TWN Info Service on WTO and Trade Issues (June08/11)
16 June 2008
Third World Network

Agriculture: G33 "disappointed" with Chair's text on SPs and SSM

Published in SUNS #6489 dated 5 June 2008 

Geneva, 4 Jun (Kanaga Raja) -- The G33 developing countries said on Tuesday that the revised draft modalities text issued by the Chair of the agriculture negotiations on 19 May does not faithfully reflect the state of play of the agriculture negotiations, particularly as regards Special Products (SPs) and Special Safeguard Mechanism (SSM).

In a written submission - in document JOB(08)/47 dated 3 June 2008 - reacting to the revised draft modalities text (TN/AG/W/4/Rev. 2), the Group said that it "is indeed disappointed".

In this regard, the G33 recalled that the Chairman in his statement of 19 May 2008 assured that he would simply reflect where Members were at that particular point in time. Therefore, the G33 expected that the divergences that remained on issues such as SPs and SSM would indeed be faithfully reflected in the revised draft text.

"However, this is not the case," said the G33, adding that in view of this, the group is presenting this submission "in order to highlight the Group's concerns regarding its position on the issues of key interest to the Group."

Pointing out that a workable and constructive revised draft text is the only course that all Members can follow in order to transcend to the next level, the G33 called for another revised draft text, particularly on SPs and SSM, which is "more balanced, factual and comprehensive", in line with the mandate and which achieves the paramount objective of development in this Round.

The G33 submission outlines the Group's reaction to several paragraphs of the Chair's text relating to Special Products and the Special Safeguard Mechanism.

In respect of Paragraph 118 of the Chair's text (on self-designation of special products), the G33 said that its position of minimum entitlement of 12% is not reflected in the second revision of the draft modalities text, and that the draft text has now put the minimum entitlement in square brackets. The G33 said that its negotiating space has been narrowed and prejudiced seriously as the current draft text provides a range of 8-20% as a maximum entitlement instead of the range of 12-20%.

On zero-cut SPs, the G33 considered that the 8% of all tariff lines shall be eligible for no cut which was placed in square brackets in the Rev. 1 version, should remain as the constructive and balanced formulation. On non-zero SPs, including the proposal for an overall average cut of 15% with a minimum of 12% and a maximum of 20%, without square brackets gives the impression that convergence has been reached among Members.

The G33 said that it has never moved from its graded approach with three tiers for the treatment of SPs. "It was quite clear that the Harbinson approach was not accepted by the G-33 when it was first raised."

The G33 is of the firm view that the sole restriction in converting unused sensitive products to special products is the ratio of 3:2, whereby the conversion already necessitates a lessening of the number of tariff lines entitled to be designated as sensitive. There were objections to this proposal by other Members but there was no proposal for an exchange rate of 3:1 as reflected in the 2nd revision.

The G33 submission said that the Group has always maintained that all SPs, whether converted from sensitive products or not, are of the same standing and would receive the same treatment as in the aforementioned graded approach. The differentiated treatment for converted SPs has never been accepted by the G33. Therefore, the G33's position should have been clearly reflected in the body of the text rather than in the footnote.

The G33 also said that its consistent demand for "No TRQ commitments, including change in in-quota tariff rates, and no tariff capping on SPs" is not reflected in the second revised draft text. It said that the flexibilities for RAMs (recently acceded members) in footnotes 16 and 18 shall be reflected in the main body of Paragraph 118.

Regarding Paragraph 119 (relating to small vulnerable economies, SVEs), the G33 welcomed the clarified language pertaining to the modalities applicable to the SVEs.

On Paragraph 120 (relating to RAMs), the G33 submission said that the draft text does not fully take into account the unique tariff structure of RAMs and the concerns of RAMs are not appropriately addressed. The G33 said that it stands firm that SPs' cuts for RAMs shall be one half less than the general SPs, and the maximum number of SPs available for RAMs shall be at least 1 percentage point greater than generally applicable.

Concerning Paragraph 121 (relating to the Special Safeguard Mechanism), the G33 said that the current revised draft text has maintained the proposal that the SSM cannot be invoked for more than [3-8] products entailing a maximum of [4-8] tariff lines per product in any 12-month period. "The G-33 views this as very restrictive. In light of the concessions made by the G-33 on this issue, the Group is of the view that the concept of a percentage of tariff lines instead of a number of products is a more satisfactory approach."

On Paragraph 123 (with regards to volume-based SSM), the G33 said that its position that the volume-based SSM should be on the basis of "most recent three-year period for which data is available" - is not reflected in the text.

As regards Paragraph 124 (relating to the applicable triggers and remedies), the G33 paper said that the "either/or" approach used for volume triggers may have succeeded in reducing the number of square brackets considerably, but has also substantially prejudiced the G33's negotiating position. "It is simply unacceptable for the G-33 to accept the package of triggers and remedies suggested by other Members as they render the mechanism useless."

