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TWN Info Service on WTO and Trade Issues (Feb09/09)
11 February 2009
Third World Network

Trade: G33 submits proposal on treatment for SVEs on SSM
Published in SUNS #6636 dated 10 February 2009

Geneva, 9 Feb (Kanaga Raja) -- The Group of 33 developing countries at the WTO has submitted a proposal on the treatment for the Small, Vulnerable Economies (SVEs) in relation to the Special Safeguard Mechanism (SSM), in which the Group emphasizes the position of its SVE Members on various elements of the SSM.

The proposal was submitted by Indonesia, the coordinator of the G33, on 6 February to the Chair of the agriculture negotiations, Ambassador Crawford Falconer of New Zealand, as well as to the WTO Secretariat. It will also be circulated to the WTO Membership as an official document.

According to a cover letter accompanying the proposal, the proposal seeks to respond to the question raised by the agriculture negotiations Chair in Paragraph 5 (b) of document TN/AG/W/7 regarding the status of the SVEs and whether a general solution for all developing countries will be applicable to the SVEs as well.

[In paragraph 5 (b) of document TN/AG/W/7 on "Revised Draft Modalities for Agriculture - Special Safeguard Mechanism", Falconer says: "Status of SVEs: If there is a "general" solution found, is it to be assumed that this is applicable to all developing countries including SVEs?"]

The cover letter recalls that the discussion so far has focussed on finding a general solution for developing countries on the understanding that any specific treatment for SVEs would emanate from the general solution for the developing countries.

However, said the cover letter, with the general solution for developing countries not yet in sight and in view of the question raised by the Chair regarding SVEs, the G33 had an in-depth discussion on the matter and has reached the conclusion that "the SSM for SVEs must be suitable to their particular circumstances."

The Group concluded that "generalizing the SSM treatment in any manner would be disadvantageous to the SVEs and incompatible with their level of development."

The cover letter noted that there are just three elements which are specific to the SVEs. First, the triggers in Paragraph 133 bis in the proposal are lower than what the Chair has proposed for developing countries in his draft modalities; second, the maximum increase over the Pre-Doha bound tariffs for SVEs could be 75 % of the current bound tariff or 75 percentage points, whichever is higher; and third, the maximum number of tariff lines that could go beyond the Pre-Doha bound levels is 30%.

All other elements in this proposal viz. those pertaining to price-based SSM, data availability or mandatory cross-check, among others, are existing G33 positions for all developing countries including SVEs, said the cover letter.

In its proposal, the G33 expressed concern, particularly with regard to the issues raised in Paragraph 5(b) of the document TN/AG/W/7 on SSM.

The Group reiterated that the SSM must be a mechanism which is suitable for the particular circumstances of their Members, and each Member, and that "limiting the SSM, a priori, as is the intent of some of the proposed modalities, is disadvantageous for its small vulnerable economies (SVEs) Members and incompatible with our level of development."

The G33 recalled that since July 2008, there have not been any discussions regarding the specific treatment for SVEs on SSM. It was the understanding of the Group and its SVE Members that emphasis would first be on finding a solution for developing countries before proceeding to look at the specific treatment for the SVEs.

According to the G33 proposal, the basis and the structure for the SSM to be agreed should be the one in the document TN/AG/W/4/Rev. 4 (revised draft modalities for agriculture, dated 6 December 2008).

In that regard, said the G33 proposal, it should include a Paragraph 133 bis for the SVEs, as follows:

"133 bis As regards the volume-based SSM, it shall be applied on the basis of a rolling average of imports in the preceding three-year period for which data are available (hereafter "base imports"). On this basis, the applicable triggers and remedies shall be set as follows:

"(a) Where the volume of imports during any year exceeds 110 per cent but does not exceed 115 per cent of base imports, the maximum additional duty that may be imposed shall not exceed 25 per cent of the current bound tariff or 25 percentage points, whichever is higher;

"(b) Where the volume of imports during any year exceeds 115 per cent but does not exceed 120 per cent of base imports, the maximum additional duty that may be imposed shall not exceed 40 per cent of the current bound tariff or 40 percentage points, whichever is higher;

"( c) Where the volume of imports during any year exceeds 120 per cent of base imports, the maximum additional duty that may be imposed shall not exceed 50 per cent of the current bound tariff or 50 percentage points, whichever is higher."

In Paragraph 144, said the G33 proposal, the maximum increase over the pre-Doha bound tariff should be 75 ad valorem percentage points or 75% of the current bound tariff, whichever is higher. Also, a maximum of 30 per cent of tariff lines in any given period should be allowed to go beyond the Pre-Doha bound levels. (A footnote in the proposal said that Bolivia is not in a position to support these numbers at this stage and remains with the pre-July position of the Group.)

Further, added the G33 proposal, as a matter of abundant caution for the SVEs, the SVEs reiterate some of their existing positions which hold good for SVEs as well as for other developing countries:

-- The provisions in the proposed 133bis (a) to ( c) are without prejudice to Members' rights to raise their applied tariffs up to the level of their current bound tariffs.

-- The triggers and remedies in paragraph 133 will apply for both within and over the Pre-Doha Bound Rates.

-- No mandatory cross check mechanism of any kind is acceptable.

The G33 proposal said that for all developing countries' markets including SVEs and LDCs, depressed prices attributable to high subsidies and market imperfections/failures can have a deleterious effect on domestic production and markets.

"As such, the price based mechanism is of crucial importance and a focussed discussion on the modalities for the price based mechanism, including the flexibilities for SVEs, is called for as soon as possible."

Finally, the G33 emphasized that both the volume-based SSM and price-based SSM have to be designed in order to address their needs in a simple and effective manner, and that this will only be achievable by extending additional and substantive special and differential treatment to the Group. +

 


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