TWN Info Service
on WTO and Trade Issues (Mar06/16)
Agriculture: Substantial gaps remain on key WTO issues
An informal agriculture consultation at the WTO on 22 March that discussed issues such as sensitive products, the Blue and Green Box subsidies and state trading enterprises, revealed that substantial gaps still remain among WTO members.
The informal consultation also discussed in greater detail a new paper on food aid from the African Group and the LDCs.
During discussions on the Blue Box, the EU announced that it was prepared to consider limits by product on the "old Blue Box" provided that this does not disrupt reforms away from the more distorting Amber Box, and that "others" are also prepared to look seriously at disciplines on the "new Blue Box".
Below is a report of the 22 March agriculture meeting. It was published in the SUNS on 24 March.
Agriculture: Substantial gaps remain on key WTO issues
By Kanaga Raja (South North Development Monitor): Geneva 23 March 2006
The informal consultation, open to all members, also discussed in greater detail a new paper (TN/AG/GEN/13) on food aid from the African Group and the Least Developed Countries, which was first introduced at an informal meeting on Monday.
All those who spoke welcomed the paper on food aid. Several said that they supported the main thrust of the paper, but had differences over some points.
Chairperson Ambassador Crawford Falconer of New Zealand said that members had actually come close to negotiating on the food aid proposal by the African and LDC Groups.
During discussions on the Blue Box, the EU announced that it was prepared to consider limits by product on the "old Blue Box" (essentially trade-distorting domestic supports that are subject to production limits) provided that this does not disrupt reforms away from the more distorting Amber Box, and that "others" are also prepared to look seriously at disciplines on the "new Blue Box". (The new Blue Box was introduced in the July-August 2004 agreed framework.)
In order to set limits by product, suitable base periods would have to be agreed, taking into account the fact that some Blue Box payments were introduced recently as part of the reform away from the Amber Box, the EU said. There were no comments from other members.
Discussions on the Green Box revealed no shift in positions. Argentina and Australia reiterated the Cairns Group's concern that the Green Box should genuinely not distort trade or do so minimally. Australia recalled the group's proposal for decoupled income support to be based on fixed and unchanging base periods.
The EU and the US said that they see no need for the Green Box to be altered, but can accept better surveillance. The G-10 (Switzerland speaking) said that base periods should be fixed "for eternity" and reiterated that the review of the Green Box should take non-trade concerns into account.
India, Nigeria and China repeated the call for revisions to more specifically allow for development projects.
As regards discussions on food aid, all those who spoke welcomed the new paper from the African Group and the LDCs.
The paper envisages criteria for emergency food aid to be included in the "safe box" (the term used in the Hong Kong Declaration to ensure that food for emergencies is not disrupted), for example, in response to an emergency identified by a UN agency; a declaration by the government concerned in collaboration with a relevant international organization; and an independent assessment of need.
Other, non-emergency, food aid would be disciplined: it would be demand-driven; in full grant form (not on credit); be untied; take account of local market conditions; address development objectives; not be tied to the donor's market objectives; only exceptionally be "monetized" (sold to raise cash) and only related to the delivery of food aid or to procure agricultural inputs; and would not be re-exported.
About twenty delegations spoke, with several supporting the main thrust of the paper, but saying that they had differences over some points.
For example, some were unsure about the possibility that NGOs (apart from the Red Cross) would announce an emergency, and some opposed monetization or at least wanted tighter wording to ensure that monetization does not displace commercial sales.
Several agreed that the WTO should not be involved in defining emergencies but should defer to more expert organizations. Several G-20 members (Brazil, Thailand, and Pakistan) said that the group will discuss the paper internally and then consult the authors.
Falconer welcomed the discussion, saying that this paper has served as a better basis for negotiating the subject than any paper he could produce.
No one spoke on the issue of export credit, but differences remained on the issue of state trading enterprises.
New Zealand, Australia and Canada argued that the situation has changed now that the Hong Kong Ministerial Declaration has stated that "disciplines relating to exporting STEs will extend to the future use of monopoly powers so that such powers cannot be exercised in any way that would circumvent the direct disciplines on STEs on export subsidies, government financing and the underwriting of losses."
According to the three countries, this means that monopoly power will not be tackled, only the use of the power to circumvent the various disciplines.
The EU and the US however disagreed with this interpretation, insisting that monopoly power itself must be tackled. The G-10 (Switzerland speaking) complained that "full parallelism" is not emerging, i. e. commitments to reduce subsidies in export credit, state trading enterprises and food aid are not matching the commitment to eliminate direct export subsidies.
As to discussions on the treatment of sensitive products, one of the main differences is on expanding tariff quotas: whether this should be based on import volumes (which could be small for highly protected products), on the quota commitments (which could also be small for the same reason) or on the size of the market, measured by domestic consumption (which would not reflect the sensitivity of the products).
The EU, which favours expansion based on imports, confirmed that it is considering a revised proposal that would make adjustments for products with small import quantities. The "correction" would be based on "parameters" or "shadow" import quantities, it said.
Australia, the US and New Zealand said that small quotas are not the only problem and that the objective has to be substantial improvements in market access even for sensitive products. Australia said that it is looking at alternative blends of approaches but insisted that domestic consumption has to be an important part of the picture.
The G-10 (Switzerland speaking) pointed out that it already has a compromise proposal based both on quota commitments and domestic consumption. Brazil said that the G-20 is working on an alternative "hybrid".
Costa Rica said the selection of products is also important and reiterated its position that tropical products must not be sensitive.
Consultations are expected to continue on Friday morning with discussion of the special safeguard mechanism for developing countries.