TWN Info Service on WTO and Trade Issues (Oct08/13)
23 October 2008
Third World Network

Agriculture: Useful talks, but no concrete progress yet, reports Chair
Published in SUNS #6570 dated 17 October 2008

Geneva, 16 Oct (Kanaga Raja) -- The Chair of the agriculture negotiations on Wednesday reported on his private "walks in the woods" consultations which have allowed negotiators to explore ideas and understand each others' concerns on six deadlocked issues, but with no movement yet away from their positions.

Chairman Ambassador Crawford Falconer of New Zealand was reporting to an informal open-ended meeting (of the full membership) of the Special Session of the Committee on Agriculture on his "walks in the woods" and other forms of consultations.

("Walks in the woods" is the term used by Falconer to describe his consultations with a group of members outside the WTO, and usually involves about 15 members, with the exact number depending on the subject matter. He has also been talking to individual delegations and smaller groups.)

According to trade officials, the Chair's summary lasted almost an hour and a half. Falconer said that members should know in some detail what has been discussed. Without the detail, he could only report "no concrete progress", which would not do justice to the value of the consultations.

The Chair also indicated that he will try to produce a revised draft text in the middle of November or towards the end of the month, but he pointed out that time is running short.

Falconer told members that he deliberately picked the six subjects where members' positions are the most polarized:

-- whether new tariff quotas can be created, which determines which products can be "sensitive" since sensitive products have to have tariff quotas;

-- tariff simplification - whether all tariffs should be converted to percentages of the products' prices - where current high prices have changed countries' positions;

-- Green Box domestic support provisions dealing with developing countries' food purchases for use as domestic food aid;

-- sensitive products;

-- the Special Safeguard Mechanism (SSM) for developing countries; and

-- cotton.

The Chair explained that the discussions have not yet developed enough to be broadened into "Room D" negotiations among the representative group of about 36 delegations, which is why he decided to go straight to a meeting to brief the full membership.

According to trade officials, several negotiators have returned to their capitals this week, while some technical calculations are made.

Falconer said that he would resume his "walks in the woods" next week. Depending on what happens, he could then call a "Room D" meeting or a session with the full membership.

In the meeting and speaking to journalists later, Falconer said that if members are to agree on "modalities" by the end of the year, in practice, this would mean in time for the General Council meeting of 19 December. That would mean that he would have to produce a final draft by the end of November at the latest, he said (see below).

The Chair told the informal meeting that several topics focussed only on provisions for developed countries on the grounds that these provisions have to be clarified first. Provisions for developing countries can then be devised on the basis of the one-third or two-thirds ratios that are used in general.

On tariff quota creation, the Chair said that positions remain "binary" -- that is, polarized between those who want to create new tariff quotas (and shield those products from the full tariff cuts) and those who oppose the move.

However, delegations were willing to explore some ideas even if they remained committed to their positions. These included limiting quota-creation to only a small number of products, providing larger-than-standard tariff quotas and having very low or zero duties on imports within the tariff quotas -- if the creation of new tariff quotas is agreed.

On tariff simplification (whether all tariffs have to be converted to ad valorem, or whether some could be in specific values, and whether a few could remain in a more complex form), Falconer said that although the options remain "binary", he has seen a "sea change" in mood among some exporting countries, with some now willing to give up their previous insistence on a total conversion to ad valorem duties.

This is because of current high prices, and because re-negotiating the method of calculation to reflect the change would be almost impossible -- considering how difficult it was to agree on the existing method and the sharply conflicting interests involved in keeping or changing it.

According to trade officials, among the ideas floated was the possibility of applying a different method only to products whose prices have risen the most, but this has not been accepted, partly because it would only work if only a small number of products were involved, and negotiators doubt if that is the case.

"This is one of the reasons why people have taken a break," Falconer told the meeting. The negotiators felt that they needed to make some calculations, to assess price movements and to consider their best options, he said.

On the Green Box (two footnotes in the present Green Box relating to provisions on governments purchasing food from poor farmers for stock holding and for domestic food aid), developing countries want to be sure that the provision do not require them to include purchases at above market prices in their calculation of Amber Box (AMS) support.

The Chair said that he thought a way could be found to achieve this.

On sensitive products, Falconer said that the discussion focussed on the number of products and the likelihood that for developed countries, the numbers would be 4% of products in general or 6% for some special cases.

He said that these and related issues remain unresolved, including provisions for allowing some non-sensitive products to end up with tariffs above 100%, with some countries continuing to oppose the possibility.

