TWN Info Service on WTO and Trade Issues (Dec05/13)

14 December 2005

G20 Ministers reaffirm “agriculture central to Doha Round,” India and Brazil state positions

Hong Kong 13 December (Martin Khor and Hira Jhamtani) -- The Group of 20 developing countries held a Ministerial meeting Tuesday morning and issued a G20 Ministerial Declaration reaffirming its position that agriculture is the central issue of the Doha Round .

“As agriculture is the engine of the negotiations, the G20 expects that Ministers in Hong Kong will provide a sound basis for making progress in the negotiations, putting the process firmly on track,” said the Declaration.   “They should agree to a clear and specific work programme in agriculture for 2006 so as to conclude the Round by the end of the year.  For this purpose, modalities will need to be agreed no later than early April and draft schedules based on these submitted no later than 3 months thereafter.”

In reasserting the central place of agriculture in the Doha negotiations, the G20 Ministers were countering the increasingly strident position taken by the EU Trade Commissioner Peter Mandelson who is canvassing that negotiations should focus equally on other issues such as NAMA and services. He has been saying that it was a mistake for the negotiations to have focused mainly on agriculture in the past few years. Placed on the defensive and being widely blamed for the EU not giving a good enough offer in agriculture, Mandelson has tried to shift the blame to India and Brazil for not offering enough in NAMA and services.

The G20 held a press conference, attended by the Trade Ministers of Brazil, Egypt, Argentina, India and South Africa.  “A development round requires the removal of distortions in international agricultural trade rules,” said the Declaration.  “The largest structural distortion in international trade occurs in agriculture through the combination of high tariffs, domestic support and export subsidies that protect inefficient farmers in developed countries. Removing these anti-development measures is a core objective of the Doha Round as it will help in reclaiming the development dimension of the DDA.  It is for this reason that agriculture is the central issue of the Doha Round.”

The Ministers added that the G20 had presented balanced and middle ground positions in all areas of the negotiations, and these proposals remain on the table as an appropriate basis for completing the Round.  “The G20 is prepared to negotiate agriculture here in Hong Kong.  We hope that others are prepared to do so likewise.”

At the G20 press conference, Indian Commerce Minister Kamal Nath said that special products (SP) and special safeguard mechanism (SSM) are integral parts of the agricultural package.  They lie in the livelihood needs and rights of developing countries and cannot be negotiated in exchange for anything, and the only defensive mechanism that developing countries have is tariffs.  He added that export subsidies were the most trade distortive measure, “yet we have difficulty in defining the end date.  Let the US and EU say that export subsidies will be eliminated in a certain number of years.  We have not come to Hong Kong to perpetuate the inequalities.  We need to correct this.”

At a separate meeting with NGOs, Kamal Nath said it is not the completion of the Round but its content which is important. The content to be deliberated in the Doha Round must not perpetuate inequalities in world trade.  “ We cannot be hassled into an agreement” he said.  While the Ministerial will discuss problems of LDCs and small states, the issue of “aid for trade” should not put developing countries more in debt so that they have to increase trade.

To correct world trade imbalance, he said, export subsidies must be eliminated.  On domestic support, it must be clear how “much less will developed countries spend on subsidies instead of shifting around the boxes”.  On NAMA, Kamal Nath said the issue is not just market access but a reform of the dumping laws. “ I do not care what formula is used, whether Swiss or German, I want to see how much the tariffs will be cut. If the EU cuts its tariff by only 24% while India has to cut by 77%, then where is the development content?” 

He stressed that there is enough already of  statements about good intentions. “But let us now see specifics”. Developed countries cannot keep pocketing whatever they can get, but reducing to statements whatever they have to give. In NAMA, for instance, the negotiation content must take into account the need to protect small, infant and large-employment industries in developing countries.  He added that the days are over when countries are held to ransom in negotiations. And this is thanks to the input and statements of civil society groups. Indeed in the beginning of his briefing he said there is a great difference between the Uruguay Round and the Doha Round, in that this time civil society is more aware of the issues and raising their voices as well as providing inputs to negotiators.

Brazil ’s WTO Ambassador, Clodoaldo Hugueney, told a separate meeting with NGOs that the G20 position is the same.  “We haven’t seen movement in agriculture, so it is not justified for the G20 to move.”   The US proposal on domestic support (in October) was important as a first move, but insufficient to allow for real reform in the US.   He said the G20 stands for two things.  Firstly, there must be real and effective overall cuts in total trade-distorting domestic support, and not just a cut in “water” (i.e. the difference between the bound and applied levels).

Secondly, there must be disciplines, especially rules on the blue box domestic subsidies, especially since the US wants a change in the way the blue box is used.  He stressed that if there is no agreement on new disciplines, there would be no new box created.  There is need for product specific caps and specific price disciplines, to control counter-cyclical payments.   The G20 also wanted a review of the Green Box subsidies, (i) to clarify that their use in developed countries is really minimally trade distorting, and (ii) to make it more user friendly for developing countries.

On market access, Hugueney said the EU proposal is widely considered as insufficient.  The cuts for developed countries are very small.  In addition, the EU wants 8% of tariff lines designated as sensitive products, or 300 of its 2200 tariff lines.   This is too excessive and unacceptable, as even if only 2% of tariff lines is accepted it would already involve a very part of the EU’s  agricultural production.    

On export competition, Hugueney said that the G20 wants a standstill in export subsidies (which have tremendous dumping effects) in the meanwhile, and an early end-date (2010). This should apply to all forms of export support, including food aid and export credits.

He also stressed the importance of S&D for the G20.  Developing countries that don’t have AMS domestic support should be exempted from an overall cut and de minimis cut.  There should be longer implementation periods for all three pillars for developing countries;  proportionality in commitments;  and the role of SP and SSM is very important.

At the meeting, French economist Jacques Berthelot argued that domestic subsidies that are given to inputs for exports (such as feed for animals) should also be considered export  subsidies.  A large part of the EU subsidy to cereals goes to animal feed.  The EU’s exports for example of chicken and pork, contain high export subsidies in the form of domestic subsidy of inputs into these exports.

Hugueney said the G20 was aware of this linkage and had raised the issue of disciplines on this.  However there was “total resistance” from the developed countries when this issue was raised.