Chair Challenges Agriculture Negotiators to Move
The central message of a ‘challenges paper’ issued by the chair of the WTO agriculture negotiations on 30 April was that countries and coalitions would have to give up long-held positions to make a Doha Round deal possible.
The paper was the ‘first instalment’ of the chair’s assessment of the range of plausible parameters for concluding the agriculture negotiations. A second paper, likely to cover Green Box disciplines, tropical products, preference erosion and the Special Safeguard Mechanism was expected to be released during the week of 14 May.
The main aim of these papers is to generate and focus debate, which in turn should help the chair in drafting the new ‘modalities’ text he plans to circulate to Members in the latter half of June. This document should be clearer and contain fewer square brackets than the one he issued to Members in June 2006, Ambassador Falconer said.
Many negotiators praised the chair’s courage in attempting to provoke a more honest debate and generate momentum, although they also questioned the underpinnings of his many of his conclusions (see page 2).
Domestic Subsidies
Ambassador Falconer said that it was ‘frankly inconceivable’ that other Members would accept the current US offer to drop its limit on overall trade-distorting support by some 53 percent to US$22 billion (see page 1). The G-20 proposal would slash the cap by 75 percent. A cut of roughly 68 percent would be necessary to bring this limit near to the US$15 billion sought by the EU.
The EU would have to envision a cut above 70 percent, with a reduction ‘in the vicinity of 75-80 percent’ still conceivable, depending on the outcome of other aspects of the negotiations. Japan should be able to match the cuts undertaken by the US ‘comfortably’, Mr Falconer said.
Depending on their existing commitments, developing countries would either be exempt from cuts or be allowed to make lower reductions to their more modest subsidies over longer time periods.
According to the chair’s ‘working hypothesis’, the US would cut the most heavily trade-distorting Amber Box subsidies by 60 percent; the EU would do so by 70 percent. He proposed compromises for reconciling the 1995-2000 base period that most Members prefer for setting commodity-specific Amber Box spending caps and the 1999-2001 period the US wants because its spending levels were much higher. For the other two components of overall trade-distorting support in developed countries, Mr Falconer suggested that the cap on ‘de minimis’ spending and Blue Box payments could be cut by at least 50 percent.
The paper explored various options for limiting Blue Box and de minimis pending on specific commodities, or for preventing payments from being concentrated on a handful of products. However, Members would first have to determine whether or not there actually was a “genuine willingness to take a ceiling limit one way or the other.”
WTO Members have already agreed that cotton payments should be reduced ‘more ambitiously’ than others. Mr Falconer estimated the ‘rough zone’ for achieving this to lie between the 53 percent cut to overall trade-domestic support proposed by the US and a West African proposal that would cut cotton subsidies by over 80 percent even if the standard cut is relatively modest (Bridges Year 10 No.2, page 6).
Tariff Cuts
A deal on slashing farm tariffs would lie “squarely between the US and the EU positions,” Mr Falconer suggested, with a scenario that would deliver an overall cut above 50 percent ‘still in play’ (see page 1). Developing countries would cut tariffs by two-thirds as much as developed countries.
Ambassador Falconer assumed that the structure of the tariff reduction formula would be based on the G-20 proposal, under which developed countries would classify their tariff lines into four bands, with duties on the most heavily-protected products in the highest band – above 75 percent – to be cut most steeply. Once the figure for the reduction in the top band was settled, the cuts for lower bands would follow, he predicted.
He acknowledged that some Members’ would only agree to a relatively high cut for the top band if they knew the extent to which they would be able to shield ‘sensitive products’ from the full force of tariff cuts. Furthermore, some sort of arrangement would have to be made to account for countries with a particularly high proportion of tariff lines in the top band. One option might be to let them designate more sensitive products.
Special Products (SPs)
Mr Falconer acknowledged that Members’ positions were ‘a long way apart’ on the Special Products that developing countries alone will be allowed to shield from the full force of tariff reduction on the grounds of food security, livelihood security, and rural development needs.
He speculated that the centre of gravity for SPs would be 5-8 percent of all tariff lines, and that tariffs on those products would be cut by 10-20 percent (see page 2). While Members were ‘perfectly entitled’ to disagree with his assessment, Mr Falconer said, he invited them to explain how they envisaged reaching an agreement based on different broad parameters. He said that ‘discernible movement’ on numbers was necessary within months, if not weeks. Otherwise, Members might have to admit that they were “not in fact going to ever negotiate a specific number for specials, […] or we are never going to have an agreement on this at all.”
Mr Falconer also presented ideas for compromise in the export competition talks, including subsidy elimination, food aid, exporting state trading enterprises and export credits.