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TWN Info Service on WTO and Trade Issues (Sept07/08)

19 September  2007


"Room E" talks continue on special products

The agriculture negotiations at the WTO continued to focus on the issue of special products on Wednesday and Thursday last week

After a general discussion on the special products (SPs) issue on Tuesday, the agriculture discussions in the small group of 35 delegations (known as the Room E meeting, named after the small room in the WTO) focused on the indicators for special products on Wednesday and continued to do so on Thursday.

The SP discussion had started with a general discussion on the concept of SPs (which will be subjected to special treatment in terms of no or reduced tariff reduction as compared to other products).

The general discussion had then moved to whether the developing countries can designate their SPs through an agreed number or percentage of tariff lines, or whether SPs can be selected only if they meet certain quantitative thresholds. 

Below is a report published in the SUNS on14 Sept. 2007.  It is reproduced here with the permission of SUNS.  Any reproduction of re-circulation requires the permission of the SUNS (sunstwn@bluewin.ch).

Best wishes
Martin Khor
TWN

"Room E" talks continue on special products

Published in SUNS #6323 dated 14 September 2007

By Martin Khor (TWN) Geneva, 13 Sept 2007

The agriculture negotiations at the WTO continued to focus on the issue of special products on Wednesday and Thursday, while diplomats continued to wait for news on when the talks on non-agricultural products will be launched.

After a general discussion on the special products (SPs) issue on Tuesday, the agriculture discussions in the small group of 35 delegations (known as the Room E meeting, named after the small room in the WTO) focused on the indicators for special products on Wednesday and continued to do so on Thursday.

The SP discussion had started with a general discussion on the concept of SPs (which will be subjected to special treatment in terms of no or reduced tariff reduction as compared to other products).

The general discussion had then moved to whether the developing countries can designate their SPs through an agreed number or percentage of tariff lines, or whether SPs can be selected only if they meet certain quantitative thresholds.

Many developing countries, belonging to the G33, are of the view that the mandate from the August 2004 package and the WTO Hong Kong Ministerial allows the countries to self-designate an appropriate number of their own SPs and that indicators (within the criteria of food security, livelihood security and rural development) are meant to guide (but not dictate or determine) the selection of SPs.

Other WTO members which have a predominantly export interest (including the United States) would like to constrain the ability or space given to the developing countries to select their SPs, and they are insisting that to qualify as SPs, the products must be linked to verifiable data and satisfy quantitative thresholds.

The G33 countries agree that there be indicators and have produced a revised list of 12 indicators, but do not want conditions such as mandatory thresholds and a verification procedure which they consider would be cumbersome and would render the SP instrument difficult to use.

On Wednesday, the meeting went through the G33 list of indicators, and completed discussion on the first five on the list.

These indicators are that: (1) the product is a staple food; (2) a significant proportion of domestic consumption of the product is met through domestic production; (3) local consumption of the product is significant in relation to world exports of that product or a significant part of world exports of the product is accounted for by the largest exporting country; (4) a significant part of the local production of the product is produced by small farms; and (5) a significant part of the rural labour force is employed in producing the product.

Several G33 diplomats said that they were pleased that the WTO members, including those that are known to be reluctant to accept the SP instrument or its operationalisation, were for the first time seriously engaging in a serious discussion on the indicators, including their rationale.

The meeting continued on Thursday afternoon, with discussion on more of the remaining seven indicators on the G33 list.

The Room E meeting is expected to then proceed to other topics on market access and developing countries, including special safeguard mechanism, tariff escalation, preference erosion, and tropical products.

At the rate the discussions on market access are proceeding, the topic of domestic support is now expected to start only next week. The most anticipated aspect of this topic is whether the United States will say anything new on whether it can improve its offer on its maximum level of overall trade distorting support (OTDS).

Many diplomats and analysts believe this to be perhaps the single most important factor determining whether there will be progress in the September negotiations at the WTO.

There is a generally pessimistic expectation on this because the US Congress and administration are both caught up in formulating the 2007 Farm Bill, which will have an effect on what the US can offer on subsidies.

On Tuesday, the Associated Press reported that the EU Trade Commissioner Peter Mandelson told European parliamentarians that "The farm bill does indeed offer no conceivable basis on which the United States could table a final offer, or any basis on which an eventual agreement could be reached" in the Doha Round.

Last month, the Australian Trade Minister had described the 2007 Farm Bill as a "setback" for the Doha Round, referring to the version of the bill adopted by the US House of Representatives at the end of July.

The US Senate will be formulating its version of the Farm Bill, and then the House and Senate will have to reconcile the two versions through a conference committee (where the differences will be worked out) and produce a single version to present to President Bush for signing.

The US Agriculture Secretary Mike Johanns has already said that he is against several parts of the House version.

According to a report dated 13 September in the US-based website "Wallaces Farmer", Senator Tom Harkin, Chair of the Senate Agriculture Committee, has said that he hopes to have a farm bill through his committee by the third week of September and onto the Senate floor by the end of the month.

There are doubts whether the process (of the Senate bill being adopted and the reconciliation with the House bill) can be completed soon. For example, the Iowa Farm Bureau president Craig Lang said last week: "It will be difficult to get a bill out of Congress by the end of 2007 because of the limited amount of time available to negotiate the differences between the Senate and House versions."

Since the new Farm Bill will determine the total amount of subsidies as well as the amounts of subsidies the government will allocate in different categories of expenditures (such as direct payments, counter-cyclical payments, commodity-specific programmes, conservation and nutrition or food aid), and for the five-year period starting October 2007, its contents will have a major bearing on the parameters of what the US administration could credibly offer on domestic support at the current WTO negotiations.

US Administration officials have told some other delegations at the WTO that the Farm Bill would not pose an obstacle to the Doha talks, since the US negotiators could negotiate a WTO deal, and whatever Farm Bill is adopted in Congress can eventually be amended to be in line with the Doha Round outcome.

However, some diplomats and analysts doubt whether the US administration can be so confident that Congress will readily agree to amend its Farm Bill (which is being so painstakingly crafted) just to fit into what the Administration has independently committed at the WTO talks.

It is more likely that the Farm Bill, or the negotiations on it in Congress, will help determine the Administration's position at the WTO, than that a Doha deal at the WTO will determine the eventual parameters of the US Farm Bill.

 


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