WTO Ministerial Section • Volume 7 • Number 20 • 4th June 2003

Agriculture Update: Special Safeguard Mechanism Discussed, Cap Reform Proceeds

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On 27 May, Members of the Committee on Agriculture (CoA) met for technical consultations on a possible new special safeguard mechanism for developing countries. Reportedly, discussions were comprehensive, but only little progress was made on the form and scope of such a new instrument. Interestingly, the US was said to have — in contrast to its usual reactions — shown general sympathy towards the idea of creating a new safeguard mechanism solely open to developing countries. Nevertheless, US Trade Representative Robert Zoellick recently stated at the US Congress Agriculture Committee that the US could only accept a new safeguard that would not be accessible to certain developing country Members, such as exporters of a specific commodity or countries with per capita incomes beyond a certain benchmark. "I can’t do the same thing for Brazil, which is an exporter," Zoellick reportedly told US Congress, referring to concessions the US might to grant net food importing countries in the Caribbean.

According to trade sources, the CoA will continue technical consultations this week from 4-6 June on subjects such as tariff reduction formulas, trade preferences, treatment of vulnerable groups, and non-trade concerns (NTCs).

EU announces advanced farm offer for Cancun

During the 1-3 June G-8 summit held in Evian, France, both French President Jacques Chirac and Romano Prodi, President of the European Commission, announced that the EU would be equipped with a new negotiating mandate providing the European Commission with greater leeway at the forthcoming high-level negotiations at the WTO Ministerial Conference from 10-14 September in Cancun, Mexico. Such an extended mandate would greatly depend on EU member states being able to agree on a reform package for the EU Common Agricultural Policy (CAP) along the lines of a proposal by EU Agriculture Commissioner Fischler. However, Fischler’s proposal to "decouple" CAP subsidies from production [to make them eligible for the Green Box under which Members can subsidise without any reduction commitments] is still heavily opposed by EU member state such as France, Spain and Ireland. Nevertheless, several observers of the CAP mid-term negotiations indicated that there seemed to be some movement in the French position, and France could be willing to accept at least a partial decoupling of trade distorting EU farm support. "There’s a clear consensus emerging, we will get some form of decoupling," an EU official said. He further added that, officially, the French had not yet altered their position on decoupling, but "it looks like the Irish may be moving," he said.

G-8 blamed for "hypocrisy"

Also during the G-8 meeting, Senegalese President Abdoulaye Wade denounced the "hypocrisy" of G-8 leaders who promoted trade liberalisation in developing countries, but continued to heavily subsidise their agricultural sectors. In his response to these accusations, Chirac stressed that "rich countries are ready to assume their responsibilities." Heads of state also confirmed their commitment to work towards providing zero-tariff, quota-free market access for products originating from least developed countries (LDCs). Moreover, they emphasised their commitment to make their preferential trade schemes more efficient and more open to developing countries.

African countries table proposal on cotton subsidies

In related news, four West and Central African (WCA) countries — Benin, Burkina Faso, Chad and Mali — have joined forces to put forward a sectoral initiative at the WTO to eliminate cotton subsidies worldwide in an effort to ensure the survival and development of the cotton sector in their region. Observers have described this issue as a potential "global deal" that could become a "make or break" issue at the next WTO Ministerial meeting in Cancun in September (see BRIDGES Trade BioRes, 2 June 2003). The submission stresses the crucial strategic position of cotton in the development policies and poverty reduction programmes in the WCA region where cotton accounts for up to 80 percent of export earnings in some countries. However, extensive cotton subsidies in rich countries, especially the US, have been displacing WCA cotton producers during the last years, the proposal argues.

To address this problem, the WCA countries are calling for an explicit recognition of cotton as a "special product" with respect to food security, rural development and/or livelihood security concerns. In addition, the countries are calling for the extension of the concept of "special products" from defensive to offensive measures, and for the total elimination of border measures, domestic support and all forms of subsidies for the export of cotton. Given the urgency to ensure the survival of the cotton sector in the WCA region, the countries propose the establishment of a mechanism to phase out support for cotton production with a view to its total elimination ("early harvest") at the Cancun Ministerial meeting. They also advocate the use of transitional measures for least-developed countries (LDC) in the form of financial compensation paid to cotton-producing LDCs "to offset the injury caused by support of production and export".

The WCA countries’ proposal is likely to be put forward at the next meeting of the Trade Negotiations Committee (TNC) on 10 June and be discussed in more detail by the Committee on Agriculture (CoA) during its 26-27 June and 1 July special negotiating session. ICTSD, together with Oxfam and the IDEAS Centre, will be holding a panel entitled "Can Negotiations on Agriculture Deliver Pro-development Reforms? The Case of West African Cotton" on 17 June at the WTO’s Public Symposium in Geneva.

The WCA countries’ submission on cotton is available at http://www.ictsd.org/issarea/ag/index.htm.

ICTSD reporting; "EU trashes out farm reform, French take to streets," REUTERS, 26 May 2003; "Global trade discussions may get a kick-start," DOW JONES, 27 May 2003; "G-8 Summit: developing countries demand better deal on trade; new EU farm offer said coming," WTO REPORTER, 3 June 2003.