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TWN Info Service on WTO and Trade Issues (May07/04) 7 May 2007
Diplomats
of different groupings of countries at the WTO spent much of Tuesday
(1 May) assessing the "Challenge Paper" issued on 30 April
by the Chair of the agriculture negotiations, Ambassador Crawford Falconer
of Senior
officials of the Group of 4 on 1 May started a meeting in In
Below
is a report on some issues being discussed, especially the The report was published on 2 May in the SUNS. With
best wishes Agriculture:
WTO groupings ponder over Falconer's paper Diplomats
of different groupings of countries at the WTO spent much of Tuesday
(1 May) assessing the "Challenge Paper" issued on 30 April
by the Chair of the agriculture negotiations, Ambassador Crawford Falconer
of Senior
officials of the Group of 4 - the The
G4 meeting is expected to focus on agriculture, with the intention to
discuss possible numbers for cutting domestic subsidies and tariffs,
and for designating and treating sensitive and special products, according
to a media report from The
In
Much of the focus in the international media has been on Falconer's views on where the "centre of gravity" lies in relation to commitments to be made by developed countries. The
three biggest sticking points here are: by how much the On the first question, Falconer's paper has said the ceiling for overall trade distorting support (OTDS) could be between the "low teens" and $19 billion, with both extremes being unlikely. Figures in the range of $14-17 billion were today being bandied around as the possible range meant by Falconer. However, a trade analyst who has followed GATT and WTO negotiations since the Uruguay Round pointed out that if the US agreed to a figure inside this range for itself, and if the rest of the WTO membership went along, it would be disastrous as this would permit the US to get away with having done nothing to reduce its actual domestic subsidies since the completion of the Uruguay Round. The figure of below $19 billion, mentioned by Falconer, is usually used as reference because in 2005 the actual level of overall trade-distorting support (amber box plus de minimis plus counter-cyclical payments) was $19.7 billion. And this figure, with the year 2005 being the yardstick, has been taken as the reference point in the negotiations of the past many months. Various
WTO members and groupings have been demanding that the maximum level
of permissible overall trade-distorting support for the However,
if the Data
on this are available in the paper on simulations for domestic support
prepared by The simulations paper shows the following overall trade-distorting support in the US: $7,697 million (in 1995), $7,052 mil (1996), $7,041 mil (1997), $15,134 mil (1998), $24,297 mil (1999), $24,144 mil (2000), $21,457 mil (2001), $14,875 mil (2002), $10,236 mil (2003), $18,628 mil (2004) and $19,666 mil (2005). The figures show that in the first three years of the implementation period of the Uruguay Round (1995, 1996, 1997), the level of overall trade-distorting support in the US was $7 billion or a little above that. This
compares with the final bound total AMS (amber box) commitment of $19.3
billion. The bound level had been fixed at a rate far above the actual
level of trade-distorting support, thus allowing a lot of "water"
for the And that is what happened. From $7 billion, the actual expenditure increased to a peak of $24 billion in 1999-2000, then dropped to $10 billion in 2003, only to rise again to $19.7 billion in 2005. In fact, the US has been able, under the flawed Uruguay Round framework, to increase its trade-distorting domestic support by more than three-fold from $7 billion just after the Uruguay Round ended (1995) to $24 billion in 1999-2000 and to maintain a level of about $20 billion in 2005. The
demand of the G20 is that the The G20 demand is in fact very moderate or even very un-ambitious, since the actual 1996-1997 level was $7 billion. A moderate approach would have been to ask that the permitted level be reduced to significantly lower than $7 billion, which was after all the level a full 10 to 12 years ago. The US however has insisted that it will retain its October 2005 offer of $22.7 billion as the permissible level and that it will only go below that if there is enough market access openings in return from the EU and from developing countries - and that these market openings be in agriculture, industrial products and services in the case of developing countries. In
the context of the above data, the Another aspect of the Falconer paper that has been closely looked at in the last two days is its last section on "a final thought on developing country market access", where Falconer suggests that the present framework for developing country's market access be set aside, and an Uruguay Round approach be taken instead. In this approach, developing countries would be required to undertake a commitment to cut their tariffs by an overall average, with a minimum cut per line. In the Uruguay Round, the developing countries' commitment was a 24% average cut with a minimum cut of 10% per tariff line. Delegates from some developing countries have been intrigued by this proposal. They are assessing whether this approach would be of more benefit to them, in terms of their being able to keep certain products, that are important for food security and farmers' livelihoods, from significant tariff cuts. In particular, the delegates are weighing the pros and cons of keeping to the present framework of applying a tiered formula (requiring all affected products to be subjected to cuts according to the formula) with flexibilities of having certain tariff lines designated as special products; or of switching to an Uruguay Round-type framework of having an overall average cut (which has significant flexibilities built in).
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