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TWN Info Service on WTO and Trade Issues (Nov07/16)

12 November 2007


G33 responds to Chair's SP, SSM proposals in agriculture talks

The G33 presented a lengthy response to the proposals and ideas on  special products (SP) and special safeguard mechanism (SSM) of the Chair  of the WTO's agriculture negotiations at a small-group agriculture  meeting at the WTO on Friday 2 November.

The Chair seemed to backtrack somewhat on his proposals on special products, which he had orally presented earlier in the week.  He said what he presented were just some ideas and not a formal proposal.

Below is a report published in SUNS on 6 Nov 2007 and it is reproduced here with permission. Reproduction or recirculation requires permission of the SUNS (sunstwn@bluewin.ch).

With best wishes
Martin Khor
TWN


G33 responds to Chair's SP, SSM proposals in agriculture talks
By Martin Khor, Geneva 4 Nov 2007

The G33 presented a lengthy response to the proposals and ideas on  special products (SP) and special safeguard mechanism (SSM) of the Chair of the WTO's agriculture negotiations at a restricted Room E agriculture meeting at the WTO on Friday 2 November.

According to diplomats, the Chair, Ambassador Crawford Falconer of New Zealand, seemed to backtrack somewhat on his proposals on special products, which he had orally presented earlier in the week.

Falconer reportedly told the Room E meeting that what he had orally presented were just some ideas and not a formal proposal.

Diplomats had reported that last Monday, Falconer had put forward the concept that 5% of tariff lines in each band of the tariff-reduction formula could be designated as SPs, and that they could have a deviation of 5 percentage points.

It was unclear whether the deviation is from the normal cuts in each of the four bands of the formula that developing countries are to apply, or from the cuts that developing countries have to apply to "sensitive products" (in which case, the reduction rates of SPs would be far lower).

Diplomats were confused as to the exact proposal that Falconer was making, and have asked him to present his proposals in written form.

At the 2 November meeting, Falconer apparently downplayed his SP proposals by saying that they were not really proposals but only ideas that he had thrown up for consideration.

However, he put forward a more concrete concept at the meeting, that if there were to be a larger number of SPs allowed, there would be a smaller deviation (from the normal reduction rates); while if there was a smaller number of SPs, the deviation could be greater.

G33 members also said that they welcomed the Falconer point that a certain number of tariff lines designated as SPs would be exempt from any tariff reduction.

The "zero tariff cut" idea, proposed by the G33, has been opposed by some agriculture-exporting countries.

The long-standing G33 proposal has been that at least 20% of tariff lines can be self-designated as SPs and that half of the SPs should be exempt from any tariff cuts, a quarter be subjected to 5% cut and the remaining quarter be subjected to 10% cut; with greater flexibilities for small and vulnerable economies and recently acceded members. The G33 has reportedly clarified that it is prepared to negotiate on these figures.

At the 2 November afternoon meeting in Room E (to which only 36 delegations are invited), Indonesia, on behalf of the G33, presented the G33 view of the latest round of negotiations on SPs and SSM, and in particular, it responded to the Chair's latest ideas.

The G33 reaffirmed its commitment to a successful pro-development outcome which incorporates core development instruments of Special Products and SSM, which are vital to delivering on the development mandate of the Doha Round and meeting the expectations of millions of small, poor and vulnerable farmers across the world.

Special Products are primarily designed to address the problems of food security, livelihood security and rural development in all developing countries regardless of their size since these are important political, social and economic development imperatives not only for the G-33 but also for the entire developing world.

It stressed the need for coherence among all the proposed solutions for SPs in order to meet the concerns of all developing countries, therefore, a holistic approach for SPs for all Members is needed.

The G-33 said that it had signaled its willingness to use some of the Chair's approaches on SPs in the draft modalities paper as the basis for further discussion. The group had drafted a Non Paper, but it was immensely disappointed that this was not even taken up for discussion (at the Room E meeting earlier in the week).

Instead, the Chair had proposed a new set of ideas, and there are different interpretations and ambiguity on what he conveyed.

