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TWN Info Service on WTO and Trade Issues  (July 07/08)

19 July 2007


ACP and African Groups submit detailed agriculture proposals

Days before the modality papers were issued, the ACP and African Groups submitted detailed proposals on agriculture to the Chair of the agriculture negotiations.  So did the G20.

Both the ACP and African Groups proposed that the tariff reduction for developing countries in agriculture should not exceed 24% on average. This compares with the G20 proposal that on average the cut for developing countries should be a maximum of 36%.

The African Group also proposed that the overall trade distorting support for the US should be in the range of $10-12 billion. This is lower than the $12.1 billion requested by the G20.

The ACP submission emphasized that all issues in the negotiations must be addressed in a balanced and equitable manner and that the modalities and solutions for all issues must be considered and settled simultaneously. The concept of "partial modalities" is therefore not acceptable to the Group.

Below is an article on the proposals.  It was published in SUNS on 18 July.

Best wishes
Martin Khor
TWN

ACP and African Groups submit detailed agriculture proposals

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

Two major groupings of developing countries have in the past few days submitted separate comprehensive sets of proposals to the WTO on what should be contained in the modalities document that has been issued Tuesday by the Chair of the agriculture negotiations, Ambassador Crawford Falconer of New Zealand.

The proposals by the Africa, Caribbean and Pacific Group (ACP) and the African Group will thus be used by them to assess the extent to which the draft modalities as authored by Falconer meet their demands.

The ACP Group prepared a Submission on the Agriculture Negotiations, which it presented in the middle of last week, while the African Group handed over a letter to Falconer on 12 July. A majority of African countries are members of both the African and ACP Group.

The G20 also submitted an Aide Memoire summarising their positions on agriculture a few days before the other two groups.

A significant point is that both the ACP and African Groups proposed that the tariff reduction for developing countries in agriculture should not exceed 24% on average. This compares with the G20 proposal that on average the cut for developing countries should be a maximum of 36%.

The African Group also proposed that the overall trade distorting support for the US should be in the range of $10-12 billion. This is lower than the $12.1 billion requested by the G20.

The ACP submission emphasized that all issues in the negotiations must be addressed in a balanced and equitable manner and that the modalities and solutions for all issues must be considered and settled simultaneously. The concept of "partial modalities" is therefore not acceptable to the Group.

The Group is willing to contribute to the agriculture reform process in a manner that is compatible with its financial and development needs, and policy objectives. However, the Group will not accept an outcome that disproportionately places the burden of this reform process on developing countries.

In addition, the contribution that the Group is willing to make is conditional on the full and satisfactory operationalisation of Special and Differential Treatment (SDT) for developing countries, in line with all three agreed mandates, across all areas of the negotiations, as well as in all three pillars of the Agriculture negotiations.

The ACP Group also stressed the importance of a transparent and inclusive process and especially the primacy of the multilateral process in Geneva. The Group is not willing to accept a fait accompli in the negotiations. Neither does it wish to be caught by the constraints of a timeframe. For the Group, the issue is content. Therefore, the Group is not seeking a conclusion to the Doha round of negotiations at any cost.

The Group put forward positions on many aspects of Market Access. It stressed that its proposal in JOB (05)/257/Rev. I, remains on the table.

On the tariff reduction formula, the ACP Group proposed the following formula for developing countries: (i) Tier 1 with tariffs  150% to have linear cut of 30%; (ii) Tier 2 with tariffs of  100% < 150% to have linear cut of 25%; (iii) Tier 3 with tariffs of  50% < 100% to have linear cut of 20%; (iv) Tier 4 with tariffs 0 < 50% to have a linear cut of 15%.

Should agreement be reached on the G20 proposal as the centre of gravity for tariff reductions, then the ACP's legitimate expectation is for proportionality in terms of tariff cuts and appropriate flexibilities. Therefore, the overall average tariff reduction by ACP countries shall not exceed 24%.

The special condition of developing country Members with ceiling bindings and homogeneous low bindings must also be taken into account through specific modalities, including the following:

(i) members with ceiling bindings to be subject to the overall average reduction only; or

(ii) tariffs will be distributed across the lower tiers of the formula on the basis of their own assessment of sensitivities; or

(iii) irrespective of the thresholds for the tiers to be agreed, countries with ceiling bindings not to be expected to undertake the level of cuts required in the highest tiers.

