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TWN Info Service on WTO and Trade Issues (July06/01)

3 July 2006
 

Mini-Ministerial becomes "Waiting for America"


The first day of the WTO "mini-Ministerial" (Friday 30 June) turned out to be a kind of "Waiting for America" process as delegations and media in one meeting after another waited for the United States to proclaim on whether it was willing to improve its offer to cut agricultural domestic support.

It was a disappointing wait. At various meetings the US deflected the question by focusing instead on its demands that others must provide much more market access.

The talks were at grave risk of getting stuck, without a concrete offer from the US to go beyond its present offer. Leaders of developing countries and their groupings were adamant that they would not compromise from their positions until the developed countries showed their commitment by improving their offers in agriculture.

By Friday lunchtime, several Ministers and officials were already wondering whether it was worthwhile for the meeting to continue beyond Saturday.

The meeting eventually closed on Saturday 1 July, one day earlier than planned, as no agreement or progress was possible.

The report below is on the first day of the Ministerial meetings. Subsequent reports will be on the second and last day.


With best wishes
Martin Khor
TWN

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WTO Mini-Ministerial becomes "Waiting for America"

By Martin Khor, Geneva, 30 June 2006


The first day of the WTO "mini-Ministerial" turned out to be a kind of "Waiting for America" process as delegations and media in one meeting after another waited for the United States to proclaim on whether it was willing to improve its offer to cut agricultural domestic support.

It was a disappointing wait. First at the G6 meeting on Thursday night, then at the informal Trade Negotiations Committee (TNC) meeting on Friday morning, and at a press briefing by the US Agriculture Secretary, the US deflected the question by focusing instead on its demands that others must provide much more market access.

The talks were at grave risk of getting stuck, without a concrete offer from the US to go beyond its October 2005 agriculture proposal. Leaders of developing countries and their groupings were adamant that they would not compromise from their positions until the developed countries showed their commitment by improving their offers in agriculture.

By Friday lunchtime, several Ministers and officials were already wondering whether it was worthwhile for the meeting to continue beyond Saturday. Said a senior official who was at the G6 and the first Green Room meetings: "There's no movement at all from the US. The EU may be contributing something, but Mandelson insisted on developing countries opening their industrial markets through a coefficient of 15, and we just said No."

Late on Friday afternoon, Brazil's Foreign Minister Celso Amorim was saying that although there was a good atmosphere (in the G6 and Green Room talks), "I don't sense until now any significant progress. I have difficulty to see any progress. It increases the tasks in the next few days and weeks. What I see now doesn't give me hope of a breakthrough."

Compared to the discomfort of the US, the EU Trade Commissioner Peter Mandelson seemed more comfortable in his new role as the one who made a move (contrasting with his role of the miserly villain in Hong Kong).

Mandelson indicated that the EU is willing to meet the G20 demand on agricultural tariff cut. At the TNC, he said the EU has to find the best way to get "as near as possible" to the G20 proposed average cuts which he said "corresponds to a 51% cut for developed countries when all of them are factored in." [The G20 has asked a 54% average cut of the EU].

Mandelson then added that a minimum is needed to achieve the G20 ambition in domestic support, which he said involves the US going considerably up in both overall and amber box trade distorting support, and accepting Blue Box disciplines. Referring to the G20 demand that overall US support goes down to $12 billion, Mandelson said this may be a big task, a compromise will be needed, but "to get there we need to start a negotiation."

He also asked developing countries in NAMA to make "real cuts" through a coefficient of 15, not 20. "At 15, we would cut through most of the water but into the meat of applied tariffs on only a limited number of lines." He said a Swiss 15 is consistent with the proportionality between NAMA and agriculture.

When it came to the turn of the US, there was a deafening silence on the question of improving its present offer. The US has offered to reduce its allowable total trade distorting domestic support to $23 billion. But this is seen as unsatisfactory to many because this upper limit is higher than the $19.7 billion of its actual support in 2005, and thus the US has space not only to do nothing but to actually raise its support further. The G20 has proposed that the US reduce its allowable support to $12-13 billion.

Today, the US Trade Representative Susan Schwab and US Agriculture Secretary Mike Johans issued a statement, that "the US proposal delivers on the promise of Doha, unfortunately other proposals lack the necessary ambition."

They said market access is the key to unlock the negotiations, and is essential for a development round. "Without deep tariff cuts that increase trade flows, there will be neither income growth nor new opportunities for farmers. Tariff cuts cannot be undermined by open-ended loopholes for sensitive and special products."

They also criticised the G20 proposal for lacking sufficient market access and being vulnerable to loopholes resulting in less market access. In an attempt to deflect blame, they said the US is ready to negotiate but so far there is no balanced proposal on the table.

Johans at his briefing added that the G20 proposal is "weak with developed countries and very weak with developing countries". With regard to the EU, he said it was one thing to restate the G20 proposal but it had little meaning unless it is known how many sensitive products would be allowed. He also criticised special products (SPs) and special safeguard mechanism (SSM) as removing the value of market access to developing countries.

Asked specifically to respond to Amorim's view that a US support level of $20 billion (suggested by Pascal Lamy) was unacceptable, Johans said that drawing lines in the sand so early should be avoided.

