TWN Info Service on WTO and Trade Issues (July 07/07)

18 July 2007

Agriculture and NAMA chairs issue modalities papers

Published in SUNS #6295 dated 18 July 2007 

By Martin Khor (TWN), Geneva, 17 July 2007

The papers on draft modalities for agriculture and non agriculture market access (NAMA) for the WTO's Doha negotiations were issued this afternoon.

The authors of the papers, the Chair of the agriculture negotiations Ambassador Crawford Falconer of New Zealand and the Chair of the NAMA negotiations Ambassador Don Stephenson of Canada held a press conference late on Tuesday on their drafts.

It was announced then that the Chairs will hold open-ended meetings starting next Monday and continuing for the next one or two days to enable WTO members to voice their initial views on the papers.

On Thursday 26 July an official Trade Negotiations Committee meeting will be held, followed by an official General Council meeting on 27 July, after which there will be the summer break.

Officials and diplomats expect the real negotiations on the two papers to begin only when the WTO re-opens on 3 September.

The two papers are likely to generate controversy and dissatisfaction among a broad range of members and their groupings. Indeed, both Chairs at their press briefings said they expect this to happen.

"This text has no standing and does not prevent anyone from defending their positions," said Stephenson at the briefing. "Members are invited negotiate from this text, with each other and not the Chair. I will revise it one or more times and it may then look like this, or not." It will, he added, take a few weeks after the talks resume in September to produce a revised draft.

Stephenson said the text is a compromise, "my best guess where members can find consensus as they told me. All members have to compromise. The text is a bridging exercise. These are my best guesses based on a thousand hours of listening to the members.

"This (draft) is the members talking, but it's not a purse science, I am a Chairman not a computer or calculator. It's for the members to decide."

Stephenson stressed that the NAMA negotiations should not be characterised as North-South in nature as all the issues have seen developing countries on different sides. There are as many developing countries seeking access to other developing countries, as there are developed countries seeking access. It is incorrect factually to characterise it as a North-South dynamic and "we risk doing damage" if it was portrayed as such.

At question time, several journalists however asked Stephenson whether he thought his text would be accepted by developing country groupings.

Since the range in the Chair's proposed coefficients are far different from the NAMA-11 figures, could his text survive, asked a journalist.

Stephenson replied that members do not want him to draft a paper with everyone's position in it. Whether his text would survive is "up to members" and their reactions especially in September would be key.

Another journalist asked Stephenson whether he could have a clear conscience with his treatment of the less than full reciprocity principle and the mandate that the levels of ambition for NAMA and agriculture had to be balanced. He was further asked how he could claim his range of coefficients could constitute the middle ground.

Stephenson said he thought his paper satisfied both the requirement of less than full reciprocity and the balance with agriculture. "These are not from the middle ground but from the views of members. I faithfully respected it." Regarding the balance, he said "I assume they will find these outcomes will satisfy them."

Asked again why the tariff-reduction formula's coefficient for developed countries was not placed below 8 if the draft was supposed to be the middle ground, and how this figure was arrived at, Stephenson said the consultations he undertook showed that the majority wanted that coefficient to be below 10 but not far below, and that is why he chose 8 or 9, which was below 10 but not far below.

Asked by another journalist how his text could be sold to the NAMA 11, and why they should agree to it, Stephenson replied he was not trying to sell anything. His paper is "my best guess to bridge the positions, it is up to them to choose."

In the NAMA paper, Stephenson proposes that developed countries have a coefficient of 8-9 while developing countries have a coefficient of 19-23. According to him, after the formula is applied with these coefficients, developed countries' bound tariffs would be below 3% on average and developing countries' bound tariffs would be below 12% on average.

His proposed coefficients greatly contrast with the NAMA 11 position that there must be a gap of at least 25 points between the coefficients of developed and developing countries. For example, if the North's coefficient is 8, the South's coefficient should be 33.

In his briefing, Falconer said that his paper gave a range of choices that are "pretty narrow now." He said the job of members is now to negotiate seriously on those ranges. "If they do beyond that it means they don't want a deal or they won't get a deal."

He said that his paper took people "outside their comfort zone... It will be painful if I am right and it's more painful if I am wrong. These are the ranges they have to go to."

Asked what the percentage reductions meant in terms of the commitments that the US and EU had to make in domestic subsidies, Falconer revealed that his paper meant that the US would have to cap its OTDS in the range of $13 to 16.38 billion, while the EU would have to cap its OTDS at 27.6 billion euro, if the 75% cut (in the range) is taken. (The paper says that the EU would have to cut its OTDS by 75 to 85 per cent).

The Falconer paper mentions that the maximum average reduction that any developing country would have to undertake as a result of applying the formula is 36 or 40 per cent (the figures are in brackets, to be negotiated).

This is higher than the figure of 24% proposed by both the African and ACP Groups in their papers submitted to Falconer last week (see separate article).

Falconer's paper does not provide figures for the numbers of special products allowed for developing countries.

Explaining these points to the media, Falconer said it was reasonable to have a range of 36 to 40 per cent as the maximum average cut for developing countries. This is a figure for only some, as many developing countries should have an average cut that is lower, as low as 24%.

On special products, he said this paper did not give a precise number. He gave a number in his Challenge paper (issued several weeks ago) but a lot of people did not like his view, some saying it was too tough, and some saying it was too easy.

He said that after his Challenge paper, "people backed off the numbers and wanted to get the numbers right. So I won't hit them on numbers this time. At the same time they will need a number, and I have some ideas."

[The number given in the Challenge paper was that 5-8 per cent of tariff lines could be designated as special products. This was objected to by the G33, which has proposed that at least 20% of products can be special products.]