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Agriculture Committee discusses negotiating proposals

by Chakravarthi Raghavan

Geneva, 5 Feb 2001 --   Proposals for negotiations on agriculture tabled by various countries and groups of countries are being taken up this week at the WTO’s Committee on Agriculture, meeting in Special Session, with proponents due to introduce and explain their proposals and hear comments.

The Committee has before it several proposals and papers, including negotiating proposals: from the European Community, Japan, Korea, Norway and Switzerland (all major agricultural productionist countries; :a paper from Argentina on ‘legitimate non-trade concerns’; a proposal from Canada on domestic support (complementing the Cairns group’s proposals); a Cairns group’s paper on export restrictions and taxes; a market access paper from Swaziland in terms of the Special and Differential Treatment for small developing countries; a negotiating proposal from Mauritius; a paper  from a number of  Caribbean countries on behalf of ‘small island developing states’ and another on behalf of the Caribbean Community members;  a proposal from Mali (an African landlocked least-developed country, focussing mainly on market access for its agricultural products, and proposals by India covering food security, market access, domestic support and export competition.

Much of the time of the meetings this week are expected to be taken up in the countries that have tabled proposals to introduce and explain, and hear comments and/or provide explanations to questions from other members.

In terms of the road-map set for the agriculture negotiations, the setting of guidelines for the negotiations is to be taken up after March.

The Argentine paper on ‘non-trade concerns’ argues that these should be pursued consistently with the objectives of the negotiations, and not at the expense of other trading partners. Nor should pursuit of non-trade concerns undermine the objectives of fundamental reform of the trade in agriculture and the consequences for developing countries.

In its “comprehensive negotiating proposal”, the EC has dealt  with trade issues, non-trade concerns, special and differential treatment for developing countries, and for the continuance of the peace clause.

Article 13 of the Agriculture Agreement (AoA), known as the peace clause, provides for due restraint and ensures that various domestic and export subsidies, so long as they conform to the disciplines of the AoA may not be challenged or disputes raised in terms of their violation of the agreement on subsidies and countervailing duties. This provision runs for nine years from 1995, and unless continued (through a new agreement in agriculture for continuing the reform process), will open the EC domestic and export subsidy practices to be challenged for violations of the Subsidies Agreement.

Under market access, the EC proposals call for a tariff-reduction formula approach, providing for an overall average reduction of bound tariffs and a minimum reduction per tariff line, as in the terms of the Uruguay Round Agreement (URA). The EC also calls for continuing the Tariff Rate Quotas (TRQ), but with a defined set of rules and disciplines to increase transparency, reliability and security of the management of TRQs.

And as a ‘counterpart’ of improved market access, the EC proposals call for ‘fair competition’ for products whose quality and reputation are linked to their geographical origin and traditional knowhow.

In these terms it calls for provisions to guarantee effective protection against usurpation of names for agricultural products and foodstuffs; protection of the right to use geographical indications or designations of origin; and guarantee of consumer protection and fair competition through labelling regulations.

The EC also wants continuation of the special safeguard clause (SSG) provisions of the AoA -  which effectively applies now only to the industrialized countries with high levels of protection and which converted their various non-tariff barriers and protections into tariffs.

A number of developing countries have been contending that the SSG provisions (enabling safeguard actions to be taken based upon import prices, without having to show any domestic injury, as under the ordinary safeguards provisions of the GATT/WTO), are unfair and should be either deleted, or their applicability extended to the developing world too.

In terms of export subsidies and competition, the EC proposes that the officially supported export credits in agriculture (widely used by the United States to subsidise its exports) should be covered by and brought under WTO disciplines, and in effect bring any understanding or accord reached at the OECD into the WTO.

Also, in the EC view, ‘abuse’ of food aid should be prevented by strengthening the rules of the food aid provisions in Art.10 of the AoA.

In this view of the EC, any food aid should be given in fully grant form, and a code of conduct established including to enable recipient countries to purchase food in developing countries, and clearly define rules about genuine food aid so as not to damage local food production and marketing capacities of recipient countries.

In regard to State Trading Enterprises, the EC proposals call for abolishing cross-subsidization, price-pooling and other unfair trade practices.

On the basis that all forms of export subsidisation would be dealt with on an equal footing, the EC says it is willing to negotiate further reductions in export subsidies.

In terms of domestic support, the EC is willing to negotiate further reductions in domestic support, provided  the current concept of ‘blue’ and ‘green’ box subsidies is continued and maintained, but subject to discussions on detailed rules on domestic support.

The further reductions would be on the basis of the final bound commitment level, with a further strengthening of rules concerning non-product specific domestic support and by a reduction of the ‘de minimis’ clause for developed countries.

In the EC view, the trade impact of the ‘blue box’ system is less trade distortive than market price support or price payments based on output or on variable input use. But the criteria for measures to fall into the ‘green box’ category should be revised to ensure minimal trade distortion, but ensuring appropriate coverage of measures meeting important societal goals like protection of environment, vitality of rural areas, poverty alleviation, and food security for developing countries. At the same time, the EC wants specific disciplines to be applied to variable ‘amber box’ subsidies that boost export performance through compensation for variations in market prices.

