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Info Service on WTO and Trade Issues (Feb24/07) Geneva, 7 Feb (D. Ravi Kanth) — The United States and Paraguay, on behalf of the Cairns Group of farm- exporting countries, seemingly clashed with the European Union, Switzerland, and Japan on 6 February over negotiating the mandate on domestic support and market access in agriculture, which is expected to be agreed upon, barring opposition, at the World Trade Organization’s 13th ministerial conference (MC13) beginning in Abu Dhabi in three weeks’ time, said people familiar with the discussions. At the continuing discussions on the chair’s draft text on domestic support and market access, which has been somewhat refined during last week’s meetings, the two sides – the US and Paraguay on behalf of the Cairns Group on the one side, and the EU, Switzerland, and Japan, on the other – appear to have traded charges against each other for “derailing” the negotiations, said people who asked not to be quoted. During the discussion on domestic support at the morning session on 6 February, the Cairns Group, coordinated by Australia, initially seems to have added some paragraphs from its proposal Job/AG/243. As previously reported in the SUNS, the Cairns Group’s proposal, titled, “Towards a strengthened negotiation framework in the domestic support pillar – building a comprehensive approach to negotiations on domestic support,” highlighted several issues to be incorporated in the agriculture mandate. In its proposal, the Cairns Group said that it is “committed to achieving greater fairness and a levelling of the playing field in agriculture through comprehensive agriculture trade reform in line with Article 20 of the Agreement on Agriculture. Such reform is essential for addressing global challenges relating to food security, development and livelihoods, and the environment.” It argued: “To ensure a robust and significant reform package, further negotiations among WTO Members could expand on the design and implementation of the overall modalities, including on the levels at which certain thresholds and limits are set; scope and product coverage; product aggregation in Annex II in the context of addressing product-specific support concentration issues; the design and application of a domestic support triggering mechanism; and Annex 2 of the AoA (Agreement on Agriculture).” The US has already supported the Cairns Group proposal, saying that the Agreement on Agriculture already strikes a good balance. The US apparently said that if members seek to change the rules, it must be done within a broader framework of domestic support reform, said people familiar with the proceedings. At the meeting on 6 February, Paraguay added a line that modalities on domestic support should be finalized and concluded at MC 14 (which is expected to be held in Cameroon in 2026), said people familiar with the discussions. In sharp opposition, the EU, Japan, and Switzerland appear to have added their sensitivities to the chair’s draft text that was circulated last week. The EU, for example, made it clear that it does not want Green Box and Blue Box subsidies to be included in the reform discussions that would follow after the Abu Dhabi meeting, if ministers agree on any conclusive agriculture package at MC13, said people who asked not to be quoted. However, the EU appears to have called for including Article 6.2 of the Agreement on Agriculture (AoA) in the reform discussions, an issue that could divide the membership between the industrialized countries that provide hundreds of billions of dollars in agricultural subsidies on the one side, and the developing countries, who want the continuation of Article 6.2 of the AoA without any change, on the other, said people who asked not to be quoted. During last week’s meeting on the chair’s draft text, the African Group and India seem to have sharply opposed attempts to undermine Article 6.2 of the AoA dealing with the “development” box for developing countries, said people familiar with the discussions. “They have created a monster now,” said a farm trade negotiator, who asked not to be identified. “Everyone is adding their sensitivities and are still saying they need to streamline,” the negotiator said. Costa Rica seemingly added some paragraphs from its proposal Job/AG/243, while Paraguay pitched for having concrete modalities by 2026, said people who asked not to be quoted. It appears that one major industrialized country, which is seeking high ambition in both domestic support and market access as well as equivalence between the two areas, is seemingly driving the Cairns Group, particularly Paraguay, to raise the bar very high, said people who asked not to be quoted. Interestingly, Japan, which is a leading member of the G10 group of farm-defensive countries, appears to have maintained at the meeting that it does not want to see any reference to “levelling the playing field” from the alleged “asymmetries” in the Uruguay Round’s Agreement on Agriculture, said people who asked not to be quoted. In turn, somewhat unwittingly, Paraguay appears to be destroying the Cairns Group’s aspirations, said a negotiator from a farm-defensive country. Initially, the chair’s proposals on both domestic support and market access, which were submitted last week, appear to have undergone substantial changes with new additions made during the morning discussion on 6 February, said people who took part in the meeting. Further changes were made on the following language on domestic support: “Members commit to pursue and intensify negotiations on domestic support to [cap/limit and] reduce substantially [proportionately, universally] and progressively [and address] [all forms of/each variety of/every type] trade [and production] distorting domestic support [by an agreed reduction target] in an equitable manner and also improve disciplines in accordance with the reform objective in the AoA and [with an objective to promote repurposing of subsidization programs to less trade distorting forms] [within reasonable timeframe to be agreed by members]/[by [2030]]. [Members agree to work towards adopting modalities by MC14.]” In sharp contrast, the African Group and India are understood to have proposed the need to “[preserve the policy space afforded to the developing countries under Article 6.2 for low income and resource poor farmers],” said people familiar with the discussions. Many developing countries also called for addressing “[existing asymmetries and imbalances in the WTO Agreement on Agriculture by eliminating the final bound AMS (aggregate measurement of support or the most trade-distorting support) within a reasonable timeframe to be agreed by members. Modalities regarding the elimination of FBT AMS entitlements shall be established by the Members with special and differential treatment duly considering the socioeconomic realities of the farm sectors across different levels of development and adopt a per farmer-based approach.]” MARKET ACCESS On the issue of market access, which was discussed in the afternoon session on 6 February, huge arguments seem to have marked the proceedings. The alignment of forces seeking substantial market access and high ambition led by Paraguay, Costa Rica, and the US on the one side, and opposition by the EU, Japan, and Switzerland to any ambition and modalities in market access, on the other, could derail the negotiations, said people who asked not to be quoted. At one point during the discussion on market access on 6 February, it appears that Paraguay accused Switzerland, which is the coordinator of the G10 group of farm-defensive countries, alleging that Switzerland is claiming to be the organizer of the “friends of the system” and then simultaneously “demand us (Cairns Group and Paraguay) to contribute all the time,” said people familiar with the discussions. The US has made known its position that it wants “parity” between domestic support and market access. It suggested that if the level of ambition in domestic support is low, then the same would follow in market access. As previously reported in the SUNS, several changes were made to the chair’s draft text that was issued last week. That text is as follows: “[[These negotiations [may address]/[shall consider addressing] tariff reductions [and other elements such as tariff simplification, tariff escalation, high tariffs and tariff peaks, transparency in changes of applied tariffs, tariff rate quotas, [and] special agricultural safeguards, [preference erosion], [and special safeguard mechanism as detailed in paragraphs … below,] and take into account the interests [and sensitivities] of both importing and exporting Members [including of developing country Members]].] [The sensitivities and food security aspects of importing countries shall be taken into account in these negotiations.] Technical discussions on relevant market access elements [and Members’ proposals] shall support these negotiations, as necessary, to facilitate effective participation by all Members and a common understanding on the elements to be addressed in negotiations.]” The US appears to have proposed that: “[Members’ contributions to the reduction of protection should be fair and equitable and take into account, inter alia, their global market participation, their status as either importers or exporters and the needs of developing Members, as well as the need to encourage a shift towards less trade and production distorting measures.]” Following the discussion on both domestic support and market access on 6 February, more changes are expected in the chair’s draft text, said people who asked not to be quoted. COTTON The Cotton-Four ( C-4) countries – Benin, Burkina Faso, Mali, and Chad – seemed to have demanded during the discussion on cotton on 5 February that they want modest ambition to achieve a concrete reduction in domestic support by MC14, said people who asked not to be quoted. The C-4 countries have considerably lowered their ambition to enable members to finalize an agreement but there is little hope that something would emerge because of alleged opposition from the US, said people who asked not to be quoted. At the session on cotton on 5 February, the US appears to have brought the issue of market access into the picture by saying that the mandate is not only for reducing subsidies, and that Washington wants to look at protection and market access, said people who asked not to be quoted. However, the African Group, Nigeria, India, Australia, and even the EU seem to have questioned the US stance on cotton, saying that the expectation is to work more on domestic support and that it is incorrect to diffuse the issue, said people who asked not to be quoted. The US position on cotton market access seems to be directed against China and India, which have high tariffs on cotton, said people who asked not to be quoted. In sharp response, China asked members to consider its duty-free and quota-free (DFQF) market access for cotton, adding that it imports cotton from the C-4 countries through the LDC-specific scheme for cotton, said people who asked not to be quoted. Given the ongoing tensions between the two trans-Atlantic giants, namely the US and the EU, on several issues concerning domestic support and market access in agriculture, there are growing fears that things could unravel in the ongoing negotiations on a mandate on agriculture at Abu Dhabi, said people who asked not to be quoted. +
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