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TWN Info Service on WTO Issues (August03/12)

22 August 2003

Third World Network

Dear friends and colleagues

AGRICULTURE: 17-COUNTRY PAPER ON MODALITIES EVOKES DEVELOPING-COUNTRIES SUPPORT BUT EC ANGER

The agriculture negotiations in WTO took a dramatic turn when 17 developing countries, including Brazil, India, China, South Africa, put forward a framework paper on modalities as a counter to the US-EC paper of last week.

The Brazilian Ambassador introduced the paper in a systematic presentation to the heads-of-delegation (HOD) informal meeting at WTO on 20 August.  It was welcomed by a number of developing countries and also cautiously welcomed by some Cairns Group developed countries.

However it was attacked in aggressive tones by the EC representative, who accused the co-sponsors of confrontation, South-North conflict, and of “classical” tactics of aiming at the stars in order to get the moon.

The Brazil Ambassador said his aim was not the moon at all, but to get access to markets in Europe and elsewhere down on earth.

With this paper, there are now two major proposals on the table, i.e. the EC-US paper and the Brazil-India-others paper.  The aim of the proposals and discussions is to prepare a paper on agriculture modalities or “framework” to be placed in the Cancun Ministerial Declaration.

The HOD meetings took place on 20 and 21 August.  On 21 August afternoon and night, intense discussions of selected countries were taking place, and are expected to continue.

Below is a TWN report on the 20-21 August HOD meetings on agriculture.

With best wishes
Martin Khor
TWN

 

WTO AGRICULTURE NEGOTIATIONS:  17-COUNTRY PROPOSAL ATTACKED BY EC, SUPPORTED BROADLY BY DEVELOPING COUNTRIES

TWN Report, Geneva 21 August, by Martin Khor

The agriculture modalities proposal of 17 developing countries, including Brazil, India China and South Africa, met with widespread support from many other developing countries and cautiously welcomed by some Cairns Group developed countries, but was strongly attacked by the European Communities.

The paper was submitted by Argentina, Brazil, China, Chile, Colombia, Costa Rica, Ecuador, Guatemala, India, Mexico, Paraguay, Peru, Philippines, South Africa, Thailand, and Venezuela.

There was an air of expectancy and even excitement when Brazil presented the proposal on behalf of the 17 countries.  It was seen by delegates and observers as an effective counter-proposal to the joint US-EC paper put out last week and which had been roundly criticized by a whole range of developing countries and Cairns Group members.

The EC representative, Peter Carl, attacked the paper in an aggressive and angry tone, calling it needlessly confrontational, claiming that it revived 1970s slogans of South versus North, that it represented a “Manichean approach to international cooperation”, and that the proponents were aiming at the stars in hopes to getting the moon.

This prompted a response from Brazil’s Ambassador, Seixas Correa, that it was not he moon that the co-sponsors wanted, but down-to-earth markets in Europe and elsewhere for their products through reforms to the unfair agricultural system.

Introducing their proposal, Correa said the cosponsors represent “not too far” from 50% of world agriculture trade and a sizeable portion of world population, and a wide cross section of he WTO membership.  They felt the US-EC paper fell short of constituting a basis for negotiations nor did the majors disposed to changing the core of their proposals.

That’s why the co-sponsors are presenting an “alternative framework proposal,” he said.  It aimed to be in line with Doha’s ambition level and incorporate the concerns of as many players as possible, thus mainstreaming S and D provisions in all pillars.

Correa said much is requested from developed countries, since we expect more from them, as they have the means to distort agriculture policies with a wide array of mechanisms to protect their farmers. Developing countries don’t have that and rely only on border protection to insulate their farmers from wide fluctuations made more damaging by Northern subsidies.

He added their paper indicated the need to provide security to developing contries in any context of market liberalization, to ensure domestic production will not be dislocated by cheap imports predicated on subsidies.

On the substance, he summarized the paper as follows.  On domestic support, the proposal aims at faster reduction of support in developed countries for those items that most benefit from it, and those that find their way to third markets.  They kept the majors’ formula regarding de minimis and reduction for all distorting support.

They also proposed elimination of derogation under Article 6.5:  “Rather than creating a new Blue Box, we prefer to get rid of its deleterious effects.”

