TWN Info Service on WTO and Trade Issues (Nov07/02)

1 November 2007

Falconer reports progress on export competition

Published in SUNS #6345 dated 17 October 2007 

The following article is reproduced here with the permission of the South North Development Monitor (SUNS). Any reproduction or re-circulation requires permission of the SUNS (

With best wishes
Martin Khor

Falconer reports progress on export competition
Geneva, 16 Oct 2007;  By Kanaga Raja

Consultations among 36 representative delegations at the WTO on 8-11 October saw "a reasonable degree of progress" on export competition issues, the chair of the agriculture negotiations, Ambassador Crawford Falconer of New Zealand, told members on Monday.

Briefing the full membership on the outcome of the "Room E" consultations on export competition issues at an informal meeting of the Special Session of the Committee on Agriculture, Falconer reported that although delegates were not yet working on an exact text, the options are now clearer.

If he had to - and if members did not do so themselves - he could produce a revised section on export competition that is shorter than the present text in his July draft "modalities", he said.

Some members said that they had "more to say" on the subject, but they would probably now have to do so after his next revision, he added.

Issues under the export competition pillar cover direct export subsidies and other areas of government intervention in exports that include export credit, insurance and other forms of financing, food aid, and state trading enterprises.

On food aid, Falconer said that apart from one or two more-political issues, negotiators should be able to conclude this subject.

According to trade officials, a major remaining political issue is "monetization" - selling donated food in order to raise funds to cover the costs of distribution etc, or even for broader development projects.

The Chairperson reported that negotiators are close to an improved text without square brackets, particularly on emergency food aid, which would be shielded from rigid disciplines by being put in a "safe box".

Some differences remain, in particular about "monetization", and how much of a role non-governmental organizations should have, Falconer said.

Opinions still differ over "monetization" for non-emergency food aid, he added. The discussion also revealed that the concept of "commercial displacement" might be a problem for the text and might be handled through specific disciplines, Falconer said.

On export financing, the Chair reported that discussion of this topic is less advanced than food aid, although it may be possible to streamline the text by dropping some provisions.

This is because two of the "terms and conditions" for acceptable financing have emerged as the keys: the limit on the repayment period (normally 180 days) and the requirement that finance programmes are "self financing" over a period (4 or 5 years are proposed in the draft).

However, differences remain or have emerged on exceptions to the 180-day repayment limit, and on the period for programmes to be established as self financing, Falconer said.

That streamlining would have a knock-on effect on sections dealing with special treatment for developing countries, because several of the special-treatment provisions refer to terms and conditions for developed countries that could be removed from the draft, Falconer added.

However, even then, some firmly-held differences remain, including the question of how to deal with the higher costs of borrowing that developing countries face, he said.

On exporting state-trading enterprises, Falconer said that negotiators had little to say on this, since their positions remain unchanged on the key political question of monopoly power.

One issue discussed was the wording of the definition of the relevant enterprises, Falconer said. He suggested that since the definition was derived from Article 17 of the General Agreement on Tariffs and Trade (GATT) (which deals with state trading enterprises in general), the simple solution might be simply to refer to that article.

On export subsidy commitments, Falconer reported that there is little new on this.

With respect to monitoring and surveillance, the Cairns Group and G-20 have separate proposals to enhance existing notification and review procedures and to cover new requirements arising from the present negotiations.

Falconer said that the two groups are working on merging their texts and that it is up to them to do so because the issues are too detailed for him to try to identify possible compromises. He said that he hopes that the merged text will be finished soon.

The Chairperson said that it is still difficult to predict what the situation will be at the end of this week.

(Consultations among the 36 delegations in Room E this week are focusing on domestic support and market access.)

Falconer said that he does have some ideas, which he will share with members at an informal meeting of the full membership on Friday morning.

The draft he circulated in July was based on "what the traffic could bear". He said that he could now revise the text on export competition, but whether he could do that for domestic support and market access remains to be seen.

According to trade officials, the Chair cautioned that the present process cannot go on forever. At some stage, members will have to "draw a line under it".