AGRICULTURE NEGOTIATIONS FROM MID-2001?
by Chakravarthi Raghavan
Geneva, 24 Mar 2000 -- Judging from the statements of main protagonists and other key delegations in the Agricultural Trade talks, kicked off this week at the Special Session of the WTO Committee on Agriculture, negotiations based on proposals from Members can at best start from middle of 2001.
In terms of Art.20 of the Agreement on Agriculture (AoA), the negotiations for continuing the 'on-going process' of fundamental reform are to cover reduction commitments on world trade in agriculture (domestic support, export subsidies and reduction in trade barriers).
In terms of frequency of meetings, the Special Sessions of the Agriculture Committee for the negotiations are to meet back-to-back with the regular meetings of the Committee, scheduled to hold further meetings this year in June, September and November.
The ideas about the work programme and "member-driven process" for negotiations, sketched out in the statements of delegations showed that end of 2000 is to be a 'target date' for members to table comprehensive proposals, but with flexibility to enable proposals to be tabled by March 2001 or earlier proposals revisited or elaborated.
Though the flexibility of a March 31 deadline was mooted by developing countries (in informal talks) and was presented as something to accommodate them, given the US electoral time-table and a new President and administration would take over only in January 2001, the US itself is not expected to provide more than a broad objective and proposals by end 2000, tabling comprehensive proposals only afterwards.
Only after March next, and on basis of the proposals tabled, negotiating modalities and the areas to be covered, in terms of the mandate for the continuation of the reform process set out in Article 20 of the Agreement on Agriculture (AoA) are to be set, and then negotiations covering broadly the areas of market access, domestic support, export subsidies and rule-making covering the areas identified in Art 20 can be expected to begin. The WTO, which is deadlocked on the choice of a chairman to head the Committee on Agriculture (and thus other subordinate bodies in goods trade) and thus the Special Sessions to lead the talks, began with the outgoing chair of the WTO Goods Council, Amb. Roger Farrel of New Zealand (another Cairns Group member).
The search for a consensus chair for the Agriculture Committee, and the other subordinate bodies under the Council for Trade in Goods are to be continued through consultations by the General Council chairman, Amb. Kare Bryn of Norway and Farrel (as the outgoing chair of the Goods Council). But most members do not believe that any solutions would be found until at least near the next meeting of the Agriculture Committee (in June).
The EC (and Japan) having vetoed the choice of Brazil's Celso Amorim, on the ground of Brazil's membership of the Cairns Group, are now stuck, until an agreed choice is made, with another Cairns group member, Farrel of New Zealand, who has to 'conduct' any consultations in between meetings normally made by the Chairman.
The agricultural talks are in pursuance of Art.20 of the AoA which spells out that negotiations should take into account:
(a) experience to date from implementing the reduction commitments;
(b) effects of reduction commitments on world trade in agriculture;
(c) non-trade concerns, special and differential treatment to developing country Members, and the objective to establish a fair and market-oriented agricultural trading system, and other objectives and concerns mentioned in the preamble to the AoA; and
(d) what further commitments are necessary to achieve the above mentioned long-term objectives
The last para of the preamble of the AoA, referred to in 20. (c), calls for the reform programme "to be made in an equitable way among all Members, having regard to non-trade concerns, including food security and the need to protect the environment, having regard to the agreement that special and differential (S&D) treatment for developing countries is an integral element of the negotiations, and taking into account the possible negative effects of the implementation of the reform programme on the least developed and net food-importing developing countries.
[Both in the agriculture committee over the analysis and information exchange programme (AIE), and in the committee on environment, the EC, Japan and other agricultural protectionist countries have been using the argument of protection of environment and the rural country-side as reasons for domestic support, while developing countries and Cairns group have been arguing that the vast support was in fact resulting in deterioration of environment.]
In the initial statements, the EC, and its allies in Europe following EC acquis, and Japan professed their serious intention to negotiate, but left little doubt that they would allow progress only on the basis of progress towards and the launching a new "comprehensive round" of multilateral trade negotiations (including the new issues pushed by them, in particular investment and competition policy, meaning TNCs being able to compete with domestic enterprises) into which the agricultural talks would be rolled in.
The US envisaged linkages between work on agriculture, other mandated negotiations, and work towards launching a "broader trade Round".
Australia, for the Cairns Group of agricultural exporters, in a statement underscored that the agriculture negotiations was part of the "promise of continuation of reform" in this sector and that "this was not contingent in any way on other negotiations".
Australia added: "It was a free standing treaty commitment."
