TWN Info Service on WTO and Trade Issues (Jan08/01)

28 January 2008

The following article was published in SUNS on 15 Jan 2008.  It is reproduced with permission of the SUNS.  Permission for reproduction is required from SUNS (

Best wishes
Martin Khor

Summary of state of agriculture talks in first half January
Published in SUNS #6392 dated 15 January 2008

Geneva, 14 Jan (Kanaga Raja) -- The Chair of the agriculture negotiations at the WTO, Ambassador Crawford Falconer of New Zealand, announced on Friday that he can now produce an improved and comprehensive revised draft "modalities" text at the end of the month, following intensive discussions since 3 January among a representative group of some 37 members.

"We have made significant progress in the discussions we've had. There've been significant openings by delegations," Falconer told an informal meeting of the full membership on 11 January.

The informal meeting ended almost continuous discussions since 3 January among a representative group of 37 members (held in the small Room E at the WTO) on 16 working documents circulated by the Chair last November and December.

According to trade officials, one of the most significant areas of progress was on the special agricultural safeguard (SSG), currently available to countries that converted import restrictions to tariffs in the Uruguay Round.

Mostly, the developed countries, with all kinds of import restrictions (ranging from variable levies to specific quotas) did the tariffication and availed themselves of the SSG.

Trade officials said that Cairns Group coordinator Australia welcomed "signals that the elimination ... might be within reach."

Falconer described the concession by some members as "very constructive". Even though the conditions attached might not be liberal enough for some others, and no consensus has been reached, the direction is clearer, he said.

According to trade officials, major differences however remain on a range of issues.

But in many areas, principles and wording have been sorted out so that his next draft will be "a lot cleaner" than the one he circulated last July, Falconer told delegates.

According to trade officials, delegates praised Falconer's handling of the negotiations and for sticking broadly to their ideas.

The Chair told journalists later that in drafting his next revision, he will not invent solutions that are outside members' positions.

"But I certainly intend to drag them out of their comfort zones," he added, referring to the need for countries to give up cherished positions in order to compromise.

According to trade officials, a large number of delegates urged him to reconvene agricultural negotiations after the revised text is circulated so that they can respond to it before it is discussed "horizontally" - that is, in comparison with other subjects such as market access for industrial products.

Falconer said that would be for members to decide after they have seen the text.

"The only horizontal process I know involves me getting horizontal as fast as possible with the help of some alcohol," Falconer said jokingly as he closed the informal session.

According to trade officials, the Chair will be taking a break from the agriculture negotiations this week (he will be chairing the Airbus-Boeing dispute panel) and will start drafting his next revised "modalities" text in the week of 21 January.

Some members said that they would continue to work among themselves on an important but highly technical exercise in estimating the domestic support to be used as a basis for expanding tariff quotas.

According to trade officials, their hope is to produce ideas for potential agreement to feed into the next text.

At the informal meeting on Friday, the Chair briefly outlined the key points in the talks this month, saying that members should wait for the new text where the details will be captured.

On the issue of support in general, Falconer said that the discussions produced greater clarity on some issues to do with overall trade-distorting domestic support (Amber Box + Blue Box + de minimis), such as special treatment for developing countries, the timing for implementing cuts, and some of the components, most notably de minimis. Also clearer is the Blue Box.

The situation with regards to cotton is unchanged, Falconer reported. There was a serious discussion of the EU's position and its limitations, he said, but nothing yet to change the approach of the previous text.

According to trade officials, the EU later defended its stance by saying that it has significantly reformed its support for cotton by scrapping the most distorting supports (Amber Box or AMS), making around 65% of its support "decoupled income support" (in the Green Box category), leaving the rest in the Blue Box.

Trade officials said that in addition to the "constructive" concession on the special safeguard and the advances on the difficult issue of estimating domestic support for tariff quotas on sensitive products, the Chair also reported improvements on a range of market access topics.

Differences remain on several issues (such as whether to scrap tariffs on quantities imported within a quota, or whether to have a mechanism for dealing with under-filled quotas) but the differences are clearer, making them easier to handle, said Falconer.

According to trade officials, the Chair indicated that issues that divide developing countries continue to divide them although members' positions have softened on some of them. These include Special Products, and tropical products versus products with long-standing preferences.

