TWN Info Service on Trade and WTO Issues (Oct05/24)

27 Oct 2005

Agriculture: "Agreement needed by 31 October or no Hong Kong deal"

A sense of urgency as well as pessimism was injected in the WTO agriculture talks on Friday 21 October when the chair of the agriculture negotiations announced that there had to be an agreement or at least more convergence by 31 October, otherwise he would report that the objectives for Hongkong cannot be met.

He characterised the agriculture talks as being on a life support system and within 10 days a decision had to be made whether to turn off the switch.

Below is a report of the Chair's views and the meeting on 21 October. It was published in the SUNS Bulletin on 25 October 2005.

With best wishes
Martin Khor


Agriculture: "Agreement needed by 31 October or no Hong Kong deal"

By Kanaga Raja (SUNS),  Geneva, 24 October 2005

The Chair of the WTO agriculture negotiations, Ambassador Crawford Falconer of New Zealand, has warned members that "material convergence", particularly on market access, was needed by 31 October, otherwise he would have to report that objectives for the Hong Kong Ministerial cannot be met.

Falconer issued this warning Friday when an informal meeting of the Committee on Agriculture (Special Session) was held on the morning of that day followed by an informal information 'clinic' in the afternoon.

The Chair characterized the agriculture talks as "on life support right now" and said that "it is probably another 10 days before the doctor decides to switch it off or not. We've got to see whether we can revive the patient."

The meetings were held in the wake of the failure of talks among Ministers of the "five interested parties" (the US, EU, India, Brazil and Australia) on 19 October to make any headway. After the exclusive talks broke off abruptly, each party tried to avoid blame for the failure, but much of the responsibility has been placed on the EU for not making a new market access offer (involving tariff cuts and tariff rate quotas).

At the meeting, many members put pressure on the EU to come up with a higher level of commitment on market access. There was also a lively debate on the new ACP proposal on market access, with many ACP members and a few others in support, while a number of developing countries with export interests speaking against parts of it.

Meanwhile, the G20 issued a press statement calling on the EU to make a new proposal with higher ambition on market access by this week, as time is running out.

Falconer told the meeting that even if the 31 October deadline is met, members would only have two weeks to thrash out a wide range of issues before they start work on a draft text. And if they complete the drafting within a further fortnight, that would mean a final text for Hong Kong on 25 November, later than the mid-November target date set by Pascal Lamy as Chair of the Trade Negotiations Committee, Falconer told members.

Falconer said that he will continue to hold consultations on key market access issues while a group of major players continue to work in parallel on their attempt to compromise on the core questions of tariff reduction and sensitive products.

The Chair stressed that whatever is agreed has to come from the membership as a whole, which means that whatever emerges from small groups will still have to be negotiated among all the members.

In an overall assessment, Falconer said that "we are already out of time" but promised to help members bridge the gaps and eventually produce a draft for Hong Kong.

Identifying market access as the most serious problem, he said that he did not blame anyone. The membership as a whole has a shared responsibility to move the talks into a "zone" that meets everyone's political needs.

If progress is made, at some stage members will expect a paper "to pass through my hands" for the final fortnight of work on the draft for Hong Kong, he said. He notably did not specify whether he would draft the paper.

But he mentioned that the content would have to come from the members and he urged them to start presenting papers that could be used as a basis for the draft rather than simply stating their positions.

Falconer also reported that his consultations during the week had been with regional and special-interest groups that covered topics including recent new members, long-standing preferences, tropical products, special products, the special safeguard mechanism for developing countries, special and differential treatment for developing countries, commodities, cotton, sensitive products, export competition and market access.

While many of these produced a clearer picture of what is needed, members largely repeated their positions, he said.

He added that he was also "a fly on the wall" at meetings involving groups of ministers (outside the WTO), but he asked the members concerned to report on the proceedings themselves.

The US, Australia, Brazil and the EU briefly confirmed that their consultations had failed to narrow the gap on tariffs and quotas.

The US, Australia and Brazil complained that the EU's proposal was too weak on cutting tariffs and was unclear on sensitive products and their quotas, such that negotiation has not been possible yet. The EU said market access is only one part of the agriculture talks and that nothing has been offered on other issues that are important to it.

Falconer said that the focus of his consultations this week will include special products, the special safeguard mechanism, commodities and the treatment of tariff quotas.

During the week of negotiations ending Friday, the G20 put forward a set of six new proposals on a number of market access issues, while the African, Caribbean and Pacific (ACP) group put forward a proposal on market access and Australia issued a paper on sensitive products.

