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TWN Info Service on WTO and Trade Issues (Nov07/15)

9 November 2007


Agriculture text delayed, consultations to continue

The Chair of the WTO’s agriculture negotiations announced on 2 November that he would be continuing his small group consultations in the week of 12 November, instead of stopping his meetings already as earlier planned.

This means that his revised text, supposed to be released in mid-November, will now be delayed, probably to the end of November.

Below is a report on the agriculture meeting on 2 November. It was published in the South North Development Monitor on 5 Nov 2007. It is reproduced here with the permission of the SUNS. Any reproduction and re-circulation requires permission of SUNS (sunstwn@bluewin.ch).

Best wishes
Martin Khor
TWN


Agriculture text delayed, consultations to continue
Published in SUNS #6358 dated 5 November 2007
By Kanaga Raja (SUNS), Geneva, 2 Nov 2007

The Chair of the agriculture negotiations at the WTO, Ambassador  Crawford Falconer of New Zealand, announced Friday that he would be  continuing his small group consultations restricted to some 36 invited representative delegations in the week of 12 November.

Falconer, according to his earlier announced plans, was to have held his  last consultation meeting Friday, and take a break to prepare his  revised draft modalities paper. This was to have been issued (along with  a NAMA revised modalities text) by mid-November.

On Wednesday, the Brazilian Foreign Minister, Mr. Celso Amorim, after a  meeting with G-20 ambassadors, had announced that a ministerial meeting  of the G20 was being convened by Brazil (which leads the group) to meet  in Geneva on 15 November. The purpose of the meeting, he had explained,  was to enable the collective voice of the G20 to be heard and listened  to by both the Agriculture and NAMA chairs.

Some trade observers had feared that the original plan of Falconer to  issue a revised modalities text by mid-November, and the G20 meeting  would have produced a clash and hardening of positions.

The continuation of the "Room E" consultation process now into the week  of 12 November would imply that the Falconer revised text would now  likely be issued later than mid-November.

At an informal full meeting of the Special Session of the Agriculture  Committee (where negotiations are taking place) on Friday, Falconer who  is chairing and leading the negotiations, reported on his week-long  small-group consultations on Special Products (SPs) and the Special  Safeguard Mechanism (SSM).

The informal full meeting was in the nature of a transparency exercise  to enable all delegations to be kept informed.

The Chair also announced at the Friday meeting that he would circulate a  "working paper" on export competition early next week.

On the issue of special products, Falconer said that the discussions  overall showed some progress, but not enough, adding that he would give  members more time in consultations Friday afternoon to "dig a bit  deeper" into special products. Members had a useful discussion on the  Special Safeguard Mechanism, the Chair also said.

In his report to an open-ended informal meeting, Falconer informed  delegations that he intends to circulate a "working paper" on export  competition early next week.

Falconer also told delegations that he would reconvene the "Room E"  consultations (among some 36 representative delegations), perhaps once  or twice in the week of 12 November. Progress made in some areas had  justified this move, he said.

(According to trade officials, a possible discussion in Room E could  take place on the Chair's working paper on export competition on 12  November, while another possible discussion could take place on domestic  consumption and tariff quota expansion on 14 November.)

Falconer told delegations Friday that this will put pressure on his  objective of circulating the revised draft text in mid-November, but the  clarifications that might be achieved justified the move.

Trade officials explained that the new arrangements are designed to give  some developed countries time to prepare important data on domestic  consumption and for members to examine this and decide the most feasible  approach for using the data as a basis for expanding tariff quotas.  Members will also have time to examine and react to the "working paper"  on export competition.

On the issue of Special Products (SPs), in reference to footnote 2 in  his July draft text (where he suggested using the Uruguay Round approach  of an average tariff cut and doing away with the concept of special  products), Falconer told delegations that it was clear that a number of  members needed to keep the concept of Special Products (indicated also  by "political statements at the highest level") and therefore, he would  delete the footnote. No one lamented its passing, he said.

