TWN Info Service on WTO and Trade Issues (May08/24)
23 May 2008
Third World Network

Trade: Agriculture and NAMA Chairs issue new revised texts
Published in SUNS #6478 dated 21 May 2008

Geneva, 20 May (Kanaga Raja) -- The Chairs of the agriculture negotiations and the non-agricultural market access (NAMA) negotiations at the WTO released their much-awaited new revised draft negotiating texts late Monday.

Both texts are the second revisions of texts that were first produced by both the Chairs in July 2007. The first revision of both texts appeared early February this year.

In a press release, WTO Director-General Pascal Lamy said that both negotiating documents provide a platform for intensified work in the coming weeks.

"These revised negotiating texts illustrate clearly where convergence lies among the WTO members and where we have more work to do. Very soon, our negotiating process will intensify as members begin to look across these two important sectors, consider other key areas and seek to find the balance that will deliver for us all an ambitious and development oriented round."

"Crawford and Don spent thousands of hours listening to members and their hard work has resulted in documents that can provide a springboard to a new and crucial stage. We are getting closer to our end game," said Lamy.

Both the chair of the agriculture negotiations Ambassador Crawford Falconer of New Zealand, and the chair of the NAMA negotiations, Ambassador Don Stephenson of Canada, held media briefings on Tuesday morning where they broadly outlined their new texts and fielded several questions from the media.

At his media briefing, Falconer was of the view that on the basis of this new agriculture text, members could go on to "finish the job", while Stephenson, at a separate briefing, maintained that the new revised NAMA text "provides lots of room to negotiate." (see below)

[In comments in New Delhi on the two texts, Indian Commerce Secretary (permanent official) Mr. G, K. Pillai said the new WTO text ignoring livelihood concerns in agriculture is "totally unacceptable" and the country will thwart rich nations' efforts to "divide and rule" developing countries on the issue of tariff cuts on industrial products under the Doha trade talks. According to a PTI report in The Hindu and other newspapers, Pillai said the Non-Agricultural Market Access text was a "total mess" with 97 areas of differences. While the number of differences in agriculture have come down, total neglect of livelihood concerns of the poor farmers is unacceptable.

[Pillai said that though rich nations are keen to push for a Ministerial Meeting in June, "there will be no deal if our core national interests are not protected". He noted that Agriculture Group Chairman Crawford Falconer has retained the condition of 30% drop in import-driven prices before a developing country is allowed to counter it by imposing safeguard duty. "If we accept this condition, how will we face Parliament," Pillai said. India wanted that it should have the option of going for safeguard trigger the moment prices fall by 5-10%.

[The Indian official said that the NAMA Chairman Don Stephenson has put out a "confusing" draft that seeks to divide the NAMA-11 coalition of developing countries - protecting the interest of countries like Mexico and South Africa, while targeting India and China. Pillai said that Stephenson has done this by offering different formulae for tariff cut by developing countries. "Our stand is very clear. You can do what you like but whatever flexibility is given to one country, should be given to all," he said.

[Also, India's three apex business chambers - CII, FICCI and ASSOCHEM - said that the revised NAMA draft was in complete disregard of the Doha mandate for "less than full reciprocity" on tariff reduction for developing countries The trade-offs between coefficients and flexibilities go against the Development Dimension, the Chairman of the Confederation of Indian Industry said.]

The revised agriculture text that was issued by Chairman Falconer has come with a cover letter in which the Chair said that this version of the text is in a more simplified or cleaner form than the immediately preceding version.

"I feel that this better reflects where we are in light of the discussions that we have had since the last version over three months ago. Where I have detected, if not agreement, then at least real convergence, I have often opted for putting in a clean text rather than square brackets around fairly fine remaining differences," said Falconer.

"I am not saying that absence of square brackets or a clear cut option always means that I believe there is agreement. But, at this late stage of the negotiation I think it is more useful to have a clean option in there because the margin of difference is not so great as to warrant multiple choices anymore."

"If Members want to continue to haggle around what is put forward there, that is fine. It is, in my view, a better way at this point in time to facilitate finalisation of our negotiation" said the cover letter.

Falconer said that he has tended to go for the classic square brackets in cases where there are what he would call the real "hot spots" left in the negotiation. "In fact, there are now relatively few left. Of these, some have been pretty stable over the past several months."

"But it is clear that, for a handful of them at least, that moment will not be in advance of having Ministers in the room. For the others, they may be left for Ministers by default. There are not so many of them left that it would be impossible to manage them in that format."

"But it is, at least in my view, conceivable (and certainly desirable) that they should be further resolved by officials before then. We should do that commencing the 26th [of May]," the Chair said.

Noting that the ongoing intensive negotiations under way on tropical and diversification products and long-standing preferences and preference erosion have not reached a resolution, Falconer said that he has resorted to the option of applying the previous version on those subjects.

Falconer also cited a minimum of other areas where he could see that, with a bit more work, members could actually still further fine tune the document.

He said that there is not much left to be done on Food Aid and Export Credits. "On in-tariff quotas, we should be able to at least make progress off the present structure. I remain (perhaps alone) stubbornly of the view that Green Box can be brought to a conclusion."

