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TWN Info Service on WTO Issues (July03/4)

Third World Network

7 July 2003

Dear friends and colleagues

REPORT ON WTO AGRICULTURE NEGOTIATIONS (26-27 JUNE & 1 JULY 2003):

NO CHANGE IN POSITIONS DESPITE EU MINISTERS DECISION ON CAP REFORM

Recently the WTO agriculture committee held three days of negotiations.  Despite the EU Ministers’ decision on reform of their Common Agriculture Policy, there was no change of position in the WTO, either by the EU or other countries.

Most delegations were skeptical that the EU’s decision would make significant changes to the EU’s negotiation position in the WTO.

Discussions focused on proposals for special safeguard mechanism (SSM) and special products for developing countries.  There was opposition to the flexible use of these categories from the US and Australia.

This prompted strong responses from developing countries, especially the Philippines and Indonesia.

Below is a TWN report on the agriculture negotiations.

Please check our website for previous reports in the TWN Info Service series:  www.twnside.org.sg.

With best wishes

Martin Khor

Third World Network

 

 

MEMBERS STICK TO THEIR POSITIONS IN WTO AGRICULTURE SPECIAL SESSION

TWN Report by Martin Khor, Geneva 3 July 2003

After three days of informal and formal meetings that concluded on 1 July, the negotiations on agriculture at the WTO have not made any progress, trade diplomats said.

The European Union agriculture ministers last week agreed on measures for reform of their common agriculture policy. These relate to domestic support of the EU farmers, but the European Community is yet to formulate and table proposals at the WTO talks - in terms of domestic support, export subsidy and market access.

At the agriculture committee special sessions (where the talks at the WTO are taking place) the different protagonists and groupings of countries stuck to their positions. The special session met in informal mode on 26 and 27 June and in a formal meeting on 1 July.

Judging from the views expressed, there was no change in position of the various parties on approaches to market access and tariff reduction, elimination or reduction of export subsidies, how to deal with domestic support and the subsidies under “amber, blue and green boxes”, and whether some non-trade concerns (such as geographical indications, the precautionary principle, and labelling).should be part of the negotiations.

WTO members were also split during the discussion, and sometimes had heated exchanges, on the proposals for a special safeguard mechanism (SSM) for developing countries to protect themselves against import surges, and for allowing developing countries to designate some products as “special products” (SP) which can enjoy minimal or smaller tariff reduction.

The chairman of the agriculture special session, Mr Stuart Harbinson, tabled the draft of a report on the status of the negotiations, which he will submit “under his own responsibility” to the Trade Negotiations Committee on 14 July.

The members made several critical comments on the draft report. It is not known whether Harbinson will revise his report to take account of the comments.

Although not part of the agenda, the EU decision on its CAP reform was briefly and generally commented upon, but more  in the corridors of the WTO than in the meeting hall.

The EU told the special session that the CAP reform decision would allow it to go to Cancun with serious negotiating proposals, but called for “all sides” to reciprocate.

Japan welcomed the EU proposal as a sign that the EU is responding to legitimate concerns of civil society.  Japan said it was also reforming its agriculture in a way suitable for Japanese conditions, and this should be encouraged through a flexible deal in the negotiations and should not be undermined by unrealistic demands.

The Cairns Group and the US cautiously welcomed the EU reform as a step in the right direction, but said they needed more details, to see how the decision translates into the EU’s negotiating position. They noted that the decision is about domestic support and not about market access or export subsidies. The Cairns group members said it that the reform proposals did not go far enough, some complaining about supports being shifted between domestic subsidy boxes without any reduction.

Harbinson described the EC reform as timely and welcome and said it should give some impetus to the negotiations.

Many developing countries did not seem convinced.  Outside the meeting rooms, the Ambassador of an Asian country said he was “sceptical” that the EU measures could provide an impetus to start serious negotiations.  He pointed out that even the EC itself would not know for some time how the member states would formulate their national policies, given the flexibilities that the decision gave the member states in implementation.  And with so many exceptions and dilutions to the decoupling principle, it was doubtful there would be any genuine concession the EC could offer, he said.

“I doubt the EC can really tell us before Cancun what its detailed position will be, or that we can agree on modalities before or at Cancun,” he added.

An African Ambassador said from what he had read of the EU decision, “it wants to give the appearance of movement, but in reality there is none.”

The meetings discussed at some length the special safeguard mechanism (SSM) and special product (SP) category for developing countries that had been proposed in the Harbinson draft modalities paper.  Many developing countries voiced strong support.

Several, including India and Indonesia, asked that flexibility be given to developing countries so that they could decide themselves which products are eligible for SSM and SP.