However, provisions for small economies have been streamlined, Falconer said.

According to trade officials, the special safeguard mechanism for developing countries (SSM) was not discussed because there has been no change in positions, but provisions for countries that recently joined the WTO have seen movement towards what these countries are seeking.

On export competition, a number of legal and other points were further tidied up, including on subsidized export credit. One remaining difference is over "monetization" - selling in-kind food aid to raise funds for transporting food, providing agricultural inputs or other means - when the aid is not for emergencies.

According to trade officials, speakers broadly praised the Chair's handling of the negotiations and reminded him of issues that are important to them.

While many said that they wanted the next draft to be handled within the agriculture negotiations, some said that they would think about this but none opposed the idea. Some said that they would continue working among themselves.

In a statement, the G20 noted that there is a broad consensus that agriculture is the engine of this Round and that results in agriculture will determine the pace and level of ambition of the negotiations. The G20 said that the range and complexity of the distorting policies applied by developed countries requires comprehensive solutions in domestic support, market access, and export competition.

Referring to the papers and proposals that it tabled on 17 December (see SUNS #6390 dated 19 December 2007), the G20 said that on domestic support, the G20 submission was intended to address necessary drafting and legal issues and to clarify the relationship between the modalities, the Agreement on Agriculture and the list of commitments.

It includes for instance, the incorporation of the new concept of OTDS in Article 6 of the Agreement on Agriculture; the binding in monetary terms of the OTDS in Member's schedules; the incorporation and binding of product-specific caps.

The G20 recalled that the OTDS cut and effective disciplines at the product-specific level - including the specific mandate for cotton - are the key benchmarks for assessing the level of ambition.

On sensitive products, the G20 said that its paper has pointed out the central need for clarity, transparency and predictability on negotiating results. This applies particularly to the calculation of domestic consumption at this juncture. The level of ambition provided by the TRQ expansion will not be known without precise data from importing developed members and a clear-cut methodology. This is an element that is essential to assess the outcome and the balance of the negotiations.

On tariff capping, the G20 said that it has shown significant flexibility. A tiered formula without a capping would result in some developed members ending up this Round with tariffs as high as 800%. Compared to the results of a Swiss formula in NAMA, that outcome would hardly comply with the ministerial instruction under Paragraph 24 of the Hong Kong Declaration, said the statement.

That same logic holds for tariff simplification, said the G20, adding that its proposal of establishing an AVE ceiling would preserve a comparable level of ambition and avoid the partial simplification sought by some developed countries.

The move towards horizontal negotiations in these and other issues will require texts that are complete and balanced, and that provide clarity concerning the actual contribution to be made by developed countries, said the G20 statement.

The G20 also believed that once the Chair's text appears, it is important and appropriate to have a round of discussions at the level of the negotiating group before moving to the horizontal process.

In its statement, the G33 said that there are substantial gaps or differences between the Chair's Special Products Working Document, Members' positions and the G33's new proposal (see SUNS #6391 dated 20 December 2007).

This, in particular, on the treatment of SPs, which includes the appropriate number of SPs for zero cut treatment and other numbers, the concept or structure of an overall average rate with a minimum and maximum cut as well as other crucial elements such as the conversion of Sensitive Products to SPs and the additional flexibilities for RAMs.

The G33 said that it would accept 12% as the guaranteed minimum number and 20% as the maximum number of SPs. The remaining self-designation of 8% shall be guided by indicators. The percentage of SPs tariff lines with a zero cut treatment in grade 1 shall be 40% of the maximum number of SPs tariff lines, or 8% of total agriculture tariff lines. Moreover, a one half deviation is unacceptable.

The G33 statement said that SPs actual cuts cannot exceed more than 12% where as a two-third deviation of 36% will be 12%. The additional flexibilities for RAMs shall be included not only in terms of numbers of SPs, but also in terms of treatment, especially in terms of the zero tariff cut.

On the Special Safeguard Mechanism (SSM), the G33 statement reiterated that the G33 proposal remains on the table. The SSM must be neither more cumbersome nor stringent than the existing SSG be it in terms of product coverage, triggers or remedies.

The G33 said that it expects a much more balanced revised draft text on agriculture modalities, within and among the three pillars.

Bolivia and Cuba called for future talks to be held among all members. +