TWN Info Service on WTO and Trade Issues (May08/26)
27 May 2008
Third World Network

Trade: Initial critical reactions to agriculture, NAMA texts
Published in SUNS #6481dated 26 May 2008

Geneva, 23 May (Martin Khor) -- There has been a wide range of initial reactions to the two revised Chairs' texts of 19 May, as WTO members prepare to discuss the drafts at meetings starting Monday 26 May on agriculture and non-agriculture market access (NAMA).

Indian Commerce Minister Kamal Nath has strongly criticized both the agriculture and NAMA texts. Argentina has said that the NAMA text is incompatible with the Doha mandate. Brazil has given a more positive general response, while the United States' private sector has criticized the NAMA text.

The Chair of the agriculture negotiations, Ambassador Crawford Falconer of New Zealand, will hold an informal meeting for all members on Monday 26 May afternoon to get reactions to his text, and discuss developments in consultations on tropical and preferences products.

He told WTO members that he could also hold a small-group Room E meeting in the middle of the week, and another full meeting on Friday 30 May afternoon.

The Chair of the NAMA negotiations, Ambassador Don Stephenson of Canada, said that he would hold a series of meetings next week, starting with a meeting on 27 May to hear reactions to his text, followed by meetings on the tariff-cutting formula and flexibilities on 28 May; treatment of para 6 countries having low tariff bindings (29 May), LDCs and preference erosion (30 May); recently acceded countries (31 May) and non-tariff barriers (1 June), and a concluding meeting to report on progress made (2 June).

The agriculture and NAMA meetings will show how acceptable the two papers are to various countries and groupings. The reactions could affect how soon the talks move to the so-called "horizontal process", in which both topics will be discussed together first by senior officials and then by Ministers in a small group of about 25-30 delegations.

Only a few countries have so far given their initial reactions to the media. Following criticisms by Commerce officials in the Indian press, Kamal Nath issued a lengthy statement criticizing many points in both the agriculture and NAMA texts.

He warned that while India was ready for a Ministerial, a lot of work must be done to narrow differences and converge before identifying a safe landing zone. (See details at end of article).

India's Commerce Secretary G. K. Pillai was more blunt. "If our national interests are not protected in both agriculture and NAMA, there will be no deal," he told a pres conference on 20 May.

He said the new agriculture text totally neglected the livelihood concerns of poor farmers and is "totally unacceptable".

[A news report quoted an unnamed official that India was unhappy with the paper's price trigger of 30% dip below existing prices before introducing special safeguard mechanisms. "We can't wait for domestic prices to drop by 30% before introducing safeguard measures. We will insist on the trigger to be the three-year average price for a particular product."

India will also insist on the volume trigger to be a 5% increase in imports rather than the 30% suggested by developed countries. Moreover, the condition for applying SSMs on only 3 to 8 products is unrealistic for a country like India with 23 agro-climatic zones," the officials added, according to a 21 May report in the Economic Times.]

Pillai added that the NAMA paper was a "total mess" as the Chair has came out with a confusing draft that seeks to divide the NAMA-11 developing countries, protecting the interests of countries like Mexico and South Africa, while targeting India and China.

India would oppose various carve-outs given to only some countries, such as Venezuela and South Africa, he said, but adding: "We are not against the concessions as long as we also get them."

He said the NAMA chairman appears "totally confused" as he has introduced 97 square brackets compared to 17 in the earlier text. "It is impossible to hold a ministerial meeting with a draft text which has so many unresolved areas. While some revisions have to be made in the agriculture text, the NAMA text has to be completely re-done."

The Ambassador of another Asian country also told SUNS that he was very unhappy with the NAMA paper for using "salami tactics" to try to divide developing countries affected by the Swiss formula. He criticized the fact that some developing counties were provided with "special treatment" resulting in higher coefficients or through some other methods to have lower tariff cuts, while other counties were not provided similar treatment.

"It looks like they are targeting some countries like mine, and there is no logic or fairness in this."

In Argentina, the government's response is that the draft texts remain "biased in favour of rich countries," according to a report in WTO Reporter (21 May).

Argentina's trade negotiator Alfredo Chiaradia said the NAMA text is incompatible with the negotiations' mandate that developed countries should make a bigger contribution than developing countries. "Yet, the current NAMA document sets greater contributions for developing nations than it does for industrial nations."

Chiaradia also said the agriculture text was lopsided and fails to address a large number of pending questions. "A preliminary reading shows there is greater ambition on industrial goods for developing countries than there is on agriculture for developed countries, which means we are still in non-compliance of the mandate," he said, referring to paragraph 24 of the Hong Kong Ministerial Declaration of 2005.

He also blamed developed countries for the food crisis. Chiaradia said import quotas, subsidies and import tariffs of up to 1,000 percent that have prevailed in industrial countries for six decades now "have contributed to make hunger more severe."

He added that these measures have discouraged food production in many developing countries, leading some to cut output and others to discontinue it altogether, helping to push prices up and`deepen the crisis, according to the report in the WTO Reporter.

WTO Reporter also reported from Rio de Janeiro that Brazil's Foreign Ministry saw progress in the agriculture text but more needs to be done. A Foreign Ministry statement said "the revised agriculture text is more complete and detailed than the previous version" and it fills gaps and defines technical aspects and methodologies... for the effective reduction of distortions and the liberalisation of agricultural markets." However, central questions are still undefined, such as limits for subsidies and tariffs of the developed countries that distort the markets, said Brazil.

