AGRICULTURE: PROGRESS MADE ON AVEs AT MOMBASA ‘MINI-MINISTERIAL’
Participants at a mini-ministerial meeting in Mombasa, Kenya from 2-4 March (see related story, this issue) reported some headway on the tricky issue of how to convert ’specific’ agricultural tariffs based on quantities into ‘ad valorem’ equivalents (AVEs), i.e., tariffs based upon the price of the product. Participants effectively agreed that in order for the technical work to proceed, they would postpone the decision of whether Members would be able to retain specific tariffs following a conversion. The ministerial-level talks followed informal technical discussions in Geneva on 25 February (see BRIDGES Weekly, 2 March 2005).
In order for Members to progress in their negotiations on agricultural tariff reductions, they need to clear the hurdle of how to convert non ad valorem duties into AVEs — a transparency exercise that will allow the tariffs to be classified into different brackets set for different reduction requirements. Without going into the technical details of the different options for conversion and verification, the ministers agreed that negotiations should continue on this process in Geneva — and that the more controversial issue of whether the converted AVEs can be converted back into specific tariffs following tariff reduction would be left for later in the negotiations.
The timetable ministers set for the work involves agreeing on the methodology for AVE conversion at the next set of agriculture negotiations at the WTO in mid-March. Members would then submit relevant data for the conversions at the following set of negotiations, scheduled for April. The EU, US, Switzerland, and Norway all have large numbers of specific tariffs that need to be converted into AVEs. The EU and G-10 (food importing) countries such as Switzerland would like to retain the right to continue using specific tariffs. In a press statement, the EU also stressed that tariff reductions should be made from bound levels set in Members’ schedules.
The next ‘agriculture week’ at the WTO will be held from 14-18 March.
ICTSD reporting; "Statement on Progress in WTO talks," EU RELASE, 4 March 2005; "AVE Progress Cited at WTO Mini-Ministerial, Deadline Set for NAMA Tariff-Cutting Formula," WTO REPORTER, 7 March 2005.
RULES GROUP LOOKS AT CRITERIA FOR FTAs
The 8 March meeting of the WTO Negotiating Group on Rules (on Regional Trade Agreements, RTAs) focused on systemic issues related to the place of such agreements within the multilateral trading system. This came in contrast to earlier discussions in this forum, which tended to focus mainly on transparency with regard to Members’ RTAs. The shift may reflect the increased scrutiny in recent months on bilateral and regional trade arrangements and their potentially damaging effects on the multilateral trading system (see BRIDGES Weekly, 19 January 2005).
Paragraph 8(b) of Article XXIV of the General Agreement of Tariffs and Trade (GATT) defines "free trade areas" for the purposes of what is permissible in the multilateral trading system. It specifies that tariffs and "other restrictive regulations of commerce" on "substantially all the trade" between constituent parties must be eliminated. The precise meaning of these stipulations, however, remains unclear.
At the Rules group meeting, Members focused on an Australian paper that said that a free-trade agreement (FTA) could be considered to cover "substantially all" trade if it covered 95 percent of the tariff lines for trade between the parties, with 70 percent of tariff lines eliminated the moment the FTA enters into force. Furthermore, highly-traded sectors must come under the remit of the FTA.
Chile and New Zealand expressed support for Australia’s ideas, praising them for promoting ambitious FTAs. Other Members including Hong Kong suggested that the evaluation of FTAs should not be limited to tariff lines, but should also consider agreements’ effects on trade flows. Norway and Switzerland suggested that other issues such as rules of origin and trade remedies should also be taken into account. The meaning of "other restrictive regulations of commerce" remains undefined.
Members also discussed the WTO Secretariat’s report on services provisions in the Chile-Canada FTA. This is part of a process led by Chair Guillermo Valle of Uruguay to improve transparency with regard to Members’ FTAs; the ultimate aim is to have a Trade Policy Review-type evaluation of FTAs.
ICTSD reporting.