In a series of press briefings, leaders of developing countries and their various groupings expressed frustration at how the developed countries were attempting to turn the negotiations around from being about Development to being all about gaining Market Access.

At a G33 press briefing addressed by the Ministers of Indonesia, Kenya and India, the Indian Minister Kamal Nath said the mandate of the Round is to enhance trade flows from developing to developed countries. "This Round is about agricultural reform through cutting subsidy," he said. "If market access is sought from developing countries, this won't work."

Referring to the US stand, Nath said "Agricultural reform and subsidy reduction are pre-requisites to market access. Subsidies cannot be traded off against market access, its against the cardinal principle of this Round.

"None of us came here to negotiate on our subsistence and livelihood concerns. This shouldn't be asked of us. This is the gist of the G33 position."

Nath added that it took a struggle to obtain paragraph 24 of the Hong Kong Declaration, that stressed the aim of enhancing market access for developing countries in agriculture and NAMA. "Now, we find the shoe in the other foot that the developed countries are arguing they must have enhanced market access to developing countries." Indicating this was unacceptable, he said: "I urge the developed countries to redeem the mandate of this Round."

Kenyan Minister M. Kituyi also stressed that there is an attempt to distort the aim of this Round. "Market access is not the goal of this Round. What is important is not how much market access the developed countries have to developing countries but it's about how market access for developing countries can help in their development."

Kituyi added that the SP and SSM mechanisms are meant "to ameliorate the pain of lower tariffs in developing countries, and to now say that they are an obstacle to market access is wrong."

Indonesian Trade Minister Mari Pangestu, who coordinates the G33, said "we didn't come here to renegotiate the Hong Kong Declaration. SP and SSM are about products that are vulnerable... The G33 are constructive by linking an "appropriate number" of SPs to clear indicators that are linked to vulnerabilities.

"It's not productive to have strict limits (to the number of SPs) when we talk about vulnerabilities as different countries have different characteristics. We stress the need for an "effective" tool to address these concerns."

A question was put to Kamal Nath, whether it is important to get rid of a lot of "water" (the difference between the allowed and the actual levels) that exists in subsidies and in tariffs.

The Indian Minister replied that subsidies are trade distorting and cannot be put in the same category as tariffs. "The only defensive tool against subsidies is tariff," he said, adding that developing countries cannot be asked to get rid of their defensive mechanism especially when subsidies continue.

"The water in tariffs gives the possibility of my making use of it, and why should I take this possibility away when you retain your subsidy? On the other hand, when you have already lowered your subsidy, why do you want to keep it bound at a higher level if you are not going to use this - unless this means that you intend to use it?"

At another media briefing, by the G90, the coordinators of the ACP, LDC and Africa Groups (respectively the Ministers of Mauritius, Zambia and Kenya) as well as the Benin Minister (on behalf of the cotton proponents) spoke of the concerns of their groupings.

The Mauritius Minister said the G90, representing the poorest members, would only accept "full modalities", and it was not happy with the stalemate in the negotiations. "We'll continue to insist on transparency and inclusiveness, no issues should be sidelined and no one should be left behind. We need political ownership."

He said the ACP Ministers who met a few days earlier in Brussels had said a developmental result is needed in agriculture and NAMA. Beyond commercial interests the negotiations should revolve around the goals of poverty reduction, development needs and livelihoods. Core issues for the ACP are trade solutions to preferences, cotton, LDC issues, rules of origin, SP, SSM, commodities and net food importing countries issues.

In NAMA, the ACP issues include LDC issues, preferences and small vulnerable economies.

Zambian Minister Depak Patel, speaking for the LDC Group, said it took ten years up to Hong Kong for the LDCs to get a text on duty free and quota free (DFQF) status for 97% of LDC products, but added (referring to the 3% exemption) that this would not be effective in giving real market access to LDCs.

Since December no developed country had engaged with the LDCs on matters relating to DFQF and rules of origin. The chair's agriculture text only reaffirms the Hong Kong Declaration, and this is not a modality. The LDCs had just submitted proposals on DFQF and rules of origin, and want engagement on these issues.

He said some developed countries had cynically suggested that the DFQF issue be dealt with through GSP, but if this was done it would not require negotiations.

The Benin Minister said "nothing at all" had been done since Hong Kong on all the decisions made on cotton - elimination of export subsidy by end-2006, reduction with view to eliminate domestic support on cotton subsidies, provision of a safety net for cotton farmers affected by poor prices and technical support for Africans.

He said the cotton proponents had received no information on legislative measures for eliminating cotton export subsidies, and there was similarly no news regarding the other issues. "But tens of millions of Africans are suffering, as cotton continues to suffer from distortion. Will we feed ourselves on promises? Will we continue to hear promises only when African producers have died?"

The Benin Minister added that the African countries were not asking for charity but respect for the rules so that cotton producers could live. "Unfortunately at this meeting we hear the same oral promises without anything given to us. We are pessimistic. You should be our witnesses (to this inaction). It is as if we are watching a football field with two players and the rest of us are spectators."

 


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