Bridges Weekly Trade News Digest • Volume  • Number  • 5th December 2007

AG Chair Presents New Proposals On Developing Countries’ ‘Special Products’

Do More

See also

The chair of the WTO agriculture negotiations has suggested a new set of potential parameters for the number and treatment of the ’special’ farm products that developing countries will be able to slate for shallower tariff cuts based on food security, livelihood security and rural development grounds.

The issue has been controversial in the Doha Round talks, with exporters such as the US and some developing countries opposing demands from the G-33 bloc of developing countries that has championed the notion of special products. The former fear reduced export opportunities; the latter say that protecting small and vulnerable farmers from the potential negative impacts of trade liberalisation is vital for their development objectives.

Negotiators present at invitation-only meetings on 29-30 November told the chair, New Zealand Ambassador Crawford Falconer, that they wanted more time to consult with their capitals before responding to his suggestions.

Falconer was considering allowing developing countries to designate around 12-15 percent of their total agricultural tariff lines as ’special’, negotiators said, an increase over the 5 to 8 percent he had suggested earlier in the year.

These special products would be divided into two tiers, to be treated differently, the chair suggested, sources say. The first tier would include between 8 or 10 percent and 12 percent of tariff lines. These would be required to undertake an average cut, perhaps somewhere around 20 percent, with each tariff line cut by a certain minimum percentage, say 15 percent, and by no more than a maximum, perhaps 25 or 30 percent. The exact figures could be negotiated, the chair said.

The second tier would include some 3 or 4 percent of tariff lines, and would be subject to a lesser cut, with some products eligible for no tariff reduction at all. Falconer concluded in November that at least some special products would have to be fully exempt from reduction if Members are to reach an agreement (see BRIDGES Weekly, 7 November 2007). The G-33 had previously called for a tenth of all products to be eligible for exemption.

The chair indicated that the total number of special products would in any case be greater than the number of ’sensitive’ products that all countries, developed and developing, would be allowed to shield from the standard tariff cut in exchange for expanded import quotas.

Members also discussed the possibility of allowing developing countries to transfer part of their sensitive product allotment to special products instead, an idea that the G-33 favoured, trade sources said. Instead of expanded tariff rate quotas, exporters could be provided some other concession, the source said.

Earlier in the meeting, Falconer had reiterated that small vulnerable economies could be allowed to undertake an average 24 percent tariff cut, with no minimum tariff cut for individual lines, along the lines he had suggested in his July draft text.

The chair has been reluctant to set out his ideas in writing, delegates report, preferring instead to discuss them verbally first. Negotiators who attended Falconer’s informal ‘room E’ consultations with 36 representative delegations last week were familiar with the details of the proposals, but reported that they were only mentioned in passing at a 3 December ‘transparency meeting’ open to the full membership.

Special safeguard mechanism

Delegates also reported that Falconer "threw out some ideas" on the special safeguard mechanism, which developing countries would be able to use to raise tariffs beyond bound ceiling levels to protect farmers from import surges and price depressions. No products would be excluded a priori from the mechanism, the chair said, but the G-33 would have to provide some other concession to exporters. Limiting the number of products on which the safeguard could be invoked would be one such option, he suggested, perhaps to a ’single digit’ number.

While the G-33 had previously proposed allowing the imposition of safeguard duties if import volumes exceed a ‘threshold’ of 105 percent of recent average import volumes, the chair suggested that this figure should be somewhere between 110 and 130 percent instead. Members would be more inclined to accept higher safeguard duties if the threshold for invoking them were higher, he said. He also suggested that Members consider using the average of the three preceding years to define average import levels, as proposed by the G-33.

Still controversial was the issue of whether safeguard duties would be allowed to take total tariff levels above the maximum permitted ‘bound’ tariffs to which WTO Members have currently committed. Some countries, such as China, are adamant that they should be allowed this flexibility. The Cairns Group of efficient exporters has argued that this would constitute a ’step backwards’. The issue would probably have to be resolved at a level more senior than that of Geneva-based negotiators, sources suggested.

Looking ahead

The chair has indicated that further room E discussions on special products and the special safeguard mechanism are unlikely for the time being. Instead, he will reflect on what Members have told him, and take it into account either in a ‘working document’ on specific issues in the negotiations, or in a revised version of his July draft agreement text - now expected around late January 2008. Sensitive products and rules to ensure that ‘green box’ subsidies have no more than minimal effects on trade and production are among the issues likely to be discussed later this week.

Falconer told Members on 3 December that he would convene ten days of talks starting 3 January, sources said.

ICTSD reporting.