"Annex C (basis for the calculation of tariff quota expansion) is something we should be in a position to tidy up to a point that is tantamount to a conclusion even if it may have to have one remaining clear-cut option," he said.

"On SP (Special Products) and SSM (Special Safeguard Mechanism), we still remain quite divergent. This is an area where the changes I have made have been to simplify the choices: there were too many fine distinctions in the previous version and they could be discarded in my view without prejudicing the big choices that remain."

"Those choices are still further apart than one would hope to see at this stage, but I do believe that some elements, at least, could still be progressed even if not finalised from the week of the 26th," said Falconer.

According to trade officials, the new agriculture text contains only 32 pairs of square brackets, compared to around 235 in the last version. Trade officials said that there has been little change in the "big picture" numbers (with respect to cuts in subsidies and tariffs).

Changes in the new text include amongst others single numbers instead of ranges for most of the tariff-reduction formula; new texts on sensitive products and tariff quotas (an attachment containing revised templates for sensitive products is included); updated options for developing countries on "special products" and the new "special safeguard mechanism"; new provisions on "Green Box" domestic support; and revised wording for food aid and export credit.

Unlike the revised agriculture text, the revised NAMA text does not come with a cover letter from the NAMA Chair. Another significant omission in relation to the previous NAMA text is a Chair's comments section.

Yet another change in the new NAMA text is the coefficients for developed and developing country members.

While the previous text had outlined a coefficient of 8-9 for developed countries and 19-23 for developing countries, the new text contains coefficients (in square brackets): 7 to 9 for developed country members and between 19 and 26 for developing country members. The new modalities text proposes three different ranges: 19-21 (referred to as x in the text), 21-23 (y) and 23-26 (z). The use of the different ranges would depend on three new options.

According to the new text, Developing Members subject to the formula shall be granted the flexibility to choose to apply the coefficient and flexibilities in paragraph 7(a) or 7(b) or 7( c).

(a) Coefficient x in the formula and either:

(i) less than formula cuts for up to [12-14] percent of non-agricultural national tariff lines provided that the cuts are no less than half the formula cuts and that these tariff lines do not exceed [12-19] percent of the total value of a Member's non-agricultural imports; or

(ii) keeping, as an exception, tariff lines unbound, or not applying formula cuts for up to [6-7] percent of non-agricultural national tariff lines provided they do not exceed [6-9] percent of the total value of a Member's non-agricultural imports.

(b) Coefficient y in the formula and either:

(i) less than formula cuts for up to [10] percent of non-agricultural national tariff lines provided that the cuts are no less than half the formula cuts and that these tariff lines do not exceed [10] percent of the total value of a Member's non-agricultural imports; or

(ii) keeping, as an exception, tariff lines unbound, or not applying formula cuts for up to [5] percent of non-agricultural national tariff lines provided they do not exceed [5] percent of the total value of a Member's non-agricultural imports.

( c) Coefficient z in the formula without recourse to flexibilities.

According to trade officials, the text also allows for the possible special treatment of South Africa, to mitigate the impact of the formula, given the important commitments it took during the Uruguay Round (as a developed country); and Venezuela, which argued to be treated as a special case because of the very special concentrated structure of the country's exports.

For South Africa, the NAMA text says: [As an exception, South Africa shall have recourse to [1-6] additional percentage points in the flexibility provided under paragraph 7(b)(I).]

For Venezuela, the text says: [As an exception, the Bolivarian Republic of Venezuela shall apply a treatment similar to that for Small, Vulnerable Economies as follows: [target average bound tariff plus minimum line-by-line cut].]

The text also provides for the possible treatment of customs unions, with customs unions that submit a single list of flexibilities shall calculate the percentage for the value of trade limitations through a given formula outlined in the text. Inter-customs union trade are excluded.

The NAMA text also says that additional points in the coefficient in the formula shall be provided as a "credit" to developing countries participating in sectoral agreements.

In a media briefing on Tuesday, the Chair of the agriculture negotiations, Ambassador Crawford Falconer of New Zealand, said of his new text that "This is basically a document which shouldn't have many surprises, if any, in it." He added that it is a document that clarifies the options and simplifies things.

"I think that what this document represents is that anybody who has got the eyes to see can now see clearly the summit... The task now is I think on the basis of this we could go on and finish the job."

Elaborating on his document, Falconer said that on the issue of market access, for instance, he has split the difference with respect to the tariff cuts, except for the top band which is "the most politically controversial". He further said that he has taken the square brackets off a number of things including the overall average tariff cut (a figure of 54% for developed countries is mentioned in the text).

He said that he has also given more specification on the tariff quota expansion details in the document, and simplified and clarified the options on special products and the special safeguard mechanism.

The text on tropical products and preferences is essentially unchanged, although its presentation is a little different, reflecting the fact that they (members) are not ready yet. The text on small and vulnerable economies has also been clarified. The text on tariff escalation "is manifestly clean".

