Bridges Weekly Trade News Digest • Volume 8 • Number 23 • 30th June 2004
WTO Agriculture Talks: Chair Says Framework Deal ‘Absolutely Doable’
Negotiations during the most recent WTO ‘agriculture week’ ended without a final breakthrough. However, sources reported some progress in talks on market access and export competition. Briefing the full Membership on the outcomes of the 23-25 June special (negotiating) session of the Committee on Agriculture (CoA), Chair Tim Groser (New Zealand) at the concluding 25 June plenary meeting said that, while he still was frustrated at the slow pace of progress, he considered an agreement on a framework accord before the end of July "absolutely doable" due to the accelerating intensity of the negotiations. Informal consultations during the three-day consultations largely focused on a new US on market access proposal. The ‘Five Interested Parties’ (FIPs) group consisting of the US, EC, Australia, Brazil and India also held intense meetings on the sidelines. The secrecy of the FIPs meetings was heavily criticised by many negotiators, primarily from the G-10 group of countries including Switzerland and Japan who called for greater transparency in the negotiation process. Groser defended the process as a necessity, but indicated he would reveal further details on content when he reported to the Trade Negotiations Committee on 30 June.
Groser defends consultative mode in the negotiations
In response to several delegations’ criticism of the lack of transparency of the process — especially in the consultations of the group of Five Interested Parties (FIPs) — Groser explained to the plenary that he had to tread a delicate balance between the need to be transparent and inclusive, on the one hand, and the need to let ideas develop before exposing them widely. On the issue of inclusiveness, Groser referred to the "public secret" of the FIPs group, which was trying to hammer out an internal compromise deal in parallel consultations — some of which he attended. Recalling that the group brought together countries with some of the sharpest differences — both as importers and exporters and developed and developing countries — he reportedly rejected the idea that the group could swiftly produce an agreement that its members could accept along with the rest of the WTO Membership.
Groser’s remarks were prompted by heavy criticism voiced at the opening 23 June informal plenary session by the G-10, including Switzerland, Japan, Norway and Mauritius. These countries expressed their deep concern at being excluded from the FIPs process while not being adequately informed about the discussions taking place. "We will not swallow a piece of paper produced without our participation," Swiss chief negotiator Luzius Wasescha stated. Japan and others reportedly also felt "a great deal of frustration" at their exclusion from the FIPs consultations. One developing country delegate said it would be very difficult for those Members and groupings not included in the talks between the G-20 (including Brazil, India and S. Africa), the Cairns Group (including Australia and Canada), and the US and EC to later reject main elements of the emerging internal agreement. "It’s a done deal," the negotiator said.
New market access approach emerging
On market access, which still remains the most difficult issue in the talks, Groser said that negotiators now showed a great deal of flexibility, looking at variations of the "tiered, blended approach". Reportedly, this approach would mean that products are separated into bands or ‘tiers’ according to their tariff levels, and then each tier further divided into products whose tariffs are reduced by different approaches — as done, for example, in the ‘blended’ formula developed earlier by the US and EC, which combined elements of the Swiss and Uruguay Round reduction formulas (see BRIDGES Weekly, 21 August 2003). However, Groser cautioned parties not to move too quickly on this proposal so as to avoid its premature rejection and indicated he was hopeful that its approach might bear fruit. He also said that for the first time, some progress had been made on ‘parallelism’ in the areas of export competition — i.e. the EC’s demand that others had to phase out the distortive elements of their export competition tools as the EC was expected to eliminate its export subsidy programmes. However, several delegates reportedly commented on Groser’s statement, saying that the EC and US were still sharply divided over this issue.
US produces new market access paper
Prior to the kick-off of the penultimate ‘agriculture week’ before the WTO summer break, the US presented an internal informal paper on market access at a 22 June FIPs meeting. The paper presented a new tariff reduction methodology, including a version of the ‘banded’ formula (see BRIDGES Weekly, 19 February 2003) combined with the ‘Swiss’ harmonising formula previously promoted by the US. According to sources, the US came up with a revised version of its proposal at the end of the 23-25 June ‘agriculture week’.
According to the 22 June paper, Member would have the flexibility to exempt a limited number of ’sensitive products’ from the general reduction formula, but would have to provide for effective new market access for these products through a combination of tariff reductions and tariff rate quota (TRQ) expansion. In addition, a maximum ceiling would be established for all tariffs, with the option to exclude a very limited number of products for which — again — additional market access would have to be ensured. US sources said this proposal was based on an earlier G-20 market access paper in which the developing country group set out key elements for the tariff reduction formula to be agreed (see BRIDGES Weekly, 2 June 2004).
Developing countries would generally be subjected to the same tariff reduction formula, but with several special and differential treatment (S&D) modifications. Least-developed countries (LDCs) would be exempted from any tariff reductions, while the paper made no reference to additional differentiated treatment of other ‘weak and vulnerable’ countries such as non-LDC African, Caribbean and Pacific (ACP) countries and other Members with particular difficulties. Notably, the US also proposed the establishment of a special safeguard mechanism (SSM) for use by developing countries, as well as the possibility for poorer countries to designate a number of special products (SPs) which would be subject to no, or significantly lower, reduction commitments.
The paper received mixed reactions. India was critical of the proposal because of the inclusion of the Swiss formula, which is based on steeper cuts on higher agricultural tariffs .The G-10 was not enthusiastic over the paper’s limited exceptions for sensitive products. Countries such as Switzerland and Japan are reportedly opposing the US approach as they say they would have to "pay twice" through mandatory TRQ expansion if they want to protect their sensitive commodities. The EC thought the formula needed to provide more flexibility for developed countries to maintain relatively high tariffs on a set of important products.
The next ‘agriculture week’ is scheduled for 14-16 July, but Members are expected to meet both before and after it. Sources reported that the FIPs countries are tentatively planning a high-level meeting scheduled for the week of 5 July in Geneva, followed by a ministerial-level meeting around the weekend of 10-11 July in Paris. In an attempt to reach a framework by the end of July, the agriculture talks will proceed continuously. According to US agriculture negotiator Allen Johnson the negotiations are expected to continue until the end of July or "until we get it done".
ICTSD reporting; "Market Access: WTO Ag Chair Sees Shifts on Market Access, but U.S., EU Still Split on Export Competition," WTO REPORTER, 25 June 2004; "Agriculture: WTO Agriculture Talks End with Chair Citing Gains, but Mum on Details; Full Report Due June 30," WTO REPORTER, 28 June 2004.