TWN Info Service on WTO Issues (June04/8)

15 June 2004

Third World Network


A meeting of Ministers of the Group of 20 developing countries (on agriculture issues in the WTO) was held in Sao Paulo on 12 June, on the eve and on the sidelines of UNCTAD XI.

The meeting issued a Ministerial Communique which laid out he main principles adopted by the Group for the framework on agriculture modalities in the WTO.

Below is a report of the communiqué and the statements made by the Brazilian and the Indian Trade Ministers at the meeting.

With best wishes

Martin Khor






TWN Report by Martin Khor, Sao Paulo 12 June

The Group of 20 Ministers have issued a communiqué laying out the main principles of their position on WTO agriculture negotiations for a framework for modalities, which the WTO is scheduled to agree on at its end-July General Council meeting.

The G20 Ministerial Communique was adopted after a meeting of the group on 12 June, on the eve of UNCTAD XI.

Participating were delegations from Argentina, Brazil, Chile, China, Cuba, Egypt, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Philippines, South Afica, Tanzania, Thailand, Venezuela and Zimbabwe.

Special guests included WTO director-general Supachai Panitchpakdi, Ambassador Tim Grosser (chair of the WTO agriculture negotiations) and chair of the recent G90 meeting, Guyana Minister, Clement Rohee.

The G20 Ministers reiterated that maintaining the level of ambition of the Doha mandate remains the negotiations’ guiding principle.  Any framework text must be fully consistent with Doha and lead to modalities ensuring “substantial reductions in trade-distorting domestic support, substantial increase in market access, phasing out with a view to elimination of all forms of export subsidies, and operational SDT, that takes into account food and livelihood security and rural development needs.”

The Ministers welcomed progress on a credible end-date for phasing out all forms of export subsidies.  “To achieve this, a precise, effective and workable definition regarding timeframes and disciplines will be needed so as to ensure that we eliminate direct export subsidies, as well as all forms of subsidies in export credits, food aid operations and state-trading enterprises activities.”

They stressed that a number of important and sensitive issues on deomstic support remain to be tackled.  To fulfill the Doha mandate, substantial reductions in support, stronger disciplines and effective monitoring are essential.

The communiqué added that to achieve substantial reduction of domestic subsidies, there must be deep cuts in the sum of overall trade-distorting support, which calls for clarity on the point of departure for reduction commitments in  the blue box. 

“Improved disciplines in distorting domestic support are required to avoid product and box shifting,” said the Ministers.  “The importance of accepting product-specific disciplines in the amber and blue box was highlighted.  Enhanced monitoring mechanisms are essential to provide confidence that commitments by members will be fulfilled.”

On the green box, Ministers stressed the importance of ensuring its non-trading distorting nature and therefore the need to clarify its criteria wile ensuring transparency and accountability in its utilization.

The Ministers also noted that the G20 membership reflects a range of different interests and has succeeded in taking into account the concerns of other members outside the G20 in its proposals.  After consultations, the G20 circulated a proposal on the main market access elements for a framework on 28 May.

“The proposal identifies the elements of a possible tariff reduction formula, as well as all other issues related to market access, including effective S&D provisions, such as a special safeguard mechanisms ad special products for developing countries, as a necessary step towards the establishment of a framework.”  

The Ministers reaffirmed solidarity with West and Central African cotton producers and called for a solution to the cotton problem on a priority basis.

They highlighted the importance of addressing in the negotiations the strengthening of disciplines on export prohibitions and restrictions in Article 12 of the agriculture agreement.

Although the successful conclusion of negotiations is a common responsibility of all WTO members, they noted the special responsibility of those that account for the main distortions in agricultural trade.

They believed that intensifying South-South trade should be a priority by all the group’s members and stressed the importance of launching a third round of negotiations under the GSTP during UNCTAD XI.  They also recalled Brazilian President Lula’s idea of a free trade area among G20 members.

Opening the meeting, Brazilian Foreign Minister Celso Amorim said there were some indications of more positive convergences, which they should pursue.  The G20 had come a long way since last August. 

The two reasons are the legitimacy of the G20 (which comprises many developing countries with a wide range of views and a major share of world rural population) and the group’s ability to translate members; interests into credible and coherent common negotiating proposals.

The G20’s work took concrete form in the critique of the “blended formula” and translated into the G20 proposal on market access.  “Our proposal demonstrated to WTO members the fatal flaws of the so-called blended approach as proposed in the Cancun text.  It led to awareness about some outstanding issues that were hidden in the discussion.

“It also provided a more constructive approach in the negotiations of a framework text by concentrating on objectives and elements that should serve as the basis for the choice of a tariff-reduction formula.”

On domestic support and export competition, we have also worked hard to incorporate in a framework document a clear outline capable of providing predictability and accountability from developed countries. “In those two pillars we find the most outrageous policies, the most glaring distortions in international trade in agricultural products. We are all developing countries and we all suffer from the distortions caused by the lavish subsidies granted by developed countries.

Amorim said we must ensure the framework will lead to complete phase-out by a credible end-date of all forms of export subsidies, while ensuring export credits, commercial displacement through food aid operations and STE operations will be dealt with in an equivalent manner.

In domestic support, the central objective is to reduce substantially all trade-distorting support.  On the blue box, any new disciplines or criteria should ensure the reduction of the trade distorting nature of this instrument.  “WE must also have a clear understanding of the departure points for AMS, Blue Box and de minimis reduction commitments.  The objective is to achieve real reductions in each of those areas, as well as in the sun of their respective amounts.

“The Green Box must also be subject to precise definitions.  We must be assured that the Green Box label is not misappropriated.  Increased transparency and stricter disciplines are thus essential.”

Amorim said the agriculture agreement has the most S and D provisions in the WTO but it is S&D in reverse for the developed countries which continue to benefit from derogations that distort markets and harm developing countries.  He said, we must change that and end these privileges, and also guaranteed effective and operational SA and D provisions.

Amorim concluded the G20 has become a central feature of the foreign policies of each of the countries and many possibilities are now open.

Indian Commerce and Industry Minister, Kamal Nath, said the new government in India would like to further strengthen and consolidate the G20 and it attaches the highest priority to India’s role in the group.

Protecting farmers’ interests (including the food and livelihood concerns of the vast rural population) should be the primary focus of negotiations in the Doha agriculture negotiations.

Kamal Nath added the G20 market access paper offered a solution acceptable to both exporting countries and those concerned about food and livelihood issues.  This was done through providing a method for treating sensitive products and establishing a proportionality based on less than full reciprocity (in reduction commitments for developing countries).

On domestic support, the same principle (as adopted in the G20 market access proposal) should be adopted by developedf countries, i.e. deeper cuts on products with higher levels of domestic support, he said.

India had also serious concerns about the proposed new blue box.  “It would be possible to endlessly maintain distortions by parking them in new slots within the agriculture framework.  In the same manner criteria for the green box needs to be clarified to ensure that all trade distorting forms of green box subsidy and completely rooted out.”

Substantial overall cut in amber box, de minimis and blue box subsidies must be ensured.

Similarly, on export subsidies, the parallelism issue would need clarification.  This had of late assumed significance as the EC had expressed reluctance to eliminate even direct export subsidies unless thee was a clear understanding on this issue of parallelism.

He said it is extremely important for the G20 to come out with a paper on domestic support  and export competition in the shortest possible time.