This sequencing meant that Members needed to show "conditional trust" so as to get the process moving, Groser said. On substance, market access reportedly emerged as the most contentious negotiating area. Groser scheduled another four ‘Agriculture Weeks’ in April, June and July. The upcoming April session will use the current negotiating format — consisting mainly of informal negotiations — but may be somewhat more structured, sources reported.
New Zealand’s Groser, the newly appointed CoA special session Chair, has chosen to use a new approach in the negotiations, which provides Members with more room to consult and negotiate among themselves during the session in bilateral and plurilateral mode, involving the Chair less. The main negotiating groups held a number of informal meetings in different configurations. These groups included the Cairns Group of agricultural exporters, the G-10 (Switzerland, Japan and others keen to protect their domestic agricultural sector), the G-20 group of developing countries, led by Brazil and India, the Indonesia-led G-33 of countries pushing for special treatment for developing countries, the G-90 group comprising mostly African and least-developed countries, as well as key individual members such as the US, EC and Japan.
Groser views week as ‘circuit breaker’ for talks
In his assessment of this first CoA negotiating session this year, presented at the concluding 26 March informal plenary session, Chair Groser said that according to what he heard and sensed from delegations, "the prevailing opinion" was that the tone had been generally positive during the week and that Members had shifted to "listening mode". Nevertheless, "problem-solving" — i.e. real attempts to narrow the prevailing gaps — still laid ahead, said the Chair. He also said the interaction and understanding between the political process (i.e. ministers and capitals) and the Geneva process was much more effective. Without the political process, work in Geneva would be a "waste of time," as the framework paper "will be written in Geneva or it won’t be written at all," Groser told Members. Moreover, the new negotiating approach was generally seen as productive and welcomed as a move away from speech-making and coalition building.
"Conditional trust" needed
Expanding on the underlying "working hypothesis" that the framework to be agreed might not include specific numbers (such as percentage reductions or coefficients in formulas), Groser said that the framework should deal with underlying concepts, whereas the modalities would include "levels of ambition". Last year’s attempt to agree on full modalities failed precisely because the negotiations tried to tackle both at the same time (see BRIDGES Weekly, 2 April 2003). In response to some delegations arguing that numbers might be needed to give a degree of certainty about the level of ambition of the modalities, Groser called on Members "to proceed on the basis of conditional trust," recalling that the Doha mandate on agriculture remained "the political anchor" for the negotiation outcomes.
Much more work needed on market access
According to trade sources, most Members endorsed the Chair’s assessment of the negotiation week, acknowledging that market access was clearly the biggest problem to be tackled. Apparently, many participants expressed their discontent with the ‘blended’ tariff reduction formula, which was first introduced by the US-EU draft framework text last August (see BRIDGES Weekly, 21 August 203) and modified in several subsequent drafts. The blended formula combines elements of the so-called Uruguay Round (UR) formula, with sets an average reduction with a minimum reduction per tariff line — to be applied to certain applied to certain "import sensitive" products — and the Swiss formula, which would bring down all tariffs horizontally to a maximum ceiling.
Australia, speaking for the Cairns Group of agricultural exporters, said it was unconvinced by the blended formula as it might not lead to real new market access, especially in key developed countries. A trade source indicated that the Cairns group now seemed more sympathetic to the banded tariff reduction formula developed by former agriculture Chair Stuart Harbinson (BRIDGES Weekly, 12 February 2003).
In contrast, G-10 leader Switzerland argued that the blended formula did not provide enough flexibility, and that the G-10 would also oppose setting maximum ceilings for tariff rates and an obligation to expand all tariff rate quotas. The EC said the blended approach would grant enough flexibility to address all issues, including non-trade concerns (NTCs) and special and differential treatment (S&D) for developing countries, and — with appropriate numbers — would offer a high level of ambition as well. The US said the picture would be clearer once numbers were inserted after the framework stage was over.
The US recently revealed that it could only accept two to three percent of all tariff lines falling into the UR formula band of the blended formula (see BRIDGES Weekly, 24 March 2004), with a larger — eventually ten percent — portion for developing countries. This reportedly led to much irritation, especially amongst G-10 countries, which aim at a target close to 25 percent. The EC signalled that the percentage should run into the double digits.
According to sources, most speakers agreed that developing countries should be allowed a category of special products (SPs) fully exempted from general reduction commitments. However, differences remained over the conditions for designating SPs. The EC reportedly responded positively to a request from China and other newly acceded Members to not have to face the same scale of reductions as others. These countries feel that they already are undertaking significant reforms, and already have low tariff rates in place. India, the main voice for developing countries that do not want to reduce their agricultural tariffs, said it would accept that all Members had to contribute to reform, but that some countries were under developmental constraints and therefore unable to contribute as much.
The following negotiations are scheduled for 20-23 April, 2-4 June, 23-25 June and 14-16 July.
ICTSD reporting; "Agriculture: WTO ‘Ag Week’ end s with call to shift to ‘problem-solving’ on market access," WTO REPORTER, 29 March 2004; "Agriculture: Mixed WTO reaction greets US Ag proposal to limit Uruguay round method in tariff cuts," WTO REPORTER, 26 March 2004.