TWN Info Service on WTO and Trade Issues (May07/05)

7 May 2007

Agriculture: Criticisms of Chair's paper emerge in capitals and Geneva

Criticisms of the "Challenge Paper" of the WTO's agriculture negotiations Chair have emerged both in the open and at private meetings and discussions.

Public criticism of the paper has been expressed by India's top commerce bureaucrat as well as Japan's agriculture Minister.

Ambassador Crawford Falconer of New Zealand had on 30 April issued his paper.

In Geneva, several developing country delegates have also privately expressed concern how, in their view, the paper has catered more to the concerns of developed countries by giving them more flexibilities, while giving poor treatment to the proposals of a large number of developing countries with defensive interests.

Some senior diplomats raised the fear that the paper would increase rather than decrease the existing polarisation of positions among groups of WTO members.

Below is a report on the emerging concerns.  An informal meeting of the agriculture negotiations will be held on Monday 7 May. 

Best wishes
Martin Khor
TWN

Agriculture: Criticisms of Chair's paper emerge in capitals and Geneva 
By Martin Khor (TWN), Geneva 2 May 2007

Criticisms of the "Challenge Paper" of the WTO's agriculture negotiations Chair have emerged both in the open and at private meetings and discussions.

Public criticism of the paper has been expressed by India's top commerce bureaucrat as well as Japan's agriculture Minister. India and Japan are part of the G6 countries that have been meeting on agriculture issues.

Ambassador Crawford Falconer of New Zealand had on 30 April issued his paper assessing the state of play of the agriculture negotiations, and proposing "centres of gravity" in the form of ranges of numbers for cutting subsidies and tariffs and for designating sensitive and special products.

In Geneva, several developing country delegates have also privately expressed both disappointment and concern over how, in their view, the paper has catered more to the concerns of developed countries by giving them more flexibilities, while giving poor treatment to the proposals of a large number of developing countries with defensive interests.

Some senior diplomats raised the fear that the paper would increase rather than decrease the existing polarisation of positions among groups of WTO members.

Many developing countries are especially upset by the way the paper dismisses the question of the number and treatment of special products, a key instrument advocated by the G33 and supported by other groupings to defend food security and farmers' livelihoods in developing countries.

Falconer today also announced that an informal meeting of the agriculture negotiations (technically called an "informal special session of the Agriculture Committee") will be held on Monday 7 May 2007 at 10.00 am. The meeting can continue into the afternoon.

He told delegations that the objective of the meeting is to hear their initial reactions to the first installment of his paper. Falconer also hopes to distribute the second installment of his paper "in the coming days". This will cover many of the issues not included in the first installment.

In New Delhi, India's Commerce Secretary G. K. Pillai criticised the Falconer paper as being "heavily weighed in favour of the rich countries."

According to a report in the Financial Express, Pillai said that India was in favour of moving the talks further but the paper should be rational, adding: "The draft has given enough leeway to the US by suggesting the subsidy cut number will be in the teens and a cut in lower teens may not be doable.

"We feel the US should make an effective cut in its overall trade-distorting subsidies (TDS) to below $11 billion."

Pillai also said that the paper had favoured the rich countries in relation to tariff cuts in the top band by suggesting a mid-way between 50 and 80 per cent.

Regarding special products for developing countries (where Falconer proposed these should be restricted to 5-8 per cent of tariff lines, compared to the G33 proposal for at least 20%), Pillai said: "The percentage of tariff lines should not be an issue.

"As per the Hong Kong declaration, every developing country should have the right to designate an appropriate number of SPs which may be different from country to country. The process should be guided by indicators."

Another newspaper, the Economic Times, cited Commerce Ministry officials as saying that Falconer's attempt to restrict the number of SPs to just 5-8% of tariff lines went against the mandate of the talks.

"The July framework talks about an appropriate number of SPs based on certain parameters and doesn't say that a numerical restriction should be applied. What is appropriate for India, which has 15 agro-climatic zones and produces hundreds of farm products may not be so far smaller countries," said the official.

