TWN Info Service on WTO Issues (July04/14)

24 July 2004

Third World Network

G10 Rejects New Blue Box for the US

In an interesting development in the WTO agriculture negotiations, the Group of 10 countries  has prepared a document proposing their amendments to the agriculture section (Annex A) of the “draft July Package”.

The proposed changes include a rejection of the July draft’s proposed change to the criteria of blue box domestic subsidies that would have suited the interests of the United States. The G10  is also proposing other changes in the text on blue box flexibility for new users, on sensitive  products, caps on tariffs, etc.

A TWN report by Goh Chien Yen on the press conference by Switzerland on behalf of the G10,  and on the G10 proposals is attached below. 

Best wishes

Martin Khor






G10 Rejects New Blue Box for the US

TWN Report by Goh Chien Yen, Geneva, 23 July 2004


There has been an interesting development regarding the WTO agriculture negotiations, with the Group of 10 countries announcing at a press conference that they could not accept the proposal in the July text to amend the blue box to suit the United States.

The G10 includes Switzerland, Norway, Japan, Korea, Bulgaria, Mauritius, Bulgaria, Israel, Liechtenstein, Chinese Taipeh.   The Group has prepared a document with their amendments to Annex A on agriculture of the draft “July package.”

The press conference was held on Friday 23 July at the Swiss Mission.  The Swiss Ambassador, Mr. Wasescha, speaking on behalf of the G10 said that they could not accept the proposal in the current draft July package text of modifying the agriculture agreement to introduce the new blue box of “direct payments unrelated to current production” for the interests of the US.

According to Wasescha, the language employed in the draft  “creates too large a flexibility and creates an imbalance in the burden of reducing the levels of trade distorting.”   Hence, the G10 in their submission for changes to the current Annex A of the draft July package, have proposed the complete deletion of the proposed measure of “direct payments unrelated to current production”  (which is part of para 13).

In addition, the G10 members have indicated their intention to themselves have recourse to the current blue box, trade-distorting measures in Annex A, by proposing the inclusion of the sentence “flexibility will also be provided for new uses of the Blue Box” in paragraph 14 of Annex A.   This will capture the idea of additional flexibilities for future uses of the blue box, explained Wasescha. This should be an incentive to move from amber to blue box subsidies, with changes of course, because blue box measures are a little bit more less trade distorting than amber box measures, he added.

On the Amber box, referreed to in paragraph 9 of the Annex, the G10 submission rejects the proposal to have product specific AMSs capped and then reduced. This original wording in the Annex was to prevent certain products receiving AMS to remain unchanged and even increased, as total AMS is being reduced.

On the paragraphs dealing with market access in the Annex, the G10 added the notion of non-trade concerns in paragraph 25 and tiret 3 of paragraph 27.  The G10 have also deleted the sentence dealing with  “tariff cap” in paragraph 28.   This concept of tariff capping in market access should disappear as rapidly as possible said Wasescha. “as this instrument does not make sense in the context of tiered approach.”   The rationale for this will be made known at a later stage, he assured.

On the issue of sensitive products, the G10 has proposed a broader criteria for the selection of these products. This is because there are “members whose sensitive products are not related to TRQs, which is more the EU situation, and also the Swiss and Norwegian situations”, Wasescha explained.  However, “this is not the situation of our Asian friends (referring to other members of the G10), that is why one should have an option,” he elaborated.

Hence, the G10 proposed the additional wording “members which have scheduled a relatively low number of tariff lines covered by TRQs will be allowed to select additional products, including the products which have been tariffied. The exact number of sensitive tariff lines may be increased as a function of the eventual level of ambition of the tiered formula.”

The G10 have also made further amendments to the Annex with regards to the treatment of sensitive products so that these products need only provide some market access rather than “substantial market access.”

According to Wasescha, “We are ready to make tariff cuts on sensitive products line by line but not substantial market access.” There is a contradiction with the way sensitive products are being treated in the current Annex, he said.   “Why single out sensitive products and then subject it to substantial cuts,” he asked.

The number of tariff lines that are sensitive among the G10 members ranges from 15 to 40 per cent of tariff lines, depending on which G10 member is referred to, according to Wasescha. While this may appear to be a high number, he recalled that Ambassador Groser, Chair of the agriculture negotiations, has aptly pointed out that “a sensitive product is a sensitive product!”

This is not a question of being inflexible Wasescha said, responding to journalists. The G10 proposal on sensitive products is about making it work. “The idea of sensitive products is accepted, we have to make it operational,” he explained.

On the issue of S and D under the market access pillar, the G10 have also proposed for greater flexibility in dealing with the issue of preference erosion, while leaving the language on special products (SP) and special safeguard measure (SSM) unchanged.   Nonetheless, Wasescha said that the developing countries have made proposals to improve the current wording on SP and SSM during this morning’s greenroom meeting on agriculture, and that the G10 will support them.

The G10 also introduced wording that will extend the operation of the peace clause.

Defending the G10 proposal for substantive changes at this stage of the negotiations, Wasescha said that the final July package could be more specific or more general. “If we move in the direction of being general, then our suggestions need not be featured in the final package.”