The US did not favour the use of the SP category, and said all countries should liberalise even if there are provisions for some developing countries.  Australia was especially strong in its objection to SP, giving the results of a study on five developing countries to back its claim that if the SP category were given to ten of the largest imported products, it would cover more than half of the countries’ agricultural imports.

Other countries, including some Cairns Group members from Latin America , warned against the possible use of SSM and SP as protectionist tools, and called for criteria to be set for their use.  Colombia proposed allowing countries making steeper tariff cuts to use more SSMs and SPs, than those making more modest cuts.

Most members of  the Cairns group made it clear that they want “effective and meaningful” market access in both developed and developing countries.  The need to “promote South-South trade” is a code used for gaining market access in the South.

Indonesia and the Philippines, though both members of the Cairns Group, broke ranks with the other Cairns Group members and spoke strongly and bluntly on the need of developing countries to protect themselves from cheap imports, including through the SP and SSM instruments.

The Philippines expressed concern that some developed countries were intent on getting developing countries to further liberalise. It said that without genuine reduction in domestic support in rich countries, and without effective SSM and SP mechanisms, further liberalization in developing countries is not feasible.

“Our small farmers are being slaughtered in our own markets because of cheap imports,” said the Filipino delegate.  “We cannot afford the political and social implications of liberalization.”

He added that all three pillars (domestic support, export subsidy/competitivity and market access) should be addressed together.  Market access should not be put forward to negotiate before domestic support and export subsidy; instead all three should be taken up simultaneously.

Indonesia was concerned that the major agricultural exporters were ignoring the need of developing countries to use the SP category for rural development and food security. For Indonesia, SP is an integral part of the package and its rejection would make it hard for Indonesia to accept any package.

Regarding SSM, Indonesia was concerned that some countries wanted to set criteria for its use.  SSM is an essential defence mechanism and a vital measure to deal with cheap imports. “We don’t have strict criteria for the use of amber, blue and green box domestic subsidies, so why are you demanding strict criteria for using SSM?” asked Indonesia, pointing out the double standards involved.

Indonesia challenged the conclusions of the Australian study, saying in any case it did not apply in the Indonesian case, as the use of SP category would result in only a slight reduction in the average tariff for its top 20 agricultural imported products.

Rebutting Australia’s claim that the use of SP would devastate the reform process, Indonesia asked: where are the reforms in subsidies anyway?  The reform, Indonesia added, is not only about competitiveness and profit.  For Indonesia, the priority is not to get export competitiveness but to get measures to meet the need for allowing its millions of small farmers to survive.

India said commercial considerations alone could not address its farmers’ problems. Gains to exporting countries should not be at the expense of developing countries. It compared the ambitious levels advocated by some countries for market access to the less ambitious ambitions in reducing domestic support and export competition, and said it was not possible to move in market access without commensurate movement in the other areas.

China noted there was a large divergence of views among members.  Its main concern was the gap between developed and developing countries over domestic support and export subsidy. The formula for tariff reduction should address differences in the levels and structure of tariffs.

China supported SP and SSM as well as other special countervailing mechanisms that should be available for developing countries to use against subsidized imports. The situation of recently acceded countries should also be taken account of.

The meeting also discussed the proposal by four African countries to have a decision in Cancun on accelerated reduction or elimination of cotton subsidies.

Many countries spoke in sympathy with the problems of the African cotton producers. New Zealand and Canada supported the proposal.  Australia said it deserved special consideration but should not be confined to cotton.

The US, which has by far the largest cotton subsidies, said there should be multilateral commitments and the US proposal would be able to deal with cotton as well.  EU and China, which were also mentioned as subsidizing countries in the African proposal,  tried to correct the impression that they were also to blame.  China said it had eliminated its export subsidies and did not export, while EU said it did not subsidise its cotton exports and it was a net cotton importer.

There were also discussions on whether the Harbinson draft modalities paper could be accepted as the basis for negotiations.

Several countries, including the EU, Switzerland, Norway, and Japan insisted the Harbinson draft could not provide a basis, and wanted this to be reflected in the chairperson’s report to the Trade Negotiations Committee.  They called for a substantially different text, without saying who should produce it.

Egypt asked if this is rejected, then what alternative text could be used?  Should the talks return to the beginning of January 2000 or should the December 2002 overview paper (a compilation of the country-positions) be used as the basis for negotiation?

Uganda and Zimbabwe said they were confused by the statement that the draft is not an acceptable basis for negotiation. What then should ministers do with the draft, Zimbabwe asked.

At the end of the formal meeting, chairperson Stuart Harbinson said he sensed  that members felt they have to start negotiating with each other and not with the chairperson. He indicated that a new document could not be produced unless new ideas emerge from negotiations.

He urged the members to begin to make the hard choices as there were only a few weeks before Cancun. “We simply cannot afford to present ministers with too many complex issues to solve in too short a time.”

 


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