Under non-trade concerns, the EC papers returns to the theme of the multifunctiional nature of agriculture, in both developed and developing countries, including its contribution to sustainable development, protection of environment, sustained vitality of rural areas and poverty alleviation.

Well targeted and transparent measures aimed at protecting the environment should be accommodated within the AoA, and with such measures implemented in minimally trade-distorting ways.

Similarly, measures to sustain vitality of rural areas and poverty alleviation is to be provided for under the AoA.

In relation to food safety issues, the EC wants the application of the precautionary principle to be clarified so that the WTO is not used to force onto markets products, about whose safety there are legitimate concerns.

In order to meet consumer concerns, labelling schemes should be developed to provide more information to consumers.

Also, trade liberalization should not be used to undermine efforts at protection of animal welfare.

Under special and differential treatment, the EC calls for trade preferences to exports of developing countries being provided by developed countries and the ‘wealthiest’ developing countries. There should be examination of ways by which these could be made stable and predictable.

Where appropriate, domestic support measures of developing countries for poverty alleviation should be exempted from reduction commitments.  The de minimis clause for developing countries should also be revised to provide necessary flexibility.

Japan, in its proposals, calls for revision of the minimum access opportunities under the UR/AoA, arguing that it has created a fundamental problem of imbalance between importing and exporting countries, and wants the level of access to be set taking account of ‘the benefits of multifunctionality of agriculture and ensuring food security’, As for TRQs, each member must adopt methods for administering the TRQ system based on their domestic conditions -  in effect thus taking them out of the WTO disciplines.

Japan also wants the SSG to be maintained, and in addition new mechanisms introduced to deal with safeguards for seasonal and perishable food products.

Japan is also opposed to sector specific tariff reductions.

As for domestic support, Japan wants improvements in effect for expanding the scope of subsidies and support that can be provided under the ‘green box’, and for maintaining the ‘blue box’ measures that are exempt from reduction commitments.

On export subsidies, Japan wants further reduction in amount of export subsidies and volume of subsidized exports; strengthening the disciplines on measures taken during implementation (including on rollovers); binding the unit value of export subsidy and then subjecting them to progressive reduction; strengthening export subsidy disciplines on products and markets in which developing countries are interested; strengthening disciplines on export credits and on domestic support that has a similar effect to export subsidies.

Under Japan’s proposals, all export prohibitions and restrictions should be converted into export taxes and bound in the WTO, and in cases where short-term or temporary measures are needed before export taxes are introduced, disciplines should be strengthened.

In terms of S&D for developing countries, the Japanese paper calls for a wide range of flexibility to developing countries on rules and disciplines on border measures so as to ensure their food security, on domestic support and their application so as not to affect the support necessary to increase food production for domestic consumption. Also, while strengthening the rules and disciplines on exports and state trading, there should be measures favouring the developing countries to exempt or ease obligations so as not to cause excessive burden on the developing countries.

The Japanese proposal for S& D for developing countries, under food security, also calls for a possible framework for international food stockholding in order to complement bilateral and multilateral food aid schemes and to enable loan of food in case of temporary shortage.

Japan has also advanced proposals to respond to what it calls concerns of Japanese consumers and civil society on measures to ensure stable food supply, providing safe food, appropriate labelling to enhance consumer confidence, and provision of adequate information to consumer and civil society about the agriculture negotiations themselves.

Korea, in its proposals covering ‘multifunctionality’, calls for specific provisions with adequate level of government intervention to secure the multifunctionality of agriculture including provision of public goods such as food security, environment protection and rural development, practical and operational provisions for S&D for developing countries, and more effective disciplines on export-related measures such as export subsidy, export credit, export restrictions, export tax and export state-trading enterprises.

As for tariff reductions, Korea wants commitments set in a way that recognizes the individual situation of each member country. In Korea’s case most import restrictions have been eliminated, it is claimed, and with tariffs as the main border protection measure, further substantial tariff reductions may bring about tremendous disruptions in the agriculture sector of a number of countries. There should hence be gradual as well as minimal tariff reductions.

In addition to other domestic support measures in the 'blue box', Korea also wants exemption from the reduction commitment of measures for compensatory support for multifunctionality of agriculture, enhancing the income safety net, supporting small-scale family farm households, and support for agricultural and rural development in developing countries.

In terms of measures for protection of human life and health, Korea calls for enabling appropriate measures to meet consumer concerns on food safety and quality, potential risks of GMOs on human health and environment and the application of the precautionary principle.

In its proposals, Switzerland notes that most of the current S&D provisions of the WTO take the form of extended deadlines, and are thus inevitably transitional. In the Swiss view, current negotiations should seek solutions that are more apt to meet the specific needs of developing countries.

But unlike S&D, in the Swiss view, non-trade concerns are not linked to any specific stage of development and apply to all societies. Hence a long-term horizontal system should be developed to provide all countries with necessary instruments in this regard.

The Swiss proposal, like that of the EC, also calls for negotiations to provide additional protection for geographical indications of origin (now related to wines and spirits) and their extension to other products. A successful outcome to these negotiations under the TRIPS, in the Swiss view, would contribute to a more equitable agricultural market. – SUNS4829

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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