The statement did not go into details on NAMA but repeated Brazil's demand that Mercosur be treated as a single entity.

A think-tank for agriculture associations and a leading business association in Brazil seemed to be "moderately optimistic" about the revised texts, according to the report.

Some mixed messages were also coming from developed countries. The EU Trade Commissioner Peter Mandelson's spokesperson welcomed the release of the texts but refused to comment on the substance until an analysis was done.

In the US, the National Association of Manufacturers criticized the NAMA text for being tilted against the US, saying that it would enable high-tariff countries to do even less than under the previous NAMA paper. The National Foreign Trade Council said real progress was reflected in the agriculture text but the same cannot be said of the NAMA text, where the level of ambition may fall short of expectations, according to a report in WTO Reporter (22 May).

Canada's agriculture minister Gerry Ritz said that he had "serious concerns" on the agriculture draft, especially since there has been so little progress on sensitive products. (AFP report, 20 May).

Meanwhile, Canada's dairy, poultry and egg farmers denounced the draft's proposals which they said would threaten the future of supply management and destroy their farms by allowing Canada to be flooded with imported food, according to another news report.

Meanwhile, the most detailed comments on the texts from a government official was made by Indian Commerce Minister Kamal Nath. Speaking to the media from Auckland, New Zealand, Nath presented a statement on 21 May.

On the agriculture text, Nath said that a major goal of the Round was to correct the fundamental structural flaws in global agricultural trade perpetuated through lavish subsidies of developed countries to their farmers.

He added that the Doha Round was an opportunity to altogether eliminate Overall Trade Distorting Domestic Support (OTDS). "Instead, all of us at the Hong Kong Ministerial settled for steep and effective cuts in OTDS. Even this goal now seems to be vanishing".

The Minister said that for the US, the lowest number in the text ($13 billion) was nearly double the current applied levels of domestic support. "Where is the need for 100% headroom as a cushion?" he queried.

Reacting to the Chair's proposals on Special Products, Nath questioned why the lower cap number of total Special Products had been "arbitrarily reduced" from 12 to 8 per cent. In April 2008, the US and a few other countries had made such a proposal but this had enjoyed no support from any country other than the proposers. "Then why the change? And, that too at this stage?" he asked.

Nath added: "While there seemed to be an attempt to raise the level of ambition on this core concern of developing countries, there was no concurrent movement either in reducing Overall Trade Distorting Domestic Support or the percentage of Sensitive Products, on which the proposals have remained frozen since July 2007. This is disconcerting."

Nath said that another area of major concern was the Special Safeguard Mechanism (SSM). "The draft proposals on SSM, including the absurdly low number of products for which the SSM could be invoked during a year, the threshold levels for the price and volume triggers and the cross-check between the two independent triggers, are even more stringent than proposals for the Special Safeguards which are going to be used primarily by developed countries", he said.

Nath remarked that the SSM proposals were "completely out of step with ground realities in the developing world and there is no way the developing countries can accept them in their present form."

On other market access issues in agriculture, the Minister noted the "palpable lack of balance between agriculture and NAMA, as reflected in the extremely tentative proposal on tariff simplification and the non-existence of any proposal on tariff capping, despite near unanimous support of the developing countries and some developed countries for such proposals."

He said: "Many developed countries are intent on using compound, mixed and complex tariffs as an additional and non-transparent layer of protection. They are also not willing to accept caps on their agricultural tariffs even at levels of 100%-150% at the end of the Doha Round, while expecting developing countries to convert all industrial tariffs in ad valorem terms and cap these at the level of 26% or below for almost all products. This imbalance is out of sync with the Hong Kong Ministerial Declaration."

On the global food scenario and the linkage with subsidies in developed countries, the Minister emphasised, "Developing countries have no alternative but to produce more food in the coming years. Trade distorting subsidies in agriculture have to be reduced much faster than proposed currently so as to send the right signals to developing country farmers."

He added, "While the Trade Ministers of major developed nations have recently spoken of ameliorating the food crisis through accelerated reduction of domestic subsidies and agricultural tariffs in the Doha round, there has been a studied reluctance on their part to get these recent promises converted into concrete proposals in the draft text."

On NAMA, Kamal Nath said: "The text has ignored the core mandate of the Doha Round of less than full reciprocity in reduction commitments and comparability in ambition between NAMA and Agriculture."

Equity and balance in this Development-oriented Round could only be achieved if developed countries agreed to take a coefficient that resulted in a cut of 49% to 51% on their dutiable lines with developing countries choosing coefficients to take lesser cuts.

On the proposal to link coefficients to flexibilities, the Minister stressed that this was beyond the mandates since the two were different modalities intended to address different objectives. He added that the number and trade limitations on flexibilities "simply ignore the realities and sensitivities in developing countries."

Criticising the proposal to make sectoral initiatives mandatory by linking them to a higher coefficient, Nath said: "This is nothing but a blatant violation of the mandate. By unduly pressuring developing countries to enter into sectorals, the Chair has given in to the demand of a handful of developed countries".

Nath also noted that there was a sharp increase in the number of square brackets in the NAMA text. He said this text would have to be "completely revised" and significant convergence achieved before taking the matter for deliberation at the Ministerial level.

The Minister indicated clearly that "India is ready for a Ministerial meeting. However, a lot of work still needs to be done to narrow differences and converge before identifying a safe landing zone". +