The issue of the additional duty being applied on applied tariffs was not accepted by the G33 and the Group requested that this be replaced by "ordinary customs duty" as reflected in the necessary paragraphs of the SSG. This is not reflected in the text, said the G33.

The proposed flexibility for LDCs of their volume or price-based remedies to exceed the pre-Doha bound levels under certain conditions was also extended to SVEs in special circumstances in the previous Rev. 1 draft text. Not only did this specific position not been placed on the table, even in square brackets, but it has been withdrawn for the SVEs. The G33 said that it had called for this fundamental principle of exceeding the pre-Doha bound levels to be extended to all developing countries and that LDCs and SVEs should be accorded additional flexibilities in that context.

On Paragraph 125 (relating to imports under any scheduled tariff rate quota commitment), the G33 said that it has in the past provided its full support to the previous formulation that the Chairman presented in Paragraph 129 of the Rev. 1 draft text. However, the G33 questions the insertion of a new element in brackets.

With regards to Paragraphs 126 and 127 (relating to price-based SSM), the G33 paper said that the triggers and remedies proposed in Paragraphs 126 and 127 are not acceptable to the Group. Similarly, the condition that pre-Doha bound rates would constitute a limit for the price-based remedy is not acceptable to the Group as this would make the SSM highly inaccessible and toothless in addressing emergency situations. This would also exclude SPs from the application of the SSM.

"While other positions have been accommodated, the G-33's request that the trigger price should only be publicly disclosed and available "following its initial use" has still yet to be reflected."

"It was agreed that the issues raised regarding the remedy for the price-based SSM being applied on both a shipment by shipment basis as well as on an ad valorem basis, would be included in the revised draft text. This has not been done," said the G33.

On Paragraph 128 (which states that developing country Members shall not normally take recourse to the price-based SSM where the volume of imports of the products concerned in the current year is clearly declining, or is at a manifestly negligible level incapable of undermining the domestic price level), the G33 said that it has made it clear that, at best, it could accept this on the "best endeavour" basis by including the clause "as far as practicable".

The current revised draft text has reflected a new approach by re-writing the text and introducing a new concept of "normally". The G33 reiterated its firm view that this provision be clearly premised on each Member's ability to self-determine a suitable policy space and exemptions to the normal application of the cross-check mechanism, and hence, does not contemplate a mandatory rule.

With respect to Paragraph 129 (relating to the calculation of volume or price triggers and the application of measures on the basis of MFN trade only), the G33 said that the first draft revised text had proposed the inclusion of preferential trade in the calculation of volume and price triggers provided that the remedies are also applied on preferential trade. "The G-33 has clearly provided its full support to this previous formulation."

Regrettably, said the G33 submission, the second revision draft text merely included the point-of-view of those Members that have objected to the inclusion of preferential trade in the calculations. "The G-33 is of the view that what was in the first revised draft text should be re-instated."

With regard to Paragraph 131 (relating to the volume-based SSM being maintained for a maximum of 12 months from the initial invocation of the measure, unless a seasonal product is involved, in which case the SSM may apply for a maximum of six months), the G33 said that although the Group's position of 12 months as the duration of the volume-based remedy has been accurately incorporated in the new revised draft text, it has also been seriously constrained by the introduction of the concept of seasonality through which the duration of the remedy for a seasonal product will only be six months.

The current revised text has also retained the condition that the remedy for the volume-based SSM should not apply for more than two consecutive periods despite objections by the G33.

"The additional condition requiring that the SSM should be applied to that product only after the elapse of a further two consecutive periods renders the SSM even more restrictive. These issues were never raised in the discussion, and the G-33 cannot accept their inclusions."

With regard to Paragraph 132 (relating to the operation of the SSM and the issue of transparency), the G33 said that it is fully committed to the notion of transparency and administrative notifications of the SSM in line with paragraph 7 of its proposal on the SSM. The prior notifications of "ongoing calculations of rolling averages of import volumes and prices" and "15 days" period, are disproportionate requirements which would render the operationalization of the SSM difficult and cumbersome for developing countries and LDCs.

Concerning Paragraph 133 (which states that the relevant Articles of the Agreement on Agriculture shall be amended to reflect the above modalities), the G33 submission said that the element of Article 4.2 of the Agreement on Agriculture has been brought up during previous discussions. The G33 has provided the logical and factual arguments on this matter. It is therefore valid that its request to include the reference on Article 4.2 in this paragraph should have been incorporated.

In closing, the G33 submission stressed that the two important issues of SPs and SSM are an integral part of the Special and Differential Treatment in the Doha Development Round. For the G33, a workable and constructive revised draft text is the only course that all Members can follow in order to transcend to the next level.

The Group called for another revised draft text, particularly on SPs and SSM, which is more balanced, factual and comprehensive, in line with the mandate and which achieves the paramount objective of development in this Round.

"The G-33 remains with the firm view that any horizontal process shall only proceed once we all have the same level of comfort and confidence on all the agriculture issues. This suitable level of comfort can only be achieved through another balanced and new revised draft text on SPs and SSM." +