TWN Info Service on Trade and WTO Issues (July08/24)
22 July 2008
Third World Network

Trade: Amorim criticises carve-outs for rich countries, text imbalances
Published in SUNS #6522 dated 22 July 2008

Geneva, 20 July (Kanaga Raja) -- On the eve of the WTO's mini-Ministerial, the Brazilian Foreign Minister Mr. Celso Amorim attacked imbalances in the draft texts on agriculture and non-agricultural market access (NAMA) which he said gave carve-outs and flexibilities for developed countries while trying to extract maximum market access from developing countries.

The basic imbalance derives from the fact that the two texts were written with different mind-sets. The agriculture text was written with one mind-set (to find flexibilities for developed countries) while the NAMA text had the mind-set of having maximum market access to developing countries' markets, said the Minister.

He also warned that if a revised text is put forward on a "take it or leave it" basis with not enough time for countries go through it or revise it, then a Cancun-like collapse could take place.

Amorim was briefing the media on Saturday (19 July). "We came here to search for a deal. But of course, this is not an easy task and I think there are some things that have to be clarified, before we know if it's possible or not to have a deal," he said.

Amorim said that he was still worried when he hears ''some myths'' in Geneva such as that ''agriculture is almost ready and all the problem now is NAMA. This is a self-serving assertion of those who do not want to do their task in agriculture, which was, has been, and is, the engine of the Round.''

There are many things in agriculture which are not clear -- from the figures in overall trade-distorting domestic support (OTDS), the head-room for Blue Box ceiling for products, tariff simplification, sensitive products, tariff caps and the new idea of creation of quota for products that were not classified as sensitive before.

''There is a whole array of questions in agriculture that have to be solved and we don't know how they will be solved, or if they will be solved,'' Amorim said. ''We can't under-estimate that at all.''

He added that in the agriculture modalities text, ''a large part of it, a big number of paragraphs (27 paragraphs) are carve-outs for different countries.''

He pointed to paragraphs that are specifically for the United States, Norway or Switzerland. They are all carve-outs, and it is never to enhance the access to their markets or to further reduce their subsidies. ''It's the other way around''.

This basic imbalance derives from the fact that in the last few months, the text in agriculture was written with one mind-set and the NAMA text was written with another mind-set, said the Brazilian Minister. This contaminates the balance between the two texts, he said, noting that the agriculture text was written with a mind-set of finding flexiblities for the rich countries. The NAMA text was written based on the mind-set of having maximum market access to the developing countries.

He said that there was a saying that if you repeat a lie several times, it becomes the truth, referring to what some people are saying in comparing what is being offered in agriculture (by the rich countries) and with what is being obtained in NAMA (in relation to the developing countries).

''When you hear the cuts in subsidies will be something around 70%, it's because you are considering the bound level of subsidies.'' When people refer that the reductions in NAMA are small, they are using the applied tariff.

''You cannot move from one standard to another standard each time that you refer to each sector of the negotiations,'' Amorim complained, adding that ''if you want to have bound (levels of tariffs), let us have bound all the time. You want applied, let us have applied all the time."

''If you want to have applied, the amount, for instance, that's being spent now by one of the major subsidisers (an apparent reference to the United States) is half of the minimum figure that is foreseen in the text,'' he added, calling for the elimination of this double standard. ''You can't use this double standard all the time.''

Amorim also cited the instance of the Prime Minister of ''a very important country'' who until recently, did not know the difference between coefficients and tariffs (in NAMA). This disinformation comes to the highest level, the Brazilian Minister observed, saying that these things have to be unmasked.

Noting that it is common to say that there is no market access in the developing countries because they are only cutting the bound levels, Amorim said that in the case of Brazil, which has 100% of its tariffs bound, the cuts in the highest tariffs, even if all of these products are in the flexibilities, will be by 30%. ''That is not insignificant.''

''If we don't clear the conceptual base on which we are discussing, we can never have a deal. We can't have a deal based on misinformation. It's not possible."

As to what would be necessary to have a deal, Amorim said that the real effort should be made in relation to agriculture - the amount of OTDS by a certain country today (in reference to the United States) is double the amount that they are actually spending. He said that he is also realistic, saying that he knows that he won't have an enormous cut in what they are actually spending today.

On sensitive products, he said that there are still important gaps - the number of sensitive products is 4-6% of domestic consumption. ''These are not insignificant differences when you are going to calculate the quotas.'' A big effort should be made in these areas. The Brazilian Minister also mentioned tariff caps, saying that some countries won't accept a tariff cap of 100.

