TWN Info Service on WTO and Trade Issues (Jun05/2)

14 June 2005


At the WTO agriculture session on 30 May to 3 June, the Group of 33 (comprising 42 countries, mainly developing countries, which are concerned about food security, livelihood security and rural development needs) submitted two papers on special products (SPs) and special safeguard mechanism (SSM), in which the G33 spell out in greater detail their proposals on these two concepts.

Below is a report on the G33 proposals and the discussion on it.

The report was published in the South-North Development Monitor (SUNS) on 6 June.

With best wishes
Martin Khor


G33 submits proposals on Special Products (SPs) and Special Safeguard
Mechanism (SSM) in agriculture
By Goh Chien Yen (TWN), Geneva, 3 June 2005

The Group of 33 (G33) at a weeklong meeting of the Special Session of the WTO Committee on Agriculture (30 May to 3 June) has spelt out the principles and practical details to members in a proposal on how Special Products (SP) and Special Safeguard Measures(SSM) contained in the July Package can be operationalised.

The discussions on SP and SSM took place in informal mode under the socalled "Room D" and "Room F" process (held in a smaller room at the WTO but open to all interested members).

The G-33 countries include Antigua and Barbuda, Barbados, Belize, Benin, Botswana, China, Congo, Cote d'Ivoire, Cuba, Dominican Republic, Grenada, Guyana, Haiti, Honduras, India, Indonesia, Jamaica, Kenya, Korea, Mauritius, Madagascar, Mongolia, Mozambique, Nicaragua, Nigeria, Pakistan, Panama, Peru, Philippines, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Senegal, Sri Lanka, Suriname, Tanzania, Trinidad and Tobago, Turkey, Uganda, Venezuela, Zambia, and Zimbabwe.

During the 'Room D' consultations on 1 June, Kenya speaking on behalf of the G33, reaffirmed the criteria contained in para 41 of Annex A of the July Package, of using food security, livelihood security and rural development needs in selecting "special products".

The G33 in their proposal articulated several of their food and livelihood security concerns and considerations in relation to special products.

These include "the importance of particular products for the subsistence strategies of the rural poor and small and vulnerable farmers; the importance that a product may represent a source of livelihood for the population of a disadvantaged region; the significance of a crop or product for the consumption profile of a country .; the potential structural effects of an import substitute in the consumption profile of the country; and the contribution of a product to the economy as a whole "

Given the profound and complex nature of these considerations, the G33 said that they "are of the view that the application of a common set of indicators across the developing world for designating SPs would be very difficult." To come up with a "multilaterally agreed threshold level for each plausible indicator , capable of capturing the size and diversity of the agriculture sector in all developing countries, would be even more difficult," the G33 explained.

Therefore, the designation of special products would require maximum flexibility, the G33 said. In its proposal, the G33 assured members that this flexibility should not be equated to "arbitrariness."

"Only under this flexibility will the fundamental importance of SPs be recognized as stated in paragraph 41 of the Framework," the G33 concluded in its proposal. The G33 also pointed out that the list of special products could also be revised by the developing country concerned to respond to changes to domestic circumstances.

In this framework, the G33 spelt out in greater detail the elements that would constitute "more flexible treatment for special products."

These elements include:

* In accordance to the July Package, "only developing countries will have the opportunity to designate an appropriate number of such products."

* "no concessions should be asked for in return" for having more flexible treatment for SPs.

* SPs will not have to be subjected to tariff reduction, and "neither will these products be subject to commitments on TRQs."

* "SPs shall also have access to the Special Safeguard Mechanism (SSM)"

Many developing countries including the ACP group fully supported the G33 proposal on special products.

However, some members such as the US, the EU, New Zealand, Australia, Thailand, Malaysia, Chile, Argentina and Colombia voiced their concern that the bigger picture of liberalization and market access opening will be watered down. Consequently, they want the number of special products to be restricted. Chile also pointed out that there should be a trade off between the number of special products and their treatment. Colombia added that if a certain amount of a product is exported, then that product cannot be designated as a special product. The US opposed the exemption of SP from tariff reductions or tariff rate quota (TRQ) expansion.

The SSM proposal of the G33 was only distributed and discussed in the 'Room F' process on 2 June.

The G33 put forward a set of parameters to guide negotiations on modalities on SSM:

( i) The safeguard measure shall be automatically triggered.

( ii) The safeguard measure shall be available to all agricultural products.

( iii) The safeguard measures should be available to address situations of import surges or swings in international prices. Therefore, price and volume-triggered safeguards shall be contemplated.

( iv) Both additional duties and quantitative restrictions shall be envisaged as measures to provide relief from import surges and decline in prices.

( v) The mechanism shall respond to the institutional capabilities and resources of developing countries; hence it should be simple, effective and easy to implement.

In line with this framework, the G33 laid down in greater detail some more "specific elements for the design of the SSM."

On the issue of triggers, the G33 said that the SSM may be invoked if:

( a) the volume of imports of the product concerned entering the custom territory of the Member invoking the measures during any year exceeds the average volume of imports of the three preceding years for which date are available, or

( b) the price of imports of the product concerned entering the custom territory of the Member invoking the measures is below the trigger price defined as the monthly average c. i. f. import price of the product concerned over the three preceding years for which data is available.

In relation to the remedies available under a volume-triggered SSM, an additional duty can be applied "to the extent necessary to address the import surge." According to the G33 proposal, quantitative restrictions (QR) can also be used, although "the measure shall not reduce the quantity of imports below the average volume of imports of the three preceding years for which data are available."

In relation to the price-triggered SSM, the G33 proposed that developing countries could also use both remedies of additional duty and quantitative restrictions. The additional duty shall not exceed "any positive difference between the cif import price of the shipment concerned and the trigger price as defined." With regards to the QR remedy, this "may be applied only when the measure is being implemented on a regular time intervals rather than on a shipment basis, but the results are ineffective in halting the continued fall in prices." Similarly, as in the case with the volume-triggered SSM, the QR measure here "shall not reduce the quantity of imports below the average of imports of the three preceding years for which data is available."

According to the G33 proposal, these remedies "shall be maintained for a period not exceeding one year from the date the measure was invoked." At the end of the first period, "the SSM may again be invoked if the relevant triggers are met." And "if the price-triggered SSM is applied on a shipment basis, no specification of duration is necessary."

The G33 also laid down some transparency requirements in their proposal. According to the G33 proposal, members using the SSM need to give notice in writing to the Committee on Agriculture "as far as in advance as practicable and in any event within

30 days of the implementation of the measure".

"The notice will include an indication of the tariff lines affected by the SSM measure." Finally, "members taking actions under this mechanism shall afford any interested member the opportunity to consult with it in respect of the conditions of application of such action."

The G33 also made clear that all developing country Members would have recourse to this SSM. And that the "SSM shall be applied in a non-discriminatory manner irrespective of the source of the imported agricultural product."

During the 'Room F' consultations, New Zealand wanted the number of developing countries that can have recourse to the SSM limited. This was rejected by the G33 members present in Room F and they insisted that the SSM is for all developing countries.

On the issue of product coverage under the SSM, New Zealand argued that only those products that have undergone substantial tariff reduction could use the SSM. Argentina was also against the idea that all products are eligible for SSM. It said that only products receiving subsidies could use SSM. G33 members reiterated that SSM is for all products.

The US and New Zealand also questioned the need for having both price and volume triggers and suggested that having only the latter is sufficient.