Bridges Weekly Trade News Digest • Volume 11 • Number 38 • 7th November 2007
Revised Ag Text Delayed As Chair Sees Glimmer Of Progress
The chair of the troubled WTO agriculture talks will postpone issuing a new draft negotiating text initially expected in mid-November until towards the end of the month, trade sources report. The move was prompted by modest signs of movement in the discussions.
Ambassador Crawford Falconer (New Zealand) had earlier warned Members that he would put a halt to meetings at the end of last week unless they started compromising with each other in earnest. He has now announced further consultations for next week.
The chair on 7 November circulated ‘working documents’ outlining potential future WTO rules on export competition (see related article, this issue). This part of the agriculture talks is generally believed to be closest to agreement.
Officials report that the chair has scheduled consultations on export competition on 12 November, and on ’sensitive products’ two days later. Both will occur in the so-called ‘room E’ format, attended by officials from 36 delegations representing a cross-section of negotiating interests.
Spotlight on consumption data
Discussions on ’sensitive products’, which both developed and developing products will be able to shield from the full force of tariff reduction in exchange for expanding import quotas, are expected to focus on data describing domestic food consumption patterns. Falconer is expecting this data from several major developed countries, sources say. These figures are crucial for Members to determine potential market access gains, since they have agreed to base the extent of quota expansion for sensitive products on current levels of domestic consumption.
The issue of ’sensitive products’ has been a major sticking point in the market access negotiations, pitting competitive exporters such as the US and the Cairns Group against countries reluctant to drop protection for farmers, such as the EU and the G-10. The two camps have also differed on the level of detail at which sensitive products should be designated. The exporters want products to be specified at the more general ‘6-digit’ level of the system for classifying farm products, while the reluctant importers want to be free to do so at the more specific 8-digit level. The difference - say, beef in general versus only certain cuts of the animal - would enable countries in the latter case to pinpoint protection on the most sensitive products, without having to use up their allotment on other commodities.
However, even the importers have had trouble providing such specific data. Falconer had challenged Members to provide what data they could.
G-33 outlines priorities
Two other proposed agricultural market access flexibilities - both reserved for developing countries alone - have also been controversial in the negotiations. These arethe number and treatment of ’special products’ that developing countries will be able to slate for low or no tariff cuts on the basis of food and livelihood security or rural development concerns; as well as the ’special safeguard mechanism’, which will allow them to impose temporary duties beyond bound ceiling levels in order to provide farmers a measure of protection from import surges and price falls.
The G-33 group of developing countries, which includes China, India, and Indonesia, has pushed for substantial latitude to protect small and subsistence farmers. In contrast, competitive exporters - including some developing nations - have sought to keep these flexibilities to a minimum, suggesting that they could compromise the value of market access offers.
Falconer told a meeting of all Member delegations on 2 November that an eventual agreement would probably have to allow developing countries to fully exempt a small number of products from tariff cuts. This, he said, would be difficult to swallow for exporters opposed to any exemptions at all, as well as for the G-33, which had once sought to exempt as many as a tenth of all products from liberalisation.
Members last week continued to explore ideas that the chair had aired verbally on 29 October, outlining a sliding trade-off between the number of special products and the extent to which they would be permitted to retain tariff protection (see BRIDGES Weekly, 31 October). Delegates asked the chair for greater clarity in writing, so that the suggestions could be properly understood and analysed.
In a late October informal submission, the G-33 welcomed a ‘hybrid approach’ for the selection of special products, one of the different options outlined by Falconer in the draft agreement text (paragraph 97) he presented to Members in July. It envisages allowing developing countries to designate a certain minimum percentage of tariff lines as ’special’ — a number higher than that of ’sensitive’ products for all Members — as well as an additional number of tariff lines identified on the basis of food security, livelihood security and rural development criteria.
As for the ’special safeguard mechanism’ (SSM), sources say that Falconer had suggested in ‘Room E’ discussions on 2 November that Members could agree to limit the number of times that countries could invoke it, citing widespread agreement that it should not be possible to do so "hundreds of times." Such a cap, he suggested, would be a simpler compromise than the ‘cross-checking’ mechanism proposed by exporters, under which simultaneous price depressions and import volume surges would be a condition for countries to impose safeguard duties.
The G-33, in a separate paper in October, had argued that the safeguard duties should be allowed to take overall tariff levels beyond the maximum current permitted ceilings, i.e., those agreed during the previous Uruguay Round. Otherwise, developing countries’ ability to offset price declines would be limited, they said. The group noted that an existing safeguard in WTO rules, used mainly by developed countries for technical reasons, contains no comparable cap.
ACP and tropical products group remain at loggerheads
Several predominantly Latin American countries seeking deep liberalisation for ‘tropical products’ continue to feud with the African, Caribbean and Pacific (ACP) group, which is seeking to minimise the erosive effects of multilateral tariff cuts on the unilateral preferences that they currently enjoy for some of the same commodities, most notably sugar and bananas. The two camps, which are disputing the lists of products concerned, both issued new proposals, largely restating their positions. The tropical products group reaffirmed its support for a list of products tabled by the Cairns Group in March (see BRIDGES Weekly, 14 March 2007). The ACP called for "targeted technical assistance to address supply-side constraints," and for the establishment of a monitoring body to ensure that commitments are fully implemented.
Delegates quietly optimistic
The decision by Falconer to continue discussions appears to have boosted spirits among delegates in Geneva, with one negotiator commenting that the delay for the revised text was a positive sign that some progress was taking place.
However, the source cautioned that major obstacles to an agreement nonetheless remained. Not least among these is the 2007 US farm bill: the version currently being negotiated in Congress would largely extend existing farm subsidy programmes for another five years; if adopted, it would further reduce the likelihood that lawmakers would approve the cuts to spending caps sought by other WTO Members. Furthermore, the late-November release of draft texts in agriculture and industrial goods trade would leave negotiators with very little time in which to sew up an agreement before the US’ 2008 election campaign gets into full swing.
In any event, ministers from the G-20 developing country group will be meeting in Geneva on 15 November, along with representatives from the governments coordinating other poor nation negotiating alliances such as the G-33, the G-90, the ACP group, and the bloc of least-developed countries. The summit will bring together developing countries such as Brazil, India and China and some of the WTO’s smallest Members in what has been dubbed the "G-110". The meeting would have more or less coincided with the initial expected release for Falconer’s new draft. One negotiator said that the gathering now sought to show that "developing countries are still united," and that their needs must be taken into account. Another suggested that it would also provide developing countries an opportunity to discuss strategy for the period ahead.
ICTSD reporting.