The Group also stresses that there shall be no tariff capping for developing countries.

The ACP reiterated the great importance it attaches to provisions on Special Products (SPs) and the Special Safeguard Mechanism (SSM), and fully supported the position of the G33 on these issues.

On Special Products, the Group said that this must be made with a full understanding of the domestic policy context and circumstances of the countries concerned. It reiterated the mandate given at Hong Kong, that developing country members shall have the flexibility to self-designate an appropriate number of tariff lines as Special Products.

Further, Special Products should be accorded maximum flexibility in terms of treatment, including the exemption of some products from tariff reduction. Special Products should also be exempted from TRQs and should have automatic access to the SSM.

The ACP endorsed the current position of the G33 regarding pursuing discussions on Indicators while keeping the issue of numbers on the table.

"In that regard, it is important to bear in mind that the Indicators reflect the diversity in the agricultural systems and policies across developing countries, and will thus allow individual developing country Members to identify its own SPs on the basis of the stated criteria of food security, livelihood security and rural development," said the Group. "Further, in the context of the discussions on Indicators, ACP members are of the view that verifiable national data should be the primary source."

On Special Safeguard Mechanism (SSM), ACP members are of the view that this must respond to the needs and particular circumstances of developing countries; must be easy to implement; and must effectively address import surges and price depressions in developing countries. All agricultural products will be eligible to use the mechanism. The view that there is a linkage between access to the SSM and the commitments on tariff reductions on particular products is not acceptable to the Group.

The ACP Group reaffirmed the mandate given in Hong Kong regarding the two triggers - price and import volume. Further, remedy measures should provide meaningful and effective relief from import surges and price depressions to the developing country Member concerned, thus relating the remedy measure to the nature and seriousness of the problem it intends to address. Therefore, the ACP Group reiterates its support for the volume multi-trigger and multi-remedy approach put forward by the G33.

As regards remedy, this should be linked to the level of import surge and price depression. That is, for example, the lower the import price relative to the trigger price, the greater the additional duty that would be imposed. In that connection, the ACP Group supports the G33 position as regards the duration of the remedy measure, that is, 12 months.

On long-standing preferences, the ACP Group said that it will not be able to join the consensus on a modalities text that does not address, in a meaningful and effective manner, its concerns regarding preference erosion. With respect to scope and coverage, Paragraph 16 of TN/AG/W/I Rev. 1 may be used as a reference for further consideration.

Some preference receiving products may account for a small percentage of a member's overall agricultural trade, while others may be of small export value but nevertheless represent a large percentage of a member's overall agricultural trade. In both cases, these products represent, in the beneficiary countries, significant employment and important sources of export revenue.

Therefore, the ACP Group will want to at least maintain the current margin of preference. It would not support the a priori exclusion of any products with tariffs of 15% and below.

It is finalizing a revised provisional indicative list of products relating to long standing preferences and preference erosion which will assist the process of treating with the overlap between the list of tropical and diversification products on the one hand, and the ACP list on preference receiving products of importance, on the other.

It agreed that sugar and bananas are of particular concern due to their historic reality and taking into account their susceptibility to dispute settlement procedures. As regards bananas, whatever process is underway outside of the Doha negotiations, the results will have to come back to the multilateral process and we expect these to be part of a Doha outcome.

On treatment, the ACP Group supports the combination of trade-based and non trade-based solutions, but emphasis must be placed on trade solutions in the multilateral negotiations.

On LDCs, the ACP Group reaffirmed its full support for the Hong Kong decision on the need for developed countries and developing countries in a position to do so, to provide duty-free, quota-free market access for all products originating from all LDCs by 2008, and to apply transparent and simplified Rules of Origin in the process.

"For developed countries facing difficulties in providing full duty-free, quota-free market access, we support the proposal by the Chair of the Agriculture negotiations for setting a specific deadline for extending duty-free, quota- free treatment to the remaining 3% of tariff lines, i. e. by the end of the implementation period," it said.

On the Cotton Initiative, the ACP Group supports the proposal submitted by the Cotton-4 countries in June 2006 regarding the reduction in the specific measure of support applicable to cotton. Developed countries and developing countries in a position to do so should provide duty-free and quota-free access for imports of cotton from LDCs. The Group stressed the need to set up a mechanism to deal with the loss of revenue that cotton producing ACP countries are facing as a result of declining cotton prices.