On S and D, there is an extension of criteria for programmes for low income and resource poor farmers.  De minimis for developing countries is maintained at existing levels.  If negotiations reach appropriate ambition levels, developing countries with AMS commitments will not find it impossible to undertake reduction commitments with accepted S and D principles.

Their proposal also incorporates concerns of most countries, that criteria for Green Box payments should be strengthend and the payments shoud be capped and/or reduced.  “For us it is absolutely essential that the reform of domestic support will not degenerate into an exercise of futile box shifting,  The re-labeling of policies is not an appropriate way of solving concrete problems.  Strict criteria and expenditure limits have to be imposed so as to avoid the corruption of the Green Box.”

On market access, Correa said they incorporated the basic structure of the blended formula and some key aspects of the Harbinson paper on tariff rate quotas.  They proposed to substitute the Uruguay Round formula by a simple linear cut, and that special safeguard (SSG) be discontinued for developed countries.  Duty free access should be granted to tropical products, those contained in the Agreement preamble and other products of interest for developing countries.

Regarding S and D in market access, they suggest the Uruguay Round tariff cut formula for developing countries and the creation of a Special Products category (under conditions to be negotiated) and a special safeguard mechanism (contingent on the level of liberalisation) for developing countries.

On export competition, Correa said their proposal gives effect to the Doha mandate and recognizes that “the only parallelism” can be achieved through elimination of export subsidies and effective disciplines on export credits and food aid.  A S and D provision from the Harbinson paper on para 9.4 was kept.

On other issues, the proposal addresses preferences erosion, recently acceded members and LDCs (the latter not requiring to undertake reduction commitments).

He ended by quoting the Brazilian novelist, Guimaraes Rosa, that reality confronts us not at the beginning or end of a journey but in the middle, and we are now facing a complex reality at the middle which has to be dealt with in an inclusive fashion or we will not reach the end of the road.

Several developing countries that co-sponsored and some others that were not co sponsors spoke in support of the joint paper.

Pater Carl of the EC aggressively attacked the proposal, describing it as “needless confrontation” with the introduction of old slogans of South versus North, and a “Manichean approach to international cooperation.”

He called the proposal an “interesting amalgamation of well known Cairs Group and developing countries proposals, all take, no give.”  He asked: “So what is the purpose?”   He said since time has virtually run out, the consequence of the joint paper would be to unfairly shift heavy responsibility of drafting to the chairman.  “How can he be expected to play God without a beginning of convergence?” he said.

Carl said the proposal asked that all reforms and efforts be made by developed countries and hardly any by developing countries.  “What constructive purpose can be served by this kind of Manichean approach to international economic cooperation?  All for A and nothing for B may be attractive for A as a clever tactical move but how about the longer term consequences?  And how  could I possibly justify such an extremist approach to my own constituency?”

He added that the proposal represented a “reinvention of the 1970s slogan of South versus North, two days before finishing preparatory work for the Ministers.”

On domestic support, he said major effort must be made by the main subsidizers, “but why make this difficult or impossible by piling additional demands to cap or abolish subsidies with no or limited distorting effect? If the purpose is to make further domestic reform difficult or impossible, the objective has certainly ben achieved.”  He was unconvinced why high income developing countries should go scot free and others be obliged to undergo radcal reform.

ON market access, he termed as a “remarkable dichotomy” the proposal for Uruguay Round approach for all developing countries but deny it to other including the EU. 

On export competition, he said the Doha mandate did not forsee elimination.  The EU is wedded to major reform and reduction but also reject total elimination.  He complained about the deep imbalance of the proposal treating export credits “much more gently” than export subsidies, in contrast to the EU/US draft on parallelism/equivalence.

He also criticized that disciplines on state trading enterprises were completely gone, to the relief of Cairns members whose motto on expor subsidies seems to be “don’t do what I do, do what I say,” i.e. proposing to remove trade distortions on a very selective basis and certainly not by friends.

Carl said he did not understand the purpose of the paper, except in terms of “all too classical haggling tactics, where you ask for the stars in the hope that others will breathe a sigh of relief if you settle for the moon.  Well the moon is not for sale, we are willing to settle for something in the earth’s atmosphere, not in the thin air of the stratosphere.”

