TWN Info Service on WTO and Trade Issues (Dec07/02)

9 December 2007

The following article was published in SUNS dated 4 December 2007 and is reproduced here with permission.  Any reproduction requires the permission of SUNS (

Best regards
Martin Khor

Agriculture Chair to begin drafting revised modalities week of 21 January
Published in SUNS #6379 dated 4 December 2007 

Geneva, 3 Dec (Kanaga Raja) -- The Chair of the agriculture negotiations at the WTO, Ambassador Crawford Falconer of New Zealand, now expects to start drafting his revised modalities paper in the week of 21 January.

At an informal plenary of the special sessions on agriculture (where negotiations are taking place), Falconer informed members Monday that he would continue his consultations till the end of this week before reconvening again in the week of 3 January for ten days.

Thereafter he would start drafting his revised draft modalities text in the week of 21 January.

The Chair was reporting to members at the informal meeting on his consultations in Room E (involving some 36 representative delegations) over the past two weeks as well as outlining his plans for the process ahead.

According to trade officials, Falconer was of the view that the consultations that he has been holding in Room E since the last two weeks have been going well. In many areas, the issues are getting closer to the shape where he can put them into a draft.

Some participants at the meeting drew the inference from Falconer's remarks and comments that though he spoke of narrowing of differences, the substance of two of the thorniest issues, the Special Products and Special Safeguard Mechanism (both of which concern the large number of developing countries) still remain to be solved.

On one or two issues, the Chair said that he will probably only need one more draft.

On the process, trade officials said that the Chair had decided that there was not much point in continuing consultations after the end of this week. He felt that if members continued after this week into a third week, they would not have much more to say.

Trade officials said that the Chair plans to reconvene the Room E meetings on 3 January which would go on for 10 days.

He will stop consultations in the week of 14 January (when he will be chairing the Boeing-Airbus panel) and will start drafting the revised draft modalities in the week of 21 January.

The Chair plans to use the two weeks in December where there will not be any Room E meetings to write some working papers.

In his report to members, the Chair said that on export competition, there are four working documents that members have.

On export credits, he said that members were clearer about the approach on export credits and the idea here is to avoid re-writing provisions that already exist in the WTO agreements. Members are looking at what the Chair called "additionality", said trade officials.

According to trade officials, progress had been made on the issue of the 180-day period of repaying a loan on exports. The Chair also mentioned the issue of self-financing. Some progress was also made on the issue of exceptional circumstances.

According to the Chair, all of these issues mean that they are close to a final text, and that they are possibly one draft away of finalizing (a text), with the exception of some political choices that would be left.

On food aid, the Chair felt that members are one draft away from a final text. Most of the definitions have been sorted out, and the role of governments and NGOs have been clarified, trade officials said, adding that some aspects of the central issue of monetization remains one of the political questions that will probably be left to ministers.

On export state trading enterprises, Falconer was of the view that this was not a complicated issue for drafting. For a long time, members have already been very close to an agreement on that, with the exception of some straight political choices, said trade officials.

On sensitive products, the Chair said that there has been considerable progress on the data on domestic consumption. He also mentioned the idea of having a floor so that one would have a minimum value of domestic consumption. Trade officials said that progress is being made.

On Special Products, trade officials mentioned paragraph 52 and footnote 3 (in the draft modalities) in relation to Small and Vulnerable Economies (which says that they should reduce their tariffs on average by no more than 24%).

Trade officials said that what the Chair has proposed to do is to redraft this so that it becomes more clearly a Special Product provision rather than a special way of using the formula. According to the Chair, the SVEs had looked at the implications of this and he detected no opposition to this idea for the SVEs.

He also said that he had suggested a variation that would have no cuts, but there remains strongly divergent views on that.

On indicators, trade officials said that the Chair was of the view that the indicators will still be there and can be used but they will not trump the numbers.

On the Special Safeguard, the Chair said that there was a brief discussion on this but not much was added. The basic choices are whether to eliminate the present Special Safeguard or not. If it is not going to be eliminated, then the number of products that would be eligible would be reduced, according to trade officials. The question is how would you reduce that.

On the Green Box, trade officials said that a lot of the discussion focussed on paragraph 6 (dealing with decoupled income support), paragraph 11 (structural adjustment programmes) and paragraph 13 (rural development programmes) of Annex II (defines the Green Box) of the present Agreement on Agriculture.

According to trade officials, the phrase "fixed and unchanging base periods" has been accepted but what needs to be sorted out is what this means. The Chair said that members will need to see how they make progress this week (the Green Box is being discussed in Room E this week.)

On the Special Safeguard Mechanism, according to trade officials, the key issue is whether the tariffs imposed can go above the current bound rates or not. Trade officials said that the Chair described positions as being entrenched which makes the rest of the discussions more difficult, but there were some ideas that were floated.

Speaking to journalists after the informal meeting, Falconer said that he felt encouraged by the degree of progress that has been made during his consultations over the last two weeks.

As to the time-line for the process, he was of the view that he needed another ten days' out of members to get the right kind of output. Members will go to the end of this week before taking a break and resuming again for two weeks beginning the week of 3 January.

Falconer said that he will start drafting his draft revised modalities text in the week of 21 January.

He also said that he was thinking of revising his working papers. He will be using the two weeks after the end of this week to work on this. As to what areas he will be working on for his papers, Falconer said that this would depend on what happens in the course of this week.

(Among the issues being discussed in Room E this week are tariff simplification, cotton, the Green Box, sensitive products, monitoring and surveillance, and tariff escalation.)

Asked as to whether any of the areas discussed last week were ready for his working papers, the Chair hoped that some of the things that were discussed there would be.

He also thought that there was a degree of progress on Special Products and the Special Safeguard Mechanism. "On the SPs, I think now the area where there is deep differences is actually a much reduced area compared to before."

"I think we have narrowed down where the differences are and that's progress," he said, pointing, for example, to the issue of whether, and how many, Special Product lines there are no cuts on.

For the main Special Product lines, he said that "I don't think there is a vast difference in the membership about what the cut on those lines should be."

The real question is whether there are some lines on which you have no cuts, and if so, how many of those it should be, he said, adding, "that is essentially the difficult question."

The centre of gravity for everything else is coming to focus, he said, citing for example, progress on the issue of the footnote-3 approach with respect to the small and vulnerable economies.

On the Special Safeguard Mechanism, Falconer did not think that members have reached any further agreement than they have before, but that there are some ideas on the table which he did not think have been pushed off the table.

But there is still a big difference over those members who believe that they should be allowed to go above the existing bound rates and those who do not.

"That remains a big rock in the road... It is a political question and that will have to be resolved."

It is difficult to derive a remedy if you haven't decided where the ceiling on that remedy is, said the Chair.

With respect to the triggers, the Chair said that the real question is the remedy. Does the remedy allow you to go above your bound rate or not.

The conversations have clarified that quite helpfully, he said, but the problem is the two schools of thought.

There have also been advances in the discussions on TRQ expansion (in relation to sensitive products), said Falconer, adding that while some technical problems still need to be sorted out, members will know what they are going to get tonnage-wise whichever methodology they will apply.