Referring to the post-Seattle talk about need to build confidence in the WTO, Australia added: "The way in which the negotiations are approached will either build or undermine support for moving forward with a broader future work programme for the WTO."
And if the EC and Japan indicated their intention to use the agriculture talks and progress as a leverage to launch a comprehensive round with investment, competition policy and other new issues, Australia left little doubt that they too had some leverage: the prospect of expiry at the end of 2003 of the 'peace clause', that enables the EU and Japan and others equally placed to escape disputes against their agriculture support policies under other WTO agreements, including the subsidies agreement and the GATT 1994.
The paragraph in the Cairns Group prepared text of the statement, referring to the peace clause as an incentive to complete the agriculture talks by end 2002, was however not delivered. The text with the para scored out was distributed to delegations inside (and thus became available to the media from members).
The EC, Japan, Korea and others who engage in heavy agricultural 'protection' countries brought in the 'multi-functionality' of Agriculture, though the Art. 20 mandate does not speak of multifunctionality, but only of 'non-trade' concerns.
Australia for the Cairns and the US brought in the mandate requiring the reform process towards a market-oriented agricultural trade to address domestic support, export subsidy and market access.
India, Indonesia, Malaysia and a number of other developing countries underscored their need for 'flexibility' and said the negotiations must also take into account problems faced by developing countries, because of their underlying constraints, in the areas of food security and rural employment, and that a purely market-oriented approach would not achieve their socio-economic objectives.
Jamaica specifically linked progress in agriculture to progress on implementation problems and the negotiations in TRIPs
Egypt brought up the issue of operationalising the Marrakesh decision on measures concerning possible negative effects of the reform programme on least developed and net food importing countries.
Australia for the Cairns Group recalled the origins of Art.20 and its heading about 'continuation of the reform process', reflecting the fact that after 40 years of neglect agriculture was tackled seriously in the Uruguay Round, but the first reform plan fell short of expectations of vast majority of members. Part of that deal (at Marrakesh) was the promise of continuation of reform (in Art 20) and "this was not contingent in any way on other negotiations - it was a free standing treaty commitment".
For Australia and the Cairns Group, this was the starting point for the negotiations. But since the failure of Seattle there had also been much talk about the need to build confidence in the WTO, Australia noted and said: "The attitude and approach to the mandated agriculture negotiations therefore has a wider significance. The way in which the negotiations are approached will either build or undermine support for moving forward with a broader future work programme for the WTO."
While world price increases had enabled most countries to meet commitments on export subsidies, capacity to subsidize exports remained still very high, and some members used "astoundingly high levels" of export subsidies. The domestic support entitlements too were still huge, and total support had returned to almost the 1987 levels. And agricultural tariffs remained five times higher on average than for other goods, with peaks as high as 500%, and some in-quota rates of 200% or more, and proliferation of tariff quotas, which were not administered fairly - with only two-thirds filled on average.
While the Cairns group would prefer target dates for detailed negotiating proposals by October/November, it was ready to be flexible in view of the difficulties of some about such a date.
If target deadlines are to be December, then there should be a meeting of the Special Session early in 2001, to have the proposals lodged, elaborated and discussed, and for stock-taking.
The EC said that while it took seriously its commitments under Art. 20 of AoA, and intended to negotiate purposefully, "we continue to be convinced that a successful conclusion can best be reached in the context of a comprehensive Round.
As for a work programme, the areas to be covered were in Art 20. On the basis of the analysis and information exchange (AIE) process and notifications, and the data base, the EC wanted the secretariat to provide a synthesis and analysis for discussions at a later meeting. The tariff quota administration issue could be addressed in this context.
As the biggest importer, and second biggest exporter of agricultural products, the EC was interested in lowering trade barriers, and obtaining improved market opportunities for its exporters in balance with increased access to the EC market. The EC also wanted progress on non-tariff issues, including consumer protection against misleading labelling.
On domestic support, while the community was moving away from high price support to a more market-oriented system with compensation to producers de-linked from current output, these reforms would need continuance of the concept of Blue (actionable subsidies in case of trade damage) and Green (non-actionable subsidies) boxes.
On export competition, the EC was ready to move towards more equal terms of competition, but the issues involved were much broader than simple reduction in export subsidies, but include other instruments affecting export competition (a reference to US export credits etc).
As for S & D, while not being presumptuous in making assumptions about what developing countries would seek, the EC was committed to move in partnership with other developed countries towards a situation where essentially all products of LDCs could enter "our markets free of tariffs and free of quotas".
This seemed to imply that the EC would narrow down the S & D treatment to the LDCs.