On Commodities, the ACP Group is seeking progress in the negotiations as regards addressing the crisis of instability and secular decline in commodity prices so as to attain stable, equitable and remunerative prices for these products. It supported the proposals on commodities submitted by the African Group. It wanted modalities that would ensure the elimination of non-trade barriers. Further, tariff cuts following the application of the formula must result in satisfactory reduction in the level of tariff escalation.

On Domestic Support, the Group wants substantial and effective reduction in domestic support by developed countries, in particular, overall trade distorting domestic support and the final bound total AMS. Appropriate disciplines, including product-specific caps and an effective monitoring and surveillance system are required to prevent concentration of support on a few individual products and box shifting. In that context, commitments by developed countries should not be made conditional upon market access commitments by developing countries.

The Group is also supportive of new disciplines for the use of Green Box subsidies by developed countries to ensure that they are really non trade-distorting. In that regard, there should also be a strong monitoring and surveillance mechanism. The ACP Group fully supports the proposal of the African Group on the Green Box.

The ACP Group shares the Cotton-4 objectives that product specific AMS caps applicable to cotton shall amount to one thirds of the final capping resulting from the historical average of the developed country member concerned, as well as their position on the Blue Box capping for cotton, that is, it should be one third of what is agreed for agriculture in general.

The Group also has proposals on various aspects of the export competition pillar.

The African Group positions are laid out in a letter sent on 12 July to Falconer by the Group coordinator, Ambassador Arsene Balihuta of Uganda.

On Domestic Support, the African Group asked for the following on the Overall Cut: (i) the OTDS for the United States should be between $10-12 billion; and (ii) Japan and the EU should undertake an 80% cut.

On De Minimis support, the Group said that: (i) Developed countries should undertake an 80% cut in their de minimis; and developing countries with subsistence or resource poor farmers should be exempt from reductions; (ii) Developing countries with no AMS commitments should also be exempt from reductions; (iii) Developing countries that do have AMS should undertake lower cuts and be granted longer implementation periods.

On Blue Box support, the African Group said that: (i) Blue Box be limited to 2.5% of the value of agriculture production for developed countries, from beginning of the implementation period; (ii) There should be product specific disciplines in AMS and Blue Box.

On the Final Bound AMS, the Group proposed that: (i) the G20 position should be the basis on the level of the cuts and the tiers; (ii) Base period should be 1995-2001; (iii) There should be product specific disciplines.

On the Green Box, the Group: (i) reaffirmed its paper and also supports amendments to paragraph 5 proposed by the G20; (ii) maintained that there should be strengthened notification, monitoring and surveillance requirements and that these must incorporate SDT provisions for developing countries; (iii) Green Box subsidies must conform to the "fundamental requirement" in para 1 of Annex 2 of the Agreement on Agriculture.

In its section on market access, the African Group letter deals with several aspects.

On the average level of ambition and double cuts in the tiered formula, it said that: (i) there should be at least 54% average tariff cut for developed countries and at most 24% cut for developing countries; (ii) developed and developing countries must be accorded different treatment on the level of thresholds.

On the Tiered Formula, the African Group: (i) supports the thresholds proposed by the G20; and (ii) Developing countries should undertake, at most, cuts that are two-thirds of those undertaken by developed countries.

On sensitive products, the African Group stated that sensitive products is an instrument that may bar market access for developing countries. The selection or percentage of sensitive products should thus be as low as possible, and developed countries wishing to avail themselves of this mechanism should compensate trading partners through tariff quota expansion.

On Special Products, the African Group supports the G33 proposal as the basis for continued negotiations.

On tropical products, the African Group maintains that tropical products should be liberalized so long as this does not have a negative impact on existing preferences.

On special safeguard mechanism, the African Group supports the G33 proposal on special safeguard mechanism as the basis for continued negotiations.

On preferences, the African Group maintains that there is need for trade related solutions for products benefiting from preferences including a longer implementation period of not less than 10 years; and that preference-giving countries should provide a package of measures to enable preference-receiving countries to diversify. This package would be monitored and reviewed on an annual basis by the General Council.

On cotton, the African Group maintains that negotiations should be based on the proposal and formula proposed by the Cotton 4.

The letter also states that the African Group is also opposed to any inclusion of a "peace clause". It also dealt with several points regarding export competition. And attached to the letter are also the Group's positions on commodities and tariff escalation.

 


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