TWN Info Service on Trade and WTO Issues (Dec08/07)
5 December 2008
Third World Network

Agriculture: G20 outlines its position on sensitive products
Published in SUNS #6601 dated 1 December 2008

Geneva, 28 Nov (Kanaga Raja) -- The G20 developing countries at the WTO presented a paper at an informal open-ended meeting on agriculture on Friday outlining their position on the issue of sensitive products in agriculture.

In their paper, circulated as a job document, the G20, represented by Brazil, commented on the issue of sensitive products based on the revised draft modalities text of the Chair of the agriculture negotiations, Ambassador Crawford Falconer of New Zealand (document TN/AG/W/4/Rev. 3, 10 July 2008).

At the informal open-ended meeting of the Special Session of the Committee on Agriculture, the G10 countries, represented by Switzerland, said that the paper by the G20 was "completely unacceptable" to the group (see below).

Referring to paragraph 71 of the Chair's text (on designation of sensitive products), the G20 is of the view that the following language should apply as the general rule for the designation of sensitive products in developed countries:

"Each developed country Member shall have the right to designate up to 4 percent of tariff lines as 'Sensitive Products'".

In a footnote (footnote 1), the G20 paper says that in the case of Iceland, Norway and Switzerland, which have more than 30% of their tariff lines in the top band, the number of sensitive products may be increased by the maximum of 2 percent and these Members shall have the obligation to ensure that, whichever deviation is selected, an additional 1 percent of domestic consumption beyond what is generally provided for is achieved for all sensitive products.

In another footnote (footnote 2), the paper says that in the case of Canada and Japan, the number of sensitive products may be increased by the maximum of 2 percent and these Members shall have the obligation to ensure that, whichever deviation is selected, for each additional 1 percent of tariff lines an additional 1 percent of domestic consumption beyond what is generally provided for is achieved for all sensitive products.

Given this amendment and the inclusion of footnotes 1 and 2, paragraph 75 (Chair's text) should be deleted, says the paper.

On paragraphs 73 and 74 (relating to treatment of tariff cuts and tariff quota expansion), the paper suggests that a clear-cut structure should be in place for the deviation from the tiered reduction formula and the corresponding compensations for each deviation.

The group suggests the following default structure: For a deviation of two-thirds, expansion by (domestic consumption) 4%; deviation of a half, expansion by 3.5%; and deviation of one-third, expansion by 3%.

The G20 stresses that each product (the different tariff lines comprised by that product) shall have one and only one deviation.

With respect to paragraph 76 (for tariff lines in excess of 100% ad valorem), the G20 recalls that the tariff capping for non-sensitive products is a general rule, part of the tiered formula structure, and therefore should be placed accordingly in that part of the Rev. 3 text (for example, after paragraph 61).

The current paragraph 76 should deal exclusively with the exception to that general rule, regarding sensitive products, and the following language could apply:

"After application of all its tariff reduction commitments, a developed country Member shall be entitled to retain tariff lines in excess of 100 percent ad valorem, only if the tariff lines concerned are confined to those designated as, and are within the numerical limits of, that Member's overall sensitive product entitlement and that the Member concerned applies an additional expansion of 1 percent of domestic consumption for those tariff lines concerned."

Therefore, says the G20, the bracketed text on paragraph 76 should be deleted.

Concerning paragraph 80, the G20 reiterates its firm opposition to the creation of new TRQs. The Group recalls the systemic and commercial implications of such decisions. The Group reaffirms its preference for tariff cuts as the means to guarantee market access.

However, says the G20 paper, in very limited and justified circumstances, if any Member requires a specific exception, it should be identified through enhanced transparency provisions in an Annex to the modalities, where developed Members and tariff lines are clearly specified.

The following conditions must also be fulfilled:

-- Entitlement - new TRQs to a maximum of 1% of tariff lines should be within the numerical limits defined in paragraph 71;

-- Compensation should be significantly higher than the default payments for the maximum deviation expressed in the modalities text;

-- All new TRQs should be MFN;

-- In-quota duties should be zero;

-- All new TRQ administration should be transparent and allow for equal opportunities amongst exporters;

-- In case of tariff quota under-fill, an automatic carry-over mechanism should be applied.

Reacting to the G20 paper, the G10 told the informal open-ended agriculture meeting Friday that the group has shown a genuine willingness to bring the negotiations forward by compromising on all issues of utmost difficulty to the group.

For example, despite its absolute opposition to tariff capping, the G10 has continuously engaged in discussions to find solutions acceptable to all Members.

As a general observation, said the G10, "this (G20) paper is completely unacceptable to [the] G10 Members."

"It represents a serious stumbling block on our way to agree to modalities," said the G10, adding that the communication by the G20, "which to a large extent targets our group and Members in a similar situation, contains requests that would be impossible to accept by any other Member in our position."

"If we want to reach modalities within the next three weeks, all Members will have to show a more constructive attitude and an understanding for each other's sensitivities. It is the last opportunity for Members to engage in realistic positions."

"We do not see, otherwise, how a possible ministerial meeting before the end of the year could be successful. The G20 paper is not however a contribution to this end," the G10 concluded. +