The consultations also explored another footnote (footnote 3 attached to  paragraph 52 of the draft text relating to provisions for small  economies and recently acceded members) that might work, Falconer reported.

This offered additional flexibility on tariff cuts to small economies  and those that recently joined the WTO and for several, would imply that  perhaps 15%-30% of products would not need to have any tariff reductions  at all.

Dressing this up so that it is a version of special products would be a  cosmetic job, the Chair said. However, more analytical work is needed  for negotiators to judge whether the idea has merit and the Secretariat  will discuss with individual delegations the implications for each of  them, he added.

According to trade officials, the Chair said that he tried to nudge  negotiators towards practical and acceptable outcomes, for example, by  exploring trade-offs - larger numbers of special products would have  smaller deviations from the formula and vice versa.

(Earlier in the week, Falconer had put forward orally his own proposals  on special products that had caused some confusion among delegations.  Confusion arose over the number of special products and their treatment.

(Asked to comment after the informal meeting on the confusion being  expressed by some delegations on his proposal on special products and  whether it was 5% of the total tariff lines or 20% of the total tariff  lines to be designated as special products, Falconer said that there was  no number and that he was merely illustrating the concept of having a  relatively larger number of special products for which the deviation  from the cut is relatively shallow or having a smaller number of special  products for which the deviation is larger. See below.)

Falconer told the informal meeting Friday that he also urged negotiators  to get used to an idea that would be uncomfortable to both sides: that  to achieve consensus, it would be necessary for a small number of  special products to have no tariff reduction. This, Falconer said, would  be uncomfortable for those countries who insist that liberalization has to be for all products, and for those who want more than a small number  of products to be exempt from cuts.

The reality is that fixed positions will not work, the Chair cautioned,  and members have to compromise seriously.

Overall, said Falconer, the discussion of special products showed some  progress, but not enough.

Rather than try to invent the middle ground, he said that he would give  members more time in Friday afternoon's consultations to "dig a bit  deeper" into special products, if time allows.

Falconer said that the discussion on the Special Safeguard Mechanism had  also been useful. A number of hypotheses were floated in an attempt to  find a way out of the deadlock: even though these were not accepted,  people explored them constructively, he said.

With respect to triggers and remedies, the Chair said that he proposed  setting a limit on the number of products that could have safeguards  applied each year as a way out of the impasse. The G33 has a proposal  but exporting countries fear that this is so loose as to allow  safeguards to be triggered hundreds of times each year; and other  countries are seeking conditions that would be too strict for the G33,  the Chair observed.

According to trade officials, at the same time, all delegations say that  they do not want the safeguard to be used hundreds of times, which is  why the Chair proposed a numerical limit. "Oh boy, that was scary for a  number of people," Falconer said, but they were willing to explore the  idea even if it might not lead anywhere.

Also discussed was the idea of cross-checking, in particular, that if  imports are falling, perhaps there would be no need to use a trigger  based on price falls. The discussion was "very conditional" but people  were reasonable with each other, Falconer reported.

On one issue, the two sides had difficulty budging, the Chair noted.  This is whether the "remedy" (the additional safeguard tariff) should  allow the tariff to go above their legally binding agreed ceilings that  were in place before the Doha Round.

Falconer said that some attempts at pragmatic compromise have been  floated, which "got a kicking." Nevertheless, negotiators still need to  continue the conversation to see if it can be done, he added.

Underlying the discussion on the Special Safeguard Mechanism was the  possible fate of the present Special Safeguard (SSG), he said, adding  that some positions depend on whether the SSG goes or stays.

According to trade officials, the ACP Group (Jamaica speaking), the  Least Developed Countries (Lesotho speaking) and Cuba urged the Chair to  continue with Room E consultations after his next revision is circulated.

Trade officials said that Costa Rica, on behalf of the Tropical Products  Group, circulated a revised paper on their proposal.

It said that the mandate is for full liberalization of tropical  products, and complained that proposals for products with long-standing  preferences would undermine this and allow developed countries to  maintain protection for these products.