According to trade officials, one point that has emerged in the discussion is the need to link the question of the number of products more specifically to the question of tariff-quota creation.

With regards to the Special Safeguard Mechanism (SSM), Falconer said that it is clear that some paragraphs in the present text have been rejected.

According to trade officials, these deal with the cases where the safeguard raises a tariff temporarily above the pre-Doha bound rates, and this was the first time that the issue was discussed within the process of the agriculture negotiations -- previously, it had been discussed by seven ministers in the "July 2008 package" talks.

A range of options have been suggested, Falconer said, to deal with various concerns, for example, applying the safeguard within fixed calendar or marketing years instead of in moving periods of 12 months, and various possibilities for the size of surges that would trigger the safeguard and the size of the temporary tariff increase. However, all of the options face reservations from some members.

The Chair also said that one member has also disclosed that it has problems with the provisions dealing with the formulas for the safeguard mechanism even in cases where the tariff is not raised above the pre-Doha bound rates. According to trade officials, some developed countries also said that they too would like to see revisions on this.

The Chair said that if members are to reach agreement within the year, then they would have to work on some of the existing ideas or produce something new, and soon -- "next week".

On the issue of cotton, Falconer reported that his discussions on this were among a smaller group than in the "walks in the woods" consultations. The atmosphere was good, and genuinely in good faith, although no new proposals emerged.

According to trade officials, there will be more "walks in the woods" followed by either a meeting of about 36 delegations ("Room D") or a meeting of the full membership.

The Chair indicated that he will try to produce a revised draft in the middle of November or towards the end of the month, but he pointed out that time is running short.

A number of countries spoke at the informal meeting following the Chair's report.

According to trade officials, South Africa, Brazil and other developing countries said that the latest discussions focused too much on adding flexibilities for developed countries to protect their markets. Some exporting countries among them (e. g. Costa Rica and Pakistan) reiterated their insistence on "no new tariff quotas".

The G33 (Indonesia speaking) and the small and vulnerable economies (Dominican Republic speaking) welcomed the fact that the "walks in the woods" show that the special safeguard mechanism is not the only issue in deadlock. They argued that the SSM must be flexible, easier to use than the present SSG special safeguard, and "not useless". The G33 said that its proposal does take account of some countries' concerns about normal trade growth being blocked (see separate article on G33 statement).

According to trade officials, Nigeria, Bolivia and Cuba shared these views.

Paraguay, Uruguay and Costa Rica rejected the arguments of the G33, reiterating their view that the special safeguard mechanism in its proposed form would prevent poor farmers from exporting to other developing countries, would be separated from its original purpose of assisting trade liberalization, and is already considerably more flexible than the present SSG.

Australia said that exporting countries are being asked to give too much ground and that importing countries should give more.

The EU called for agreement on modalities by the end of the year, in agriculture, non-agricultural market access and intellectual property.

According to trade officials, Cuba and Bolivia said that what had been discussed among seven ministers in July should not be counted since it was not discussed among the full membership. Cuba also objected to the Chair reporting directly to the full membership instead of following the "agreed" process of allowing some negotiation among the representative group in Room D first.

Meanwhile, speaking to journalists after the informal meeting, Falconer said that he will continue in this process "until it runs out of steam or produces a result." He added that he is having more "walk in the woods" discussions next week.

Asked whether he was planning to produce some kind of paper by the end of this year, Falconer said that he will produce it "if there is enough progress to warrant it, and when there is enough progress to warrant it." It would be desirable for that to happen because its better for that to happen sooner rather than later.

He said that he told members at the meeting that if you are operating on the time horizon of getting these modalities done by the end of the year, "the end of the year is actually not the end of December." The end of the year to a practical intent and purposes is presumably the General Council meeting on 19 December.

Falconer said "that's when you've got to have this done by if you say its going to be done by the end of the year." If its got to be done by 19 December, then you would need to have "a final, final text available in time for people to consider it and have reached decisions by the 19th of December."

You could do it if there is enough progress, he said, adding that there is not that much time.

On the issue of SSM, the Chair said that there had been a discussion on ideas. There are certain ideas on the table which have not succeeded. "Nobody's bought into them yet."

He said that for the time being, it's push-and-pull at some of the ideas on the table and see if you can make them work. "There isn't any other alternative... but if you're gonna come up with a radically new idea, you'd have to do it next week because there isn't enough time for people to digest if you leave it any longer than that."

"And I frankly doubt you're gonna see any new ideas on that... I doubt it very much at this late stage of the game," Falconer said. +