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TWN Info Service on WTO and Trade Issues (Oct04/8)

11 October 2004

Third World Network

WTO AGRICULTURE SESSION DISCUSSES GREEN BOX, SSM, EXPORT COMPETITION

The first session of agriculture negotiations since the July Package decision took place at the WTO on 6-8 October.   A report on the 6 October discussion was provided in TWN Info Oct04/7 dated 7 October.  Below is a report of the discussions held on 7 and 8 October.

The informal discussions on 7 October focused on selected topics in each of the three pillars.  The topics had been chosen by the chair of the agriculture negotiations, Tim Groser of New Zealand.  Among the main topics were Special Safeguard Mechanism for developing countries, the Green Box domestic support and several aspects of export competition.

At the close on 8 October, the Chair said that the next stage would involve production and discussion of draft texts.

The next meetings will each last a full week, beginning on 15 November and 13 December.

 

 

With best wishes

Martin Khor

TWN

 

 

 

AGRICULTURE NEGOTIATING SESSION DISCUSSES GREEN BOX, SPECIAL SAFEGUARD MECHANISM, EXPORT CREDITS, ETC.

Report by Goh Chien Yen (TWN), Geneva, 10 October 2004

 

 

OVERVIEW OF DISCUSSIONS ON 7 and 8 OCTOBER

The agriculture negotiations, which started on 6 October 2004, continued on 7 and 8 October in the WTO.   (The 6 October meeting was reported in TWN Info Service Oct04/7 dated 7 Oct).   On 7 October, discussions were held in “informal mode” on technical issues that had been selected by the Chair of the agriculture negotiations, Tim Groser of New Zealand.    For each of the main agriculture “pillars,” certain “technical issues” had been chosen for the discussion, including the green box (for domestic support pillar), export credits and insurance programmes, food and and state trading enterprises (for the export competition pillar) and the special safeguard mechanism and ad valorem equivalents of specific duties (for the market access pillar).

On 8 October, the meeting was held in a mixture of “formal” and “informal” modes.  Duing the formal mode, many countries asked that the statements they had made on 6 October be put on the record.  There were also some new statements, made by Nigeria (for the Africa Group), Trinidad and Tobago (for the ACP countries), and others.  Nigeria said the Africa Group wanted cotton to be a permanent agenda item, and that the cotton sub-committee should be set up as soon as possible and this sub committee should take up both trade and development issues relating to cotton.

Some members of the G20, especially China and Thailand, stressed again its point made on 6 October that work should begin on general principles whilst exceptions could be dealt with later.  However some other developing countries such as Zimbabwe, Mauritius and Philippines and the Africa Group stressed that this should not mean that special and differential treatment for developing countries should be taken as an exception to be dealt with only later.

In concluding, the Chair said it was now time to move from speeches to texts and that there should now be drafts of texts to be produced for each subject under discussion.  When asked who would prepare the texts, whether it would be himself or the members, he said it would depend on the topic, and that the annexes of the Harbinson paper could also be used as a starting point for some issues.

Two more meetings on agriculture negotiations will be held this year, each of them for a week.   The meetings will be on the weeks starting on 15 November and 13 December.

 

The following is a summary of the informal discussions that took place on technical issues on 7 October.

SPECIAL SAFEGUARD MECHANISM FOR DEVELOPING COUNTRIES

In order to operationalise the commitment of establishing a special safeguard mechanism for developing countries contained in Annex A of the July framework, Indonesia (coordinator of the G33) proposed that the initial work on SSM should be on how the new mechanism should be designed.  Among the issues of focus should be the following:

·        the limitations and shortcomings of the current safeguard mechanisms which should be avoided

·        how the SSM should be triggered

·        what the SSM should do and

·        how long it should last, how the SSM is to be implemented The proposal by Indonesia was supported by several developing countries, including the Philippines, Barbados and India.

Other countries such as the US, Costa Rica, New Zealand, Malaysia and Argentina argued that they found it difficult to proceed in the discussions on the SSM without first having a clearer picture of how the market access pillar is going to be fleshed out. Some members such as the US pointed out that the nature of the SSM would be tied to the how deeply tariff reductions members would have make. The US argued that without deep tariff cuts, a safeguard would be pointless.