According to trade officials, Nicaragua, Ecuador, Colombia, Panama, Peru  and Guatemala supported Costa Rica. Jamaica said that its group is  discussing the issue bilaterally and urged others to be flexible.

After the meeting, Falconer spoke informally to some journalists.

Asked to comment after the informal meeting on the confusion being  expressed by some delegations on his proposal on special products and  whether it was 5% of the total tariff lines or 20% of the total tariff  lines to be designated as special products, Falconer said that "there is  no number. There never was and there is no number."

He explained that what he was suggesting to members to illustrate was  the concept - the concept is that one way which you can do it is to have  a relatively larger number of special products for which the deviation  from the cut is relatively shallow or relatively more shallow, or you  could conceivably have a smaller number (of special products) for which  the deviation is larger.

"What you would precisely have if you went down that structure for the  numbers is not a clear-cut matter because it has got to reflect what the  cuts will actually be, none of which is agreed... what the two-thirds  will be, how it relates to sensitive (products) etc," he said.

Asked about the treatment of the special products and whether the 5  percentage point deviation is in relation to sensitive products (an  additional 5 percentage points off whatever the reduction rates are for  sensitive products) or is in relation to the normal cut under the  formula, Falconer said that he just used it as an illustration.

"It was an illustration. There is no 5 percent. I don't know what the  number would ultimately be. Whether in fact you would not even go for an  ad valorem deviation. You might well say 'for a certain number of these,  we will just take the following x percent cut.' If you have a large  number and if you have a smaller number, you might have x percent or  x-plus something percent to make it a bit larger," he said.

He added that clearly people are going to be entitled to have sensitive  products, "so whatever you end up with has to be consistent with among  other things, where we end up on what the extent of the sensitive  (product) deviation from the tariff cut will be."

That is what we will have to talk about and negotiate, he said.

Falconer also said that he could not say when the revised draft would be ready.

He said that for a long time, members have been stuck on the sensitive  products issue, but since the text had come out, we got agreement that  we will go on a particular direction on sensitive products. Now there is  an argument about whether you should define your 4-6% of domestic  consumption, but do you do that at a6-digit tariff level or 8-digit level.

If you are going to evaluate the merits of the two competing approaches,  you need to have an idea of how the more detailed 8-digit approach would  actually work, said Falconer, adding that in order to do that, a lot  more detail is needed on consumption in everyone's market and what the  allocation of trade would be at the 8-digit level.

All of the key developed countries have agreed to provide the data,  Falconer said, adding that the US, EU, Canada, Japan, Norway, and  Switzerland have agreed among themselves on a common format for use  which they will provide to the secretariat by next Wednesday.

This means that you can then have the kind of discussion on sensitive  products that you need to have, said Falconer, adding that a meeting on  this could not take place before 14 November. If something as crucial as  this is only going to be able to have a serious discussion on 14  November, "you are putting a bit of pressure on the concept [that] you  will have a full revised text out in the middle of November."

As to whether he had enough on export competition to be able to draft  something, Falconer said that he thought that he has. The first draft is  not that far away from where we will end up anyway, he said.

Pointing to a discussion on export competition issues that took place  the week before last, Falconer said that he had come to the conclusion  that it might be helpful to the process if he put on the table as early  as possible next week a "working document" which sums up the discussions  on that pillar.

That discussion progressed things, and it might be helpful if in a  working-document format he tries to capture what he thinks was "the  degree of progress that we had... so that they (the members) can react  to that and that will help me then to finalize that pillar in the actual  revised draft, whenever that emerges."

He felt that members were open to that and he will try to get something  out by Monday (5 November) and members will have the opportunity to  react the following week.

Asked about his assessment of SPs and SSM, Falconer said that "we are  making progress of a kind... people are being more realistic with each  other, and more honest with each other than they have ever been."

If you talk to the delegations involved, their feeling is that they are  trying to find things in the way they haven't and they are making some  kind of progress, Falconer said.

 


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