The official also criticised the paper's rationale that it would be difficult to convince the US to bring down its trade-distorting domestic subsidies to the early teens from the current $19 billion level. "This means he is referring to a figure of around $16-17 billion. This is way too high to be acceptable to us."

India's main business group, the Federation of Indian Chamber of Commerce and Industry (FICCI) also criticized the Falconer paper, according to another media report from Delhi.

The paper has not only lowered down the ambition for subsidy reduction in developed countries but has also limited the scope of SPs for developing countries, said the FICCI.

On domestic support, FICCI noted significant lowering down of the ambition in reduction of Aggregate Measure of Support (AMS) as compared to the Hong Kong Declaration and also as articulated by G-20.

The Chair's approach may not bring about any effective reduction of subsidies in developed countries, FICCI said. Also, the issue of reviewing disciplines of Green Box support in order to make it minimally trade-distorting has not been covered by the paper.

According to FICCI, the issue of reduction in domestic support in agriculture has to be considered comprehensively by looking at all measures of support, including the Green Box.

On Special Products, the FICCI said the Chair's proposal of having only 5-8 per cent of tariff lines as SPs is in sharp contrast to the July Framework Agreement and the demand of the G-33. The July Framework stated that the developing country members will have the flexibility to designate an appropriate number of SPs and the G33 wanted 20 per cent of total agriculture tariff lines to be designated as SPs, said the Chamber.

The FICCI stressed that to secure and ensure the livelihood and food security of millions of people in developing countries who are dependent on agriculture, SP is the bedrock of agriculture negotiations under the Doha Round.

Meanwhile, Japan's agriculture minister Katsutoshi Matsuoka said during a visit to Geneva that he was unable to accept the paper's proposal that sensitive products be limited to 1-5 per cent of tariff lines. The G10 of which Japan is a member has proposed that there can be 15% of products classified as sensitive products.

The Minister indicated that Japan could not accept a figure of only 5% for sensitive products. According to his Ministry's data, there are 1,326 agricultural tariff lines in Japan. Of these, high tariffs are imposed on 17 tariff lines for rice, 20 for wheat, 56 for sugar and 47 for dairy products. If a limit of 5% is placed, Japan would be able to have only 66 sensitive tariff lines, which is lower than the products with high tariffs, and Japan would have to substantially cut tariffs on many of them.

In Geneva, several developing-country diplomats have also privately expressed that Falconer's paper is biased towards developed countries, catering to their sensitivities, while showing lack of sympathy or sensitivity for the positions of a majority of developing countries with defensive interests.

"The paper is not balanced, as it shows much more flexibility for the US and EU, but poses hard questions for the G33," said a member of the G33 grouping.

A diplomat from another developing country disputed Falconer's claim that in considering the treatment of SPs, exempting any SP from tariff cuts could not be taken as a form of "treatment."

"This leads Falconer to conclude that all SPs have to be subjected to cuts without exception. But this concept itself is not acceptable. For example, in the treatment of LDCs, it is agreed that there is exemption for LDCs from any cuts. So exemption from cuts is part of the options for treatment, including of sensitive products."

Diplomats from G33 countries also stressed that the mandate of Hong Kong and the July framework states that developing countries can self-designate special products. By placing cumbersome conditions regarding how products have to match with indicators measured by internationally-recognised data would deprive countries of being able to implement their right of self-designation.

The Ambassador of a G33 member country remarked: "I don't understand how on the SP issue you can move from a mandate of self-designation, by now inferring an approach to indicators that puts designating a product out of the hands of people who are supposed to self-designate and into the hands of others who will judge whether you meet the standards of an indicator!"

Several senior diplomats raised the concern that while the Falconer paper was supposed to facilitate WTO members to be closer to a consensus, it may have the opposite effect.

"We expected the paper to be something to move us forward, but there is a good chance it will do the opposite," said the Ambassador. "Positions are already polarised, as we know. The paper is in danger of getting countries to dig deeper into their trenches to defend their positions."