The G-33 applauded the Chair's recognition of the need for no-cut treatment for some SPs. This is in line with the G-33's proposal that some SPs should not be subject to any tariff reduction or any other market access commitments. The number of the products under this category should be appropriate so as to cover the most critical products of developing countries.

The G-33 also welcomed the favourable flexibilities in paragraphs 52 and 53 extended to the SVEs and some other developing countries under footnote 3. It understood this to mean that the countries would only need to reduce their tariffs by a maximum average of 24%, with no minimum reductions on tariff lines.

It reminded the meeting that there is a specific mandate for addressing the concerns of the SVEs and a separate mandate for the designation of SPs, by all developing countries.

On the Chair's oral proposal for countries other than SVEs or paragraph 3 countries, the G33 was of the view that the proposal subsuming SPs within the tariff reduction formula deviates from the spirit and nature of the SPs mandate.

Such a link is not compatible with the distinct and special characteristics of SPs and could render the SPs mechanism ineffective in providing the most favourable treatment for the products of most importance.

Regarding treatment, the G33 is of the view that the mandate is clear for more flexible and favourable treatment for SPs vis-a-vis Sensitive Products.

A quick simulation based on the deviations suggested on the tariffs of different developing countries, shows that the deviation in all the three higher bands comes out to be unreasonably lesser than the proposed one third to two thirds deviation for Sensitive Products.

The group would not accept a treatment of SPs that is less favourable than for the Sensitive Products.

The G-33 reaffirmed its Hybrid Approach proposed in its Non-Paper as the appropriate way ahead and a base upon which the architecture of SPs can be further developed. This approach recognizes that One Size Fits All can never be a solution to addressing the different and complex conditions of all developing countries.

The G-33 deems it necessary that the revised draft text Modalities must integrate this Hybrid Approach as well as footnote 3.

On SSM, the group reiterated its position depicted in its SSM Non-Paper. The G33 commented on some aspects of the discussion of the past few days.

On the suggestion by the Chair to limit the number of times the SSM can be invoked, the G33 said that this was difficult to understand and it could not comment more due to the limited information provided and thus its inability to see the implications of the proposal.

The G-33 remained firm that the SSM should be designed so that it can effectively address emergencies of import surge and price depressions. Therefore, it would have difficulties accepting a proposal that worked against this.

On the Cross Checking proposal, the G33's view was that the mandate on triggers for the SSM is crystal clear. There shall be two distinct triggers, price and quantity based from which developing countries can choose to address a particular import surge or price depression.

These two trade remedy options are particularly designed to ensure that the SSM is relatively simple and can be effectively used by developing countries and LDCs.

Any proposal that makes the SSM overly complicated, such as the cross checking proposal of Argentina, Paraguay and Uruguay, would be counter to the mandate and render the SSM ineffective in addressing these emergencies.

It stressed that even where triggers are breached, the application of remedies is not automatic. It is incumbent upon a member to determine domestic supply and price situations in making the decision whether to impose the SSM remedy, be it price or quantity based.

However, this exercise cannot be made mandatory as it would unnecessarily constrain developing countries from imposing SSM remedies. This is the essence behind the G-33's proposal (in an earlier paper). In that proposal, the G-33 specifically and deliberately mirrored the existing Article 5 on the SSG.

It stressed the need to retain the reference to 'as far as practicable' due to the dynamic nature of agricultural production and agricultural trade, which may necessitate the application of the price-based SSM even where imports may be declining.

On the proposal by some non-G33 countries to cap the remedy (the increase in tariff in the SSM) only to the Uruguay Round bound levels, the G33 said that the remedy for SSM must effectively address the problem, regardless of the Uruguay Round bound levels.

Therefore, raising the duty only to the Uruguay Round bound rate would mean that in many cases the developing country would be able to offset the price decline and import surge to only a very limited extent. Thus, the entire objective of having an SSM would not be achieved.

The group said that the Agreement on Safeguard and the existing SSG does not have such a restriction on additional duties. The SSM should be more flexible than the normal agreement on safeguards or the SSG.

 


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