Bridges Weekly Trade News Digest • Volume 9 • Number 13 • 20th April 2005
Agriculture Negotiations Suspended Over AVEs - Again
On 19 April, New Zealand’s WTO Ambassador Tim Groser, who chairs the WTO agriculture negotiations, suspended a meeting of the Committee on Agriculture (CoA) special (negotiating) session due to Members’ differences over the process for converting ’specific’ agricultural tariffs based on quantities imported into ‘ad valorem’ equivalents (AVEs), i.e., tariffs based upon the price of the product. The ‘agriculture week,’ which started on 13 April and was set to conclude on 19 April, focused intensely on clearing the hurdle of AVE conversion, with key Members meeting informally on the issue. AVE conversion had also been left inconclusive at the end of the previous agriculture week on 18 March (see BRIDGES Weekly, 23 March 2005).
At the close of the meeting, India’s ambassador to the WTO, Ujal Singh Bhatia, expressed concern about the impasse, saying "we need a solution very quickly or we are in trouble." Members are working to come up with a ‘first approximation’ of agriculture modalities by July, with the actual modalities — percentages of tariff and subsidy cuts, reduction formula, criteria for domestic support, deadlines, or transition periods — to be completed at the December WTO Ministerial Conference in Hong Kong. AVE conversion represents a transparency exercise that will allow Members’ tariffs to be classified into different brackets slotted for different reduction requirements under the tiered formula for tariff cuts that Members have agreed to use.
Key Members close to agreement on AVE conversion
AVE conversion is straightforward for some tariff lines; Members are set to use the ‘unit value’ method in these cases, basing the conversion on import volumes and notified import values in the WTO Integrated Database (IDB). Complications arise, however, with products such as sugar and some cheeses, where preferences or tariff quotas are involved. In such cases, import prices often differ significantly from the world prices compiled in the UN commodity trade statistics (ComTrade) database. Members have discussed a formula for ‘filtering’ out cases in which there are significant gaps between world prices and import prices, based on comparisons between the WTO and UN sets of data. They would then proceed with the conversion in a way that is different from simply using the IDB. Disagreement and misunderstandings emerged over how the conversion would take place, and this technical issue could not be resolved, leading to suspension of the formal CoA special session. This happened after a Canada-hosted meeting of senior trade officials from 31 Member countries had reportedly arrived at a solution to the issue.
AVE conversion has pitted the EU and G-10 countries against the US, the Cairns group of agricultural exporters and the G-20. The former groups make use of a large number of specific tariffs. Agricultural exporters would like to see the conversion based more closely on the lower world prices, which would lead to higher AVEs, and eventually, steeper tariff cuts.
The next agriculture week is scheduled to start on 30 May.
ICTSD reporting; "WTO farm talks deadlocked, threaten deal deadline," REUTERS, 19 April 2005.