On domestic support, Falconer said that "all of the headline numbers remain basically stable because they have been stable for a long period of time... The big decisions on those will only be made by ministers."

He said that he had simplified the text in the area of the Blue Box, getting rid of some of the options that were there before which he thought did not have any support. There was greater clarification for the status of developing countries in the Blue Box.

On the process, Falconer said that he will have a meeting in the week of 26 May. He presumed that it will take all of that week at least. "Beyond that, I won't predict... It will depend a bit on how the discussions go both on agriculture and NAMA, let alone what happens on other texts that may or may not emerge in the meantime."

"What I do know is that there is actually no reason that I can think of why as far as agriculture is concerned, we couldn't still make progress in that week and we should try to do so."

"And given that I don't believe that there are that many issues left in agriculture actually based on where the process has got us to this point what I described in my covering note as 'hot spots', most of them will probably remain all the way to ministers."

Asked to elaborate on where the "hot spots" were, Falconer said that the figure for overall trade distorting domestic support is clearly going to be a political decision. The range has remained stable and the reason it has remained stable is because no official wants to negotiate it. "They know that's going to be political."

The base period for AMS for the United States is going to remain a political decision as well, he added.

On market access, Falconer was of the view that the number of sensitive products and the percentage of domestic consumption (4-6%), politically, will be decisions that ministers will have to make. The number of special products that will have no tariff cuts - or indeed if any of them have no tariff cuts - will be a political decision, he added.

"I think those are linked together. And indeed because they are linked together, its very unlikely that on those elements, you'll ever get officials making those decisions even the week of the 26th."

Asked about the high food prices and resulting crisis and whether this will move the process forward, Falconer thought that members are conscious of it. He thought that from the point of view of the present situation, "its operational consequence is to stress the urgency for getting this done because the real world has other problems that it needs to move on to".

He however stressed that it is not dictating the detail of the negotiations in any real way. The negotiations can't give a short-term answer to that problem. It will operate - if it operates at all - in the medium term.

"If you are a policymaker wanting to deal with the fact that there are people out there starving right now, you wouldn't come here first. You have to go somewhere else," he said.

Meanwhile, in his media briefing, the Chair of the NAMA negotiations, Ambassador Don Stephenson of Canada, in respect of the format of his document, said that he has dispensed with his comments section in his text.

"[The comments section] perhaps were helpful in earlier texts to try to give guidance to the members about where other members stood in respect to specific issues, but I think now as we try to move to a horizontal process, to an end-game negotiation, to what I refer to as the 'real negotiations' finally, I think that gratuitous comments from the Chair are less and less useful, or appropriate."

On the text itself, Stephenson maintained that there are "increased flexibilities proposed for developing countries" in the new text. "And I think that is one of its principal distinguishing features."

Recalling that following his July 2007 text as well as the February 2008 text, there were calls by some members for the Chair to provide more room to negotiate, he said that this text "provides lots of room to negotiate."

With respect to the formula in some places and also in respect of some other issues, "the ranges are quite wide", and while they cannot represent every single member's position, "they more than adequately reflect the general position of members and provide considerable room in which to negotiate, if that's what members wish to do finally," Stephenson said.

According to the NAMA Chair, technically, the biggest change in respect of the last text (issued on 8 February), is with regard to the shape of the proposal in the formula and the flexibilities that relate directly to the formula.

With respect to the numbers, Stephenson said "I suppose you could make the case that not that much has changed in respect of the developing country coefficient..."

"If you consider in the last text I said the range in which members were negotiating on that option was 3-5 additional points (19-23), you can make the case that the new range 19-26 is pretty much where members were..." He said that in his consultations with members, that is where the majority were or are in respect of the discussions on the numbers.

Pointing out that the figures are in brackets (meaning no agreement), he said that they "will remain the focus of negotiations - if we ever have one - and very likely will be resolved last, because they reflect the ambition in the negotiation and will likely be resolved only when the ambition in other parts of the negotiation are finally resolved."

Stephenson also noted that a series of issues set out in brackets in paragraph 7 (d-i) in his text remain to be resolved. With respect to the rest of the text, not much has changed, he said, adding that there hasn't been too much movement in respect of the non-formula issues.

Referring to the NAMA negotiations, Stephenson was of the view that "this has been challenging, not to say, frustrating for the Chair, spending hundreds of soul-destroying hours in consultation with members, trying to find the convergence or possible middle grounds in their position, and then to try to simultaneously try to reflect other positions and defend the points of convergence."

"The members now have before them a document in which there is plenty of room to negotiate," he said, adding that "There has been very little in the NAMA process that you can characterize as negotiation. In fact, not much engagement."

On the process forward, he said that members will have a few days to consider the text. "We will then gather them next week for them to respond to the text and consider what next steps they would like to take."

Asked why he has done now what he should have done in the previous two texts, in terms of reflecting members' viewpoints, Stephenson was of the view that his text reflects where the members are in their discussions on NAMA.

"I have been asked many times why can't I be more like Crawford (the agriculture chair). And I lament that I am not. But this process such as it is in NAMA, is the process that the members have chosen of the chairman," he said. +