Malaysia wanted the interests of exporting countries to also be taken into account.  Croatia made the point that recently acceded members of WTO also wanted the right to use the SSM.

 

GREEN BOX DOMESTIC SUPPORTS

On domestic support, the discussion focused on the Green Box measures.  There were distinct differences of emphasis among some WTO members, with one group of countries proposing that new disciplines (and revision to the Green Box) would be needed to ensure that the Green Box measures are really non-trade-distorting;  whilst another group (the G10 and EU) arguing that the Green Box is already minimally or non trade distorting.

According to several members (especially those in the Cairns Group) such as Australia, Canada, Argentina, Costa Rica, Chile, Brazil, Thailand, Malaysia and the US, the paragraph 16 of the Annex of the July Framework, provides the mandate for a possible revision of the Green Box to ensure that the “Green Box is really Green” and that they are really non trade-distorting or minimally so.  A key technical issue is therefore to ensure that the direct income supports and other measures in the Green Box are de facto minimally or non-trade distorting as assertions will not be sufficient, and disciplines may thus be necessary.

Some of the countries pointed out that when farmers receive Green box subsidies on top of Amber and Blue Box subsidies, this could indeed increase their production levels.  They referred to this as a “cumulative effect” of Green Box subsidies.   Australia proposed that time limits be placed on direct payments in order to avoid farmers basing their production on expectations of future support.

However, Switzerland (coordinator of the G10) and the EU were of the view the Green box measures are already minimally or non-trade distorting, even if large payments are made in this category. The technical the work should therefore focus on monitoring and surveillance of the green box measures.  Others speaking in support of this view included the other G10 members of Japan, Chinese Taipei, and Mauritius.

 

EXPORT COMPETITION

Of the various issues in the export competition pillar, the Chair had selected to focus the discussion on how to proceed with the work on export credit, guarantees and insurance programs, state trading enterprises and the practices of food aid. This is in line with the commitment established in the framework of “ensuring the parallel elimination of all form of export subsidies and disciplines on all export measures with equivalent effect.”

Members who spoke generally agreed that much technical work in this respect has been done and is contained in the Harbinson’s draft modalities text.

The EU presented a list of issues to be discussed both for credits with repayment periods of over 180 days (which have to be eliminated at the same time as export subsidies), and credits which have less than 180 days repayment period (which have to be subject to disciplines in order to minimize other forms of subsidy).

The US, which uses export credit a lot, said it accepts in the main the topics proposed by the EU, but cautioned that there will be differences on the issues within the list.

On the issue of state trading enterprises, the EU and US wanted more information on how members’ exporting state trading enterprises operate, as the lack of transparency makes it difficult to identify when a subsidy is being used.

Canada, New Zealand and Australia (countries with exporting state trading enterprises) countered that the case for further disciplines remains to be established since a recent dispute case supported their argument that STEs do operate commercially.

Speaking for the G-10, Switzerland said the examination of the enterprises monopoly powers should look at effective monopoly power and not just at whether the enterprises enjoy legal monopoly rights.   There were also differences of view on the extent to which the Harbinson text on this subject should be used as reference.

On food aid, the discussion focused on several issues including how to work on “operationally effective disciplines” and avoid “commercial displacement”,  how to consult with other international agencies involved with food aid, whetrher aid should be in fully in the form of grants, and ensuring that food aid does not displace output in the receiving countries.  Developing countries such as Argentina and Senegal said that disciplines on food aid should not prevent them from receiving food aid to meet their needs.

 

AD VALOREM EQUIVALENT

Besides SSM, the discussion on market access also focused on “ad valorem equivalents.”  This involves conversion of specific duties (such as so many dollars per tonne of a product) into percentages of the value.  After the conversion, it is then possible to know in which tier the product belongs, and calculate the reductions under the “tiered formula” agreed to in the framework.

The issues included what reference price to use to calculate the ad valorem equivalent and what period should be used as the reference.

 


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