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TWN Info Service on WTO and Trade Issues (June 06/16)

21 June 2006
 

DEVELOPING COUNTRIES CALL FOR LOWER CUTS IN FARM TARIFFS

Several developing countries have argued that they should not be obliged to undertake significant tariff reductions in agriculture, and advocated that the rates of cuts in the formula should be lower than those proposed by the Group of 20.

They raised serious concerns with the reference paper on possible modalities for market access (issued by the chairperson of the agriculture negotiations) on Friday 16 June at the final session of the WTO's agriculture consultations last week.

As a draft of the agriculture modalities is being prepared, these developing countries want to see their concerns taken on board.

Taking the floor on Friday, key members of the African, Caribbean and Pacific group of developing countries, such as Kenya, Nigeria and Barbados, reaffirmed the group's position on the agriculture negotiations, in particular on the issue of tariff cuts for developing countries.

The ACP proposal states that the "overall average reduction of tariffs by developing countries shall not exceed 24%." It also envisages for developing countries an average linear cut of 15% for tariff lines no more than 50%; a 20% reduction for tariff lines between 50% to 100%; a 25% reduction for tariff lines between 100% to 150%; and a 30% reduction for tariffs above 150%.

The ACP proposal has not figured prominently in discussions of what are usually called the "major players" in agriculture. However, it is backed by a bloc which contains the largest number of WTO members.

Below is a report of the agriculture meeting.  It was published in the SUNS of 20 June.

With best wishes
Martin Khor
TWN

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DEVELOPING COUNTRIES CALL FOR LOWER CUTS IN FARM TARIFFS

Geneva, 19 June 2006:  By Goh Chien Yen (TWN)

Several developing countries have argued that they should not be obliged to undertake significant tariff reductions in agriculture, and advocated that the rates of cuts in the formula should be lower than those proposed by the Group of 20.

They raised serious concerns with the reference paper on possible modalities for market access (issued by the chairperson of the agriculture negotiations) on Friday (16 June) at the final session of the WTO's agriculture consultations last week.

As Ambassador Crawford  Falconer of New Zealand, Chair of the Special Session of the Committee on Agriculture, prepares the draft agriculture modalities for adoption by the end of the month, these developing countries want to see their concerns taken on board.

Taking the floor on Friday, key members of the African, Caribbean and Pacific group of developing countries, such as Kenya, Nigeria and Barbados, reaffirmed the group's position (JOB 05/257 Rev.1 dated 28 Oct 2005) on the agriculture negotiations, in particular on the issue of tariff cuts for developing countries.

The ACP proposal states that the "overall average reduction of tariffs by developing countries shall not exceed 24%." It also envisages for developing countries an average linear cut of 15% for tariff lines no more than 50%; a 20% reduction for tariff lines between 50% to 100%; a 25% reduction for tariff lines between 100% to 150%; and a 30% reduction for tariffs above 150%.

The ACP proposal has not figured prominently in discussions of what are usually called the "major players" in agriculture. However, it is backed by a bloc which contains the largest number of WTO members.

Kenya noted the Chair's view (in his reference papers) "that the real zone of engagement has to be around the G20 proposal" but then emphasized that "a formula that would take into account the development concerns that [they] have been expressing...will have to be to the extreme south of the G20 proposal and closer to the ACP proposal."

Similarly, Barbados (speaking from the perspective of small economies) made clear that "the end result should be south of the G20 and more in line with the cuts proposed in the ACP proposal."

Alluding to the Chair's methodology of  cutting developing countries' farm tariffs by two-thirds of the rates of what the developed countries would have to do, Barbados pointed out that this would only be "acceptable if the effect of the two-third cuts would be consistent with what the ACP has been proposing."

"A two-thirds cut would definitely be unacceptable for small vulnerable economies, unless the level of ambition was lowered so as not to result in our already vulnerable economies collapsing," Barbados stressed.

"For after all, we are not looking to increase the list of least developed countries in future Rounds. If such an increase would be the result of commitments undertaken by developing countries in this Round, this Round surely would have failed," Barbados warned.

Barbados proposed a separate provision for small and vulnerable economies in relation to the tariff cuts. It said that if this is not the preferred approach, then the tariff cuts for developing countries must be low.

Kenya also pointed out that the Chair's possible modalities paper failed to include some important elements of the ACP proposal, in particular the issue of "ceiling binding countries."

Kenya was alluding to the fact that many African countries have bound all or a substantial part of their tariffs at a single rate (and at a relatively high level) under the Uruguay Round.  For instance, in Ghana 99% of its farm tariff lines are bound at 99.5%.