As for non-trade concerns, the EC's objective was to ensure means are found to enable agriculture to perform its multi-functional role. The EC would elaborate the precise nature of this role, covering the environment, rural development, food safety, food security and animal welfare, and instruments for safeguarding it.
Japan, with one of the most heavily protected and highly government-supported and subsidised agriculture, wanted the negotiations in terms of Art 20 to be held in a balanced manner, and establish rules and disciplines that were "genuinely fair and equitable" for all Members and "allowing for co-existence" of various types of agriculture.
Balanced results, Japan said, could be obtained only by taking into account the diverse nature of agriculture. Hence the importance of multi-functionality including food security.
There was also need to redress the imbalance in rights and obligations between exporting and importing countries, and for due consideration to be given to the needs of developing countries which account for the majority of the membership, and enable each government to respond to the interests and concerns of consumers and civil society.
But the negotiations in agriculture would gain a stronger momentum when the negotiations became a part of a new Round. In order to conclude the negotiations on agriculture, it is imperative that all aspects of the new round, including agriculture, be considered a 'single undertaking' and efforts continued towards the launch of a new Round.
While conducting negotiations in agriculture, there should be acceleration of discussions for the launch of a new round, Japan added.
Hungary was prepared to participate in good faith and without preconceptions in all aspects of the Art 20 negotiations - in market access, domestic support, export competition and rule-making.
At the same time Hungary was under no illusions that the pace and outcome in agricultural negotiations would be heavily dependent on scope of overall negotiating agenda of the WTO, and hence its preference for agricultural negotiations to be conducted within the framework of a comprehensive round of multilateral trade negotiations that would enable trade-offs.
The United States said it would actively participate in the negotiations, and wanted agriculture to be at the centre of the work at the WTO this year, "both as we work to launch a broader trade Round and as we advance the work on mandated negotiations." The US supported an end of the year deadline for submission of negotiating proposals from countries, but with recognition that countries might revisit or make further elaborations on their earlier proposals during the first quarter of 2001.
New Zealand suggested that the presentation and initial consideration of negotiating proposals should be completed at the Special Session next March and, following that, the agriculture negotiations should move to a new, more intense phase.
India, in its statement supported the objective of agriculture negotiations to bring about reform and discipline in one of the most distorted sectors of trade, by disciplining use of trade distorting subsidies and reducing import barriers, especially non-tariff barriers.
But the negotiations must take into account problems faced by developing countries which, because of certain underlying constraints have to necessarily take into account concerns such as food security and rural employment while formulating their domestic policies.
The negotiations must recognise that in countries like India where the main source of assured entitlement to food is food production itself, either in the form of subsistence farming or through generation of farm incomes, import of food could not be an alternative to domestic production. Food security therefore naturally became an extremely important concern for countries like India.
In such countries, India reiterated, "a purely market-oriented approach may not be able to achieve the desired socio-economic objectives."
The only way such concerns could be met was by providing a certain degree of flexibility to developing countries, specially in provisions relating to domestic support and the 'green box'. India would submit concrete and operational proposals for S & D provisions for developing countries that would take into account the experience of developing countries in adopting the present reform process, their differing levels of economic development, the role of agriculture in their economies, particularly in countries with large rural agrarian populations, the need to ensure food security as well as vulnerability of the agricultural sector in developing countries.
As for the work programme and deadlines, India said there should be some inbuilt flexibility for submission of proposals or additional proposals or elaboration and strengthening of earlier proposals, at least until the March 2001 meeting.
It was also important that the secretariat should be able to provide technical inputs, and secretariat assistance would be vital for small delegations with limited resources.
Egypt noted that Art 20 had clearly stipulated the agenda for the mandated negotiations. It was necessary that the negotiations should discuss and adopt means to operationalize the Marrakesh decision on measures concerning possible negative effects of the reform programme on LDCs and net food importing developing countries.
At the end of the discussions and presentations in two sessions (Thursday afternoon and Friday morning), the Committee agreed that work in terms of the Art. 20 would be based on technical papers and submissions by participants,as well as on basis of information prepared by the secretariat the request of the committee.
The negotiating proposals are to be submitted by end December 2000, on the understanding of flexibility to submit further and more detailed proposals beyond that date, but in time to enable the stocking taking exercise in March 2001 meeting.
For the June meeting, the committee agreed that the secretariat should provide the background papers by revising and updating material based on notifications about tariff quotas, domestic support and export subsidies, use by countries of these expressed in a common currency; the agricultural trade performance of developing countries; effects of reduction commitments on agricultural trade; and, implementation of the Marrakesh decision on LDCs and net food-importing countries. (SUNS4634)
The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.
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