Bridges Weekly Trade News Digest • Volume 14 • Number 9 • 10th March 2010

Doha Limbo Stymies Progress on Ag Market Access

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A crisis of political leadership has undermined any hopes of rapid progress in the WTO’s Doha Round of trade talks, negotiators said - despite a raft of new submissions from developing countries on ways to safeguard their domestic producers from import surges and price drops.

Several Geneva-based delegates who spoke to Bridges this week acknowledged that little progress may be made in the negotiations over the course of this year (see related article, this issue). The pervasive sense of inertia has not helped countries to overcome polarised positions on the controversial ’special safeguard mechanism’ - a tool that would allow developing countries to impose additional duties on goods to tackle surges in import volumes or price depressions.

Trade officials expressed little surprise that no progress was emerging from informal consultations being held this week by the chair of the agriculture talks, Ambassador David Walker (New Zealand). “Negotiations are stalled,” observed one delegate, who told Bridges that countries were simply repeating their established positions.

The informal talks come two weeks ahead of a “stock-taking exercise” in Geneva, which will involve senior officials and not ministers, as some had speculated. With the WTO keen to avoid another high-profile failure, a decision was taken to hold a low-key event, trade sources said.

Pascal Lamy, the WTO Director-General, has reportedly asked the chairs of key negotiating groups to prepare reports on progress ahead of the ’stock-taking’, which will take place the week of 22 March. One delegate observed that these reports, as much as the chances of achieving progress, may be the real objective of the chair’s recent informal meetings.

Special safeguard mechanism still deadlocked

The G-33 developing country group that favours a strong special safeguard mechanism (SSM) has recently circulated five technical notes on the tool, along with a ‘political’ paper - although these, and related talks, have done little to break the deadlock on the issue, sources said.

On Monday, Walker hosted informal small-group discussions on whether safeguard duties should be made conditional on the co-existence of both a surge in import volumes and a price depression, following a G-33 paper on the issue. Further talks on Wednesday morning examined the group’s new submission on the price-based safeguard - although these only accorded cursory attention to two more recent G-33 papers, on special flexibilities for small, vulnerable economies, and on the question of ‘pro-rating’ the calculation of average import volumes so as to discount months in which safeguards had been imposed.

The consultations follow discussion one month ago of a G-33 paper examining whether the safeguard should accommodate seasonal variations in trade.

Delegates from exporting countries nonetheless dismissed the G-33 submissions as being essentially “political” documents that offered “nothing new” to the discussion. They queried G-33 claims that developing countries would find it too difficult to monitor both price and volume data to verify the co-existence of import surges and price depressions, claiming that this would be necessary in any case if countries wished to use the two types of safeguard mechanisms. They also sought clarification on why the group considered that a volume surge could cause injury to domestic producers in the absence of a price depression.

While the G-33 had sought to relax conditions on using the safeguard for small, vulnerable economies (SVEs), exporting countries argued that this discussion should take place only after there was greater clarity on the flexibilities that would be provided to developing countries as a whole. The paper reiterates calls for SVEs to be allowed to impose safeguard duties when average import levels are lower than for other developing countries (10 percent above historical averages); to impose heavier duties (75 percentage points or 75 percent of the maximum permitted ‘bound’ ceiling, whichever is higher); and to apply safeguard duties that exceed bound rates on a larger share of a country’s imports (on 30 percent of tariff lines). “Developing countries, and in particular those that are small and vulnerable, need a simple and effective SSM mechanism,” the G-33 paper argues.

Another new G-33 proposal on ‘pro-rating’ calculations of average import volumes by excluding months in which safeguard duties were applied seeks to address exporters’ calls for the mechanism to protect ‘normal trade’, by underscoring the role of the rolling three-year average and the related but higher ‘trigger’ threshold that must be breached before additional duties can be imposed. These conditions, the group says, would themselves allow for trade to grow while providing a means to tackle sudden import surges or a drop in prices. The group also argues that the exporters’ focus on a limited number of “hyper growth” products is misleading, claiming instead that “double or triple digit growth rate products are not the norm, but the exception.”

Sensitive products: Japan, Canada, US anger developing countries

In informal talks on Tuesday, Japan and Canada reiterated their request to be allowed to designate an additional two percent of tariff lines as ’sensitive’ - a category of products that would be allowed to undertake a gentler tariff cut in exchange for expanded tariff quotas. In response, the US repeated its suggestion that, if this should be granted, all countries should be allowed to benefit from an additional 2 percent allocation. Developing countries such as China, India and Brazil opposed any such move, arguing that developed countries should not be allowed to take advantage of additional flexibility.

One observer speculated that the US suggestion could be a tactical move aimed at dissuading Canada from seeking extra sensitive product tariff lines. As trade between the two countries is significant, US exports could be significantly affected by their trading partner’s sensitive product allocation. However, one source noted that the proposal sat uneasily with the US’s continued insistence on expanding developing country market access.

Other import-sensitive countries such as Switzerland were reportedly happy with the existing draft text.

Cotton

The chair was expected to hold informal consultations on cotton with key countries on Wednesday afternoon, although delegates expected little progress to be achieved. The talks will be held in the shadow of recently announced penalties that Brazil intends to impose on the US following a panel decision on the cotton dispute between the two countries (see related article, this issue).

Subsidies

Aside from the negotiations, the regular committee on agriculture was also due to meet on Wednesday, with several countries submitting written questions in advance. Several countries had questions for the European Union, which recently submitted new data on subsidy spending to the WTO, with members such as Australia and Canada querying how spending related to the WTO’s criteria for green box support - payments exempt from any cuts or an overall ceiling, on the basis that they cause not more than minimal trade distortion.

Australia also questioned a number of countries about the reasons for substantial delays in officially notifying their subsidy spending to the WTO. These included China, Egypt, India, Korea, Turkey and Venezuela. Backlogs amounted to eight years’ delay or longer for many countries, Australia noted.

Looking for political leadership

Several delegates commented on the need for ministerial engagement and clear signs of political will at a senior level if the talks are to emerge from the current stalemate. One source reported that the EU, India and Australia were contemplating holding a ministerial meeting at some point between the stock-taking exercise later this month and the G-20 meeting of finance ministers in June. However, many officials remain sceptical about the chances of achieving progress in the near future.

ICTSD reporting.