TWN Info Service on WTO and Trade Issues (June 07/06)

14 June  2007

Agriculture talks intensify in WTO but is the action still elsewhere?

Below is a report of the situation on WTO agriculture talks as at 1 June, when an informal small-group discussion took place on the second instalment of the Chair's second instalment of his Challenge Paper.  The first topic discussed was SSM.

With best wishes
Martin Khor
TWN

Agriculture talks intensify in WTO but is the action still elsewhere?

By Martin Khor (TWN), Geneva, 1 June 2007

There has been a flurry of discussions at the WTO among a small group of about 20 chosen members on agriculture since 22 May.

No breakthroughs have been achieved. But the talks have got some of the WTO members back into the habit of talking to one another, even on sensitive topics such as domestic support, tariff cuts, special products (SP), and special safeguard mechanism (SSM).

Today, the small-group discussion started on responses to the second installment of the "Challenge Paper" of the chair of the agriculture negotiations, Ambassador Crawford Falconer of New Zealand.

The first topic was SSM, which is proposed for use by developing countries, to protect their small farmers, in response to import volume surges or import price declines.

According to a trade diplomat, Falconer put forward the proposition that the SSM should be more flexible than the existing special safeguard (SSG), if there is a decision to retain the SSG.

Some G33 members said that even if the SSG were to be abolished, the new SSM (to be used by developing countries) should have more flexibilities than the SSG, which is mainly used by developed countries.

A few countries (Costa Rica, Uruguay and Argentina) did not agree on the SSM being more flexible than the SSG, said the diplomat. However, other countries present at the meeting did not object to the principle put forward by Falconer at the start of the meeting, and this was a step forward, said the diplomat, since previously, there had not been an understanding that the SSM would have more flexibility.

The US did not comment on the issue of 'extra flexibility'. It however voiced the view that the SSG should be abolished.

G33 members indicated that they were not in agreement with the implications in Falconer's second installment paper regarding when the price-related and volume-related triggers could come into effect for the SSM to be used, nor with the remedies (the extent to which import duties can be raised when the triggers come into effect).

The WTO meetings have been confined to two representatives for each of the 20 or 25 members invited into the small WTO room where they are held. Although major countries (such as the US, EU, Canada, Japan, Australia, India, and Brazil) are always invited, the composition of the rest of the small group may change depending on the topic discussed.

The small-group meetings in agriculture are the most significant part of the implementation of the resumption of the multilateral process of the Doha negotiations.

However, the meetings at the WTO are still taking place under the shadow of the series of meetings of the G4 (comprising the US, EU, Brazil and India). Most delegates are of the view that these G4 talks are still where the "real action" is.

They are convinced that the US or EU in particular will not reveal any changes in their positions (regarding what they are offering especially on market access and domestic support in agriculture) at the WTO, until after they have done so and reached agreement at the G4 meetings.

The US has been taking the initiative of arranging for bilateral Ministerial meetings with its G4 partners. The US Trade Representative Susan Schwab met with the EU Trade Commissioner Peter Mandelson in Brussels on Friday (1 June), together with the US Agriculture Secretary and the EU's Agriculture Commissioner.

Schwab is scheduled to move on to London where she is to meet on Saturday (2 June) with Brazilian Minister Celson Amorim. She also plans to meet soon with Indian officials, according to a USTR statement.

In turn, Amorim is scheduled to move on from his London meeting with Schwab to India on Sunday (accompanying Brazilian President Luiz Inacio Lula da Silva on a state visit), and to meet Mandelson on 9 June in Geneva.

The G4 Ministers are scheduled to meet as a group on 19-22 June (in a European city to be decided upon) in what Amorim has termed a "decisive meeting". He told the media in Brasilia that the meeting would be decisive "because there isn't much time left". Things are advancing, though there still has to be a convergence, he said.

The clock was ticking on the Doha Round, and it should finish by the end of the year or in the first days of the next year, added Amorim, because it would be "much more difficult to gain approval in the US Congress in the throes of an election campaign" (referring to the US Presidential elections in November 2008).

This timeframe requires a politiucal evaluation of the numbers and rules of an agreement by the end of July and a definition of the details of its application in September, said Amorim.

On agricultural subsidies, Amorim said that the EU made a resonable proposal, and the US is moving, a "conditional movement", while Brazil is prepared to make some concessions in the industrial sector.

G4 senior officials have also been meeting in Paris and in Geneva in the past days.

To prepare for the G4 Ministerial, the G20 will hold a Ministerial meeting in Geneva on 11 June, according to Amorim.

Also in Geneva, on the same day, the NAMA 11 group will hold a Ministerial meeting in the afternoon, to take advantage of the preseence of the G20 Ministers, according to a NAMA 11 source in Geneva.

While there are signs of a growing movement in these Doha talks, in terms of the numbers of meetings and papers, the goal of reaching consensus among the wider WTO membership seems to be just as difficult to reach.

In the corridors of the WTO, several senior diplomats from the African and ACP groups expressed disappointment and dissatisfaction with the second installment of Falconer's "Challenge paper."

In the view of one Ambassador, the paper takes the stance that other WTO members have to give in to the wishes of the "big players" (the US and EU) as the paper dismisses the positions and demands of developing countries as something that is "undoable", "unrealistic" or wishful thinking.

"The paper is preparing the ground for acceding to the weaknesses of the major countries, in that they don't have to make much concessions on issues like Green Box disciplines, while the developing countries have to give in by having their demands not met in SSM, preference erosion and commodities," said the Ambassador.

Another senior diplomat, whose country belongs to the NAMA 11, remarked that the developed countries were still attempting to escape from having to fulfil their own obligations in both agriculture and NAMA, by inadequate reductions in agricultural domestic support and lax disciplines in the Green Box, and a coefficient of 10 in NAMA which allowed them to cut their industrial tariffs by only 20-plus per cent.

Yet they have been piling on the pressure to get developing countries to accept a coefficient of 15 in NAMA, which would cut average bound tariffs by 60-plus per cent and therefore cut significantly into their applied levels, as something to extract for their not doing anything significant in agriculture, said the diplomat.

A source from the Indian delegation meanwhile indicated that even if the US and EU were to strike a deal that the US overall trade distorting support could have a ceiling of $16-17 billion, this would not be an adequate enough level and could not be accepted.

The political situation in India, where the farming communities and farmers' organisations find it unacceptable for their interests to be compromised, makes it not possible for India to give in to the demands of the major developed countries, said the Indian diplomat.

According to another trade diplomat, at the agriculture small-group discussion at the end of last week, the positions of various members had remained the same as to what should be the maximum level of the United States' total trade-distorting domestic support: the EU wanted it to be $15 billion, and India and Brazil wanted $12 billion. The US did not make a comment on this. +