He concluded he was not impressed by this, as negotiations require a search for compromise, not needless confrontation on the introduction of old slogans.

An Asian diplomat, whose country did not co-sponsor the proposal, said outside the meeting he was shocked and greatly disturbed by the way the EC representative had attacked the proposal, in terms that are too aggressive and rude.  “Even if you don’t agree, you can argue it out on substance without name calling.  After all, the EC has been putting all kinds of extreme proposals on the table too, not only on agriculture.”

Speaking to the media, Brazilian Ambassador Correa said it was wrong to portray Brazil and the other co-sponsors as aiming at the stars to get the moon.  “It’s not the moon we want at all. What we want is on the earth, that is, fair access to markets of Europe and so on.”

In contrast to the EC’s outburst, Us gave a calm response to the 17-country proposal and other proposals that had been tabled that day, saying it would study them later, and welcoming that the “framework approach” is gaining ground.  It understood that some countries wanted dramatic reductions, and there are elements of that in the US-EC paper.  It asked whether the Uruguay Round approach being proposed would yield marlket access especially to developing countries with high tariffs.  It claimed that 70 percent of benefits that go to developing countries  would come from their own reforms.

Australia and New Zealand said they liked the Brazil approach.  Australia however said developing countries must also reasonably contribute to liberalization.  New Zealand was in favour of the proposal but said the way forward would be to find common ground with all.

Canada said it appreciated the Brazil paper, and appealed to the co-sponsors and EU-US to find common ground.  The Brazil paper had positive inputs which could be part of the Chair’s basis for negotiations. 

There were other papers and proposals tabled, most of them a response to the the EC-US text.  These papers were from Japan, from two groups of countries, the first being Bulgaria, Chinese Taipeh, Iceland, Korea, Liechtenstein and Switzerland, and the second being Dominican Republic, Honduras, Nicaragua and Panama.

A Norwegian paper presented on Thursday accepted the Special and Differential Treatment approach in the 17-country proposal on domestic support, the Uruguay Round approach on tariff cuts, and the Special and Differential treatment approach on export competition. Norway however combined this with opposition to any cap or reduction in green box support, nor on maximum tariffs or TRQ expansion, maintaining the special safeguards mechanism, and for continuance of the peace clause.

At the end of the HOD on Thursday, the Indian ambassador, Mr.K.M.Chandrasekhar, intervened to reply to the points made against the 17-country proposal, in particular the criticism from the EC.

On the issue of ‘timing’, Chandrasekhar said that the US and the EC had accommodated each other’s interests and concerns (but left out the issues of others) and had presented their texts only on 13 August. ‘Encouraged’ by the US-EC approach, the seventeen in their text had dealt with the concerns of others, Chandrasekhar remarked.

The very composition of the 17 member group and their different interests showed that the paper had been evolved in a democratic way.

On the complaint that the paper had not specifically provided for the LDCs, Chandrasekhar said that the Doha declaration itself had set the mandate in terms of members committing themselves to giving duty-free access to LDCs for all products.  The G-17 paper took over from that position, and had used the term “shall” in terms of the commitments to be made.

On the view of the paper being made a North-South issue, the Indian ambassador noted that the US and the EC had sought to bridge their gaps. The 17-country paper had sought to address the ‘development agenda’ and the concerns of the developing countries.

On the US view that many developing countries had tariffs that were nine times that of the US and hence the Swiss harmonization formula (used by the US-EC paper), Chandrasekhar said the whole issue was about market access and protection for farmers. The US and the EC provided protection to their farmers through ‘green box’ and ‘blue box’ supports from their budgets. And this was 20 to 30 times the level of domestic support in developing countries, who could not afford budget-support. The only protection they could provide to their farmers was through tariffs.

Any agreement would need to bear in mind the sensitivities of all members, he added.

In winding up the discussion, the GC chairman, Amb. Carlos Perez del Castillo said that on the basis of the discussions on agriculture, he did not find any basis to revise the ministerial draft text. He would therefore encourage members to engage in direct bilateral and plurilateral consultations.

 


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