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TWN Info Service on WTO and Trade Issues (Nov07/10)

2 November 2007


Agriculture Chair puts forward his new views on Special Products

The Chair of the WTO's agriculture negotiations, Ambassador Crawford Falconer, put forward his own thinking on "special products" at a Room E meeting at the WTO on 29 October.

As the proposal was orally presented and not in writing, diplomats said they found it hard to understand what the Chair actually meant by his proposal.

The report below was pubolished in the South North Development Monitor on  31 October.  It is reproduced here with the permission of the SUNS.  Any reproduction or re-circulation requires the permission of the SUNS (sunstwn@bluewin.ch).

With best wishes
Martin Khor
TWN


Agriculture Chair puts forward his new views on Special Products
Published in SUNS #6355 dated 31 October 2007
By Martin Khor, Geneva, 30 Oct 2007

The Chair of the WTO's agriculture negotiations, Ambassador Crawford Falconer of New Zealand, put forward his own thinking on how to treat the issue of "special products" for developing countries at a restricted meeting at the WTO on Monday afternoon.

At the so-called Room E meeting, to which 36 delegations are invited, Falconer orally laid out his current views on how he would treat special products (SPs) in the new revised modalities paper that he is scheduled to issue in November.

He gave his views following the presentation of a new paper on SPs by the Group of 33 developing countries.

According to diplomats present, the G33 paper was not discussed at the meeting, although it was tabled and presented. Instead, Falconer asked the meeting to consider and comment on his own proposals for SPs.

Falconer proposed a dual treatment for two categories of developing countries, according to the diplomats. The first category are the countries that are small and vulnerable economies, or that are listed in Annex C of his 1 August modalities paper (TN/AG/W/4).

In that paper (paras 52, 53 and footnote 3), these countries can reduce their tariffs according to the tiered formula by have a further 10 percentage points less than developing countries generally, and should the use of the formula result in an overall average cut higher than 24%, they can apply lesser reductions at their discretion to keep within the 24% average level.

In that paper, some of the countries are also entitled not to make a tiered reduction but would be subject only to the overall average reduction (24%).

At the meeting, Falconer seemed to be opting towards the overall average reduction approach. He also clarified that this approach would be an alternative to the use of SPs for the SVEs and other countries in annex C.

Diplomats took this to mean that the Annex C countries would not be able to make use of the SPs instrument as such, but that in Falconer's view the approach would enable these countries to shield some of their products from tariff reduction, and that some other products could be subjected to low reduction rates.

According to a trade official, Falconer told the meeting that studies done by the WTO Secretariat showed that some countries could give special treatment to 20% of their products under this "24 per cent average cut" approach, while others could cover less than or more than 20% of their products.

The second category are developing countries that are not listed in Annex C. For them, Falconer proposes that a certain number of "special products" would enjoy special treatment in being given an extra five percentage point "deviation" from the treatment accorded to "sensitive products."

In his present 1 August paper, the tariff cuts for developing countries are two thirds the level of cuts for developed countries in the tiered formula. For sensitive products, the proposed "deviation" is one third to two thirds (meaning that the percentage cut is reduced by one third or by two thirds of the normal).

The special product is understood to have an extra deviation of 5 percentage points, i. e. 5 percentage points will be deducted from the cut that would be made for a sensitive product.

However, some diplomats were also uncertain whether the 5% deviation is to be applied to the formula cuts, or on top of the deviation allowed for a sensitive product.

Some diplomats understood Falconer to say that about 5 per cent of the total tariff lines of a developing country would be eligible for this special product" treatment, to be made up of 5% of tariff lines in each of the four bands of the tiered formula.

In addition, a certain small percentage of tariff lines may be exempted from any tariff reduction and thus presumably would not be subjected to the formula. Falconer reportedly indicated that the number to be exempted is a "political" matter that had to be decided at the level of Ministers.

According to a diplomat, Falconer also indicated that he would no longer consider his proposal (in footnote 2 of his 1 August paper) that one approach would be for this category of developing countries to undertake the Uruguay Round approach, to cut tariffs by an overall average (in this case by 36%) instead of using the formula, and instead of using the SPs concept.

Several developing-country diplomats interviewed said they were confused with the Falconer proposal, as he did not give the participants any written paper. It was thus difficult to understand precisely what the Chair meant, especially in relation to the "5 per cent deviation" allowed for special products and how this would be calculated.

Some diplomats were uncertain whether the 5 percent referred to for special products was a deviation from the tiered formula itself, or an extra deviation on top of the deviation allowed for sensitive products.

Egypt, on behalf of the Africa Group, requested the Chair to put his ideas in writing, so that it could be clearly understood, and so that it could be conveyed to members of the Group. However, the Chair reportedly declined to put the proposal on paper.

A diplomat from a small economy said she was uncomfortable with the proposal to "drop" the SP concept for SVEs and other Annex C countries. These countries should be given the opportunity to make use of SPs even within their "average cut" approach, or else the countries should be allowed to choose between using the formula with SPs, or to use the average cut approach.

It was difficult or even impossible for these small countries to now do national studies to determine whether this or that approach was more suitable for them. They should be given he right to choose, said the diplomat.

The Falconer proposal for the second category of countries also appears to have several important differences with the G33 proposal on SPs, on both the number and on the treatment.

(The SUNS in the next issue will report on the G33's latest paper on SPs).

 


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