Many delegations spoke on Friday, with several calling for the EU to show more ambition on tariffs and quotas. The EU said that it needed time to breathe and also to see more progress on geographical indications, industrial products and services.

The G10 (Switzerland speaking) described its latest concerns in the major issues and argued that the flexibility that it is seeking in market access is no different from the flexibility that other big players are seeking on supports and subsidies.

It is prepared to contribute to a deal, but it does not want to be squeezed into a corner and become a "veto group" if the proposed deal is politically unacceptable to its electorates. As it has nothing to gain in agriculture, gains in other topics are needed, the G10 said.

Some other countries (Costa Rica, Argentina, New Zealand and others) said that the G10 is not offering enough. Costa Rica said that the G10 statement sounded like an ultimatum.

The ACP group (Mauritius speaking) presented its latest proposal (see SUNS #5900), which includes a tiered formula with tariff cuts for developing countries ranging from 15% to 30%, with figures for developed countries to be supplied later.

The group opposes tariff caps, and emphasises moderate cuts and flexibility for developing countries. It proposed delays in the erosion of preferences - products that are the subject of preferences would be designated as sensitive products.

The ACP argued that its proposals are needed because the group's members are weak and vulnerable. In addition to various members of the group, Indonesia and Switzerland also spoke in support of the ACP proposal.

A number of developing countries spoke against the ACP proposal, arguing that its sweeping flexibilities and treatment of preferences would undermine their developmental interests.

Colombia, Costa Rica, Pakistan, Ecuador, Malaysia, and Thailand raised concerns over various aspects of the ACP proposal. Costa Rica (referring to a group of 11 countries that submitted a paper on tropical products) and Ecuador objected to preferences that discriminate against other developing countries.

Pakistan said that if the agriculture talks fail, preferences will be eroded by free trade agreements anyway and added that a range of proposals suggest that everyone is "trying to get a Round for free". It said that the G20's proposed tariff caps of 100% for developed countries and 150% for developing countries are "not ambitious by any means".

Malaysia and Thailand, addressing the G33's proposal on special products as well as the ACP's, said that the main problem obstructing their farmers' development is protectionism. Malaysia said the mandate is for substantial improvements in market access for all products. Thailand said some of its export products are also "special products" because the exports affect the livelihood of poor farmers.

Brazil, India, the Philippines and other G20 members argued that the G20's proposal was a difficult compromise to reach within the group and represents a genuine middle ground.

Benin repeated the four West African countries' concerns to see genuine results on cotton in Hong Kong.

Meanwhile, Chile, Costa Rica, Pakistan, Thailand, Brazil, Australia, New Zealand, and the US called on the EU to show more movement. The EU responded that it is under pressure, and pressure sometimes results in a lack of oxygen. Fresh oxygen is needed, and "today is Friday and a new week is about to start," the EU said.

Negotiators remain "permanently on call" and consultations with the Chair and among groups of members are expected to continue. Another information 'clinic' to review the latest developments has been scheduled for either 31 October or 1 November.

Meanwhile, in a press statement issued on 21 October, the G20 called on the EU to submit a new proposal on market access in agriculture.

"This is a Development Round and agriculture is its engine", said the statement. "The potential of developing countries' agriculture continues to be hindered by the massive distortions and restrictions prevailing in international trade in agricultural products."

It added that the G20 has presented in the last two weeks full and concrete proposals, with numbers, to move the negotiations on domestic support and market access.

"All the G-20 proposals conform strictly to the July framework. They mainstream the development dimension in all the three pillars of the negotiation by recognizing that the need to address rural development, food security and the livelihood concerns lies at the heart of the agriculture negotiations.

"In market access, this means ensuring proportionality of commitments and the need to develop the concepts of special products and special safeguard mechanism."

The G20 said that the US proposal last week on domestic support was an important contribution to the negotiations, for it engaged the US in the reform of agricultural policies. "The US proposal still needs improvement to allow for real cuts in the sum of the total amount of trade-distorting subsidies and must be completed by new disciplines."

It added that market access remains the one outstanding pillar on which no progress has been made. "The G-20 proposals in market access are balanced and the result of intensive negotiations among a diverse group of developing countries with exporting and importing interests, and represent the benchmark for an ambitious outcome that safeguards the legitimate concerns of poor farmers in the developing world.

"The EC is yet to present a proposal in line with the Doha mandate. A substantial effort by the EC on market access is essential to unblock the Round and this is to be done now, for we are running out of time," said the G20, which also stressed that a new EC proposal with a much higher level of ambition than the previous one must be tabled by this week.