Bridges Weekly Trade News Digest • Volume 9 • Number 31 • 21st September 2005
EU-US Bilateral AG Talks Pave The Way For Progress In Geneva?
While the first ‘agriculture week’ after the WTO August recess was underway in Geneva, the EU and the US held high-level bilateral meetings in Washington from 13-14 September. EU Trade Commissioner Peter Mandelson met his counterpart, US Trade Representative Rob Portman. They were joined by EU Agriculture Commissioner Mariann Fischer Boel and US Agriculture Secretary