Kenya remarked that it is not the intention to have these countries "penalized in this round where unlike other members they will be expected to disproportionately reduce their tariffs under only one tier given their tariff structure."

These "ceiling-binding" countries "should be subject to the overall average reduction for developing countries only or be allowed to distribute their tariff lines across the lower tiers of the formula," proposed Kenya. "Irrespective of thresholds for the tiers to be agreed, they should not be expected to undertake the level of cuts required in the highest tiers."

Kenya was also supported by Nigeria and Zimbabwe, countries with ceiling bindings.

The Nigerian Ambassador, Yonov Agah, reaffirmed his country's support for the ACP proposal and its tariff-reduction formula for developing countries. Nigeria said that this "remains the best position that would protect small farmers and livelihoods in Nigeria and other developing countries."

"The ACP proposal would also serve as the best approach for effectively addressing the prevailing unfairness in international trade in agriculture, particularly if the modalities do not result in a meaningful and effective reduction in actual levels of domestic subsidies, because this will mean that artificially cheap imports that are subsidized can continue to be dumped in developing countries like Nigeria."

"Our countries, thus, need to be able to defend themselves against subsidized imports; and so we should not be called upon to significantly reduce our agricultural tariffs, so long as we continue to face this situation," Nigeria highlighted.

Ambassador Agah explained that Nigeria was a member of multiple groupings, including the ACP, the G-20, the African Group, and the G-33. "This circumstance has placed us in a position to appreciate the positions of a significant, if not the majority of the membership.

"To ensure fairness and equity in the process, there is need to ensure that consensus is not built around the positions of one Group...The mid-points differ from issue to issue.

"In line with the bottom-up approach, only areas where there is consensus should be reflected, otherwise the various positions of Members should be placed side by side for Ministerial input and guidance."

Ambassador Agah added that on the formula, "in order to maintain the level of ambition in the Doha Mandate, it is important that developing countries cut on an average basis, while developed countries apply it on a line by line basis. This would enable developing countries to enjoy flexibilities and at the same time secure access to developed country markets.

"This proposal is not new, as it was the approach that was used in the Uruguay Round. Moreover, developed countries still have a lot of subsidies and the funds to continue to maintain them."

Nigeria also pointed out that the range of tariff cuts reflected in the Chair's possible modalities reference paper for developing countries could be misleading especially when compared to the Chair's earlier report to the TNC of 23 November 2005 (JOB 05/306).

In that document, the range of tariff cuts for developing countries is between 15% to 25% for the first tier, 20% to 30% for the second tier, 25% to 35% for the third tier and 30% to 40% for the fourth tier. This reflects the plausible range between the ACP and G20 positions. The US proposal of "slightly less than 65, 75, 85 and 90% cuts" respectively for developing countries was referred to as a footnote.

In the Chair's latest reference paper on possible modalities document, the range of cuts for developing countries have been expanded to include the US proposal. Hence, the current ranges of tariff cuts for the developing countries in the various tiers span the ACP proposal on the one hand and the US proposal on the other.

Nigeria argued that "any attempt to find a middle ground that is based on the range in the [current] Reference Paper would place far greater obligations on developing countries than is being envisaged by the great majority of Members."

"To maintain the balance in the text, we urge that the ranges...in the Chair's status report [(JOB05/306)] replaces the ranges that appear in the Reference paper," Nigeria concluded.

The EU also circulated a new paper on several market access issues, including proposals for geographical indications, the present special safeguard, preferences and tropical products.

On Friday afternoon, the meeting mainly discussed export competition issues, basing their remarks mainly on the Chairperson's new "consolidated" reference paper on export competition.

The EU requested that the paper's structure should be adjusted to make clearer

"parallel treatment" of the various components of export competition: export subsidies, subsidized export credit, food aid, and exporting state trading enterprises. The EU was of the view the paper was well short of this "parallelism." It said: "We will not give up our export refunds if we do not get full parallelism."

The G-20 (represented by Brazil) and Cairns Group (represented by Australia) commented that the paper should have included their proposals for the year-by-year reductions in export subsidies, along with their calls for a freeze on current spending and a "down-payment" (large initial cut) on the legally bound ceilings.

On state trading enterprises, the EU and US indicated they still seek the end of monopolies for exporting STEs.  On the other hand, Canada, Australia and New Zealand rejected the chairperson's assessment that the Hong Kong ministerial conference's declaration was calling for an actual change in practice for developed countries' state enterprises with monopoly power.  In their view, the aim is to ensure that practices do not circumvent export subsidy commitments.

There was also a debate on food aid, mainly on the extent to which recipient countries should be the focus in determining the need for food aid.

 


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