TWN Info Service on Trade and WTO Issues (July08/08)
10 July 2008
Third World Network

Agriculture: Falconer outlines how he may treat outstanding issues
Published in SUNS #6513 dated 9 July 2008

Geneva, 8 July (Martin Khor) -- Some progress has been made by members to bridge their differences in the WTO agriculture negotiations on a few issues such as disciplines on the Green Box domestic support, as well as special products (SP) and special safeguard mechanism (SSM), according to the chair of the agriculture negotiations.

Ambassador Crawford Falconer of New Zealand said however that on some issues like cotton and tropical products there had not been enough progress yet and he indicated he would stick to his old text when preparing his next draft, which is due out on Wednesday or Thursday.

He also indicated that on the major numbers such as the ranges in the percentage of cuts in allowed domestic support and in tariffs, or in the numbers of sensitive products, the figures in his previous text would be retained in the next draft, and it would be for the Ministers in the mini-Ministerial starting on 21 July to decide on them.

Speaking to journalists after the open-ended agriculture meeting on Monday (7 July), Falconer said he did not know what would happen after he issues his next draft.

"I don't know if there will be any more open meetings (on agriculture) after the text," he said, replying to a question. "I am available to do what is considered useful by members.

"The bigger question is how the chair of the Trade Negotiations Committee [WTO director general Pascal Lamy] intends to do. There is no clarity on the overall process. It may become clearer in the next few days."

On the issue of domestic support, he said he had received comments on it and some changes can be made. "However the macro numbers have been clear at this stage and there won't be surprises in numbers."

Falconer reported to the meeting the results of consultations he had conducted in recent weeks, including small meetings which he termed "walks in the woods", and a Room D meeting of 37 delegations on 4 July.

At the meeting, the United States also reported on the consultations held on sensitive products and the domestic consumption data to be used to determine tariff rate quotas on these products.

In his report to the meeting, Falconer said that on Domestic Support, there had been progress on the Green Box, indicating that a compromise would be reached on the issue of basing the programmes of decoupled income support on "fixed and unchanging" base periods.

Some delegations felt having fixed periods was too strict, but Falconer indicated a compromise could be to accept the fixed base periods but allowing for exceptional changes, while also having provisions to ensure that farmers' expectations are not altered, for example by requiring the new base periods to be far enough in the past.

On cotton, Falconer said there had not been enough progress on this issue to be the basis for agreement, so his current text would remain.

On market access, Falconer spoke about paragraph 75 of his May text, dealing
(implicitly) with the issue of tariff caps for developed countries.

He indicated a revision would be made to his text, which proposes a penalty for tariffs that are above 100%, by having to provide additional market access through a larger than normal tariff quota.

He indicated an option where "sensitive products" would not be subject to a ceiling, while a few non-sensitive products can be permitted to have tariffs above the cap. This would be an alternative to some countries (the G20, the Cairns Group) wanting a firm cap, and others (such as the G-10) not wanting a cap at all.

On In-Quota Tariffs, Falconer indicated he would propose a compromise between the opposing ideas of zero in-quota duties and no or small cuts in in-quota duties. The compromise could be cuts of 50% or more on higher in-quota duties, which would further have a ceiling imposed on them, while low duties may be eliminated.

On tariff rate administration, Falconer reported that a group of countries with different views had produced a compromise for dealing with situations where quotas are not filled, involving information sharing and consultations to determine if the under-filled quotas are due to market conditions or by the way the quotas are administered. There could then be a measure to alter the administration.

On special products, Falconer said the difference between G33 members and some other countries are still not resolved. However, there was a willingness to consider a different structure to the options.

(Falconer had put forward a new proposal on the treatment of SPs during consultations last week, involving two tiers of SPs, with different treatment in each tier. The G33 responded that they were willing to consider his two-tier idea, provided it was made clear that some SPs would be allowed to have no tariff cuts).

On Special Safeguard Mechanism, Falconer reported on the continuing divisions, especially on whether the extra duty could be allowed that would raise tariff above the Uruguay Round or pre-Doha bound rates.

Falconer indicated a compromise where the treatment of the SSM would be closer to the position of the countries (e. g. Argentina, Paraguay, Uruguay) opposing an effective SSM. This would involve the SSM being used in a way that limits duties to only the pre Doha rates in most cases, while tariffs can go beyond the pre-Doha rates in only a small number of cases a year. However, the triggers for the SSM could be closer to the G33 position.

There seems to be a trade-off in this Falconer scenario: allow the G33 to mainly have its position on triggers, while allowing the opponents to have their way with strict treatment of SSM.

On Tropical Products and Preferences, Falconer reported that there is still no agreement on this topic. He would stick to his present text for next draft.

According to trade officials, on sensitive products, the US reported that there was some progress in three areas: domestic consumption data (to be used to determine tariff quota sizes) for potential sensitive products; verifying the data; and revising the list of potential sensitive products. However, some data is still not yet made available.

Several members and their groupings made statements in response to Falconer's report (See SUNS #6512 dated 8 July for report on G20 and G33 presentations). However, the members were mainly reiterating their known positions, and there was no new development. +