He also said that one way of overloading (the NAMA agenda) are including the issues of anti-concentration and sectorals. ''This is a recipe for failure.''

There is not a buying market for developing countries for the Round, it is a selling market, Amorim noted, saying that ''you have the burden to prove that the Round is really good.''

Some countries, including Brazil, have systemic reasons to fight for the round, but there is a limit. Others have to pay a price, and the price has to be balanced, he said. If they are not identical, they have to favour developing countries.

Amorim believed that a quick result is not easy in the modalities. There can be success only if we have in mind that this is a development round and move forward to areas which are more favourable to developing countries and realistic when things are being demanded from us - and this doesn't apply only to countries like Brazil, India and China which have become a sort of the "devils" for rich countries, but also speaking for SVEs or other countries whose problems are not solved yet.

Either you do that or maybe we'll have to wait three or four years, because I take it that public opinion in the world is changing,' said Amorim.

Public opinion in the developed world is also changing, he said, pointing to recent remarks by EU Development Commissioner Louis Michel saying how can the EU say that they want to eliminate poverty and hunger in the third world and at the same time continue giving subsidies, and by doing that, disabling producers in the developing world.

''Public opinion is in our favour. If we lose this moment now, it will take three or four years, but probably we will have a round still more favourable than this one,'' said Amorim. ''Of course, there are risks and this is where the systemic reasons come, to try to have it now. But you can't operate just as you operated in the past, trying to extract the maximum from the weakest and give the minimum from the stronger. This time is gone.''

On his meeting with Lamy Saturday, his message to the Director-General on the process was that whatever the plans, it is important that if there is a revised text at some point after discussions, we have to be sure that we have to have enough time to re-negotiate on the basis of the new text. Otherwise, said Amorim, ''you may have a Cancun-like scenario.''

In response to a question, Amorim said that in Cancun, the text that was on the table was not the basis for negotiation. Here, on the basis of what is on the table, provided that ''we move to the more development-friendly figures, we may come to a result. There is a fundamental difference between this and Cancun. It's only in the case that this is not done, we may have a Cancun-like scenario.''

Asked to elaborate on Brazil's applied tariffs in NAMA, Amorim said that he is always glad to talk about applied tariffs, provided that people also talk about applied subsidies, which they are not doing. He said that those products with the highest tariffs - 35% in the case of Brazil - they will fall to around 23-25%, depending on the coefficient. That is not the drop that we will see in many agricultural products considered sensitive.

He added that many of the tariffs in textiles are about 18-20% applied, and it is bound at 35%. It does make a difference, he said. ''What we cannot accept is the double standard of using the bound level for subsdies and applied level for the tariffs.''

Asked whether it was in Brazil's interest to maintain the G20 alliance as it was an exporting country, Amorim said that ''we would have never ever have come to the situation that we were now if [it] were not for the G20.''

He said that in the past, developed countries, in this case the European Union, would use this division between the developing countries to disqualify the argument of the Cairns Group (of agricultural exporters). ''It was by making this coalition that we brought these negotiations to the point that we have brought.''

''As a balance, I think the G20 has played a very, very important role, and will continue to play an important role until the end of this negotiation, and might I say, and beyond,'' he said.

Asked about the unfair ''rate of exchange'' between developed and developing countries, and if it is still possible to insist on a tiered formula in NAMA where developing countries undertake lower percentage reductions (in line with the Doha mandate), Amorim replied that ''I think it will be very difficult to change methodology at this stage in time.''

''I am not here looking for absolute justice. I am looking for a deal that is accepteable to me, that can being benefits to me and... other developing countries and whose price is not too high.''

Explaining why the price cannot be high, Amorim used the analogy of purchasing a used car as compared to a new car. "A used car is still useful. But I cannot pay the price of a new car when buying a used car."

To a question whether the Chair's numbers for the United States' overall trade distorting domestic support should be changed because of the changed situation (where the US actual subisidies had now fallen below the Chair's figures), Amorim said the value of the Chair's figures is now less important than a year ago.

The meaning has changed, so that has to be taken into account, he said. Some limitation is useful, but it is not the same value. "This is why I spoke of buying a used car," he said.

Asked if he would be willing to accept a text by Director-General Lamy if there is no conclusion in the first three days of the mini-Ministerial, Amorim said that ''I don't think he (Lamy) would run the risk of putting a text, take-it-or-leave-it, for the membership. I think this would really create a very bad scenario. I don't think this will happen... I think it will be a big risk just to put a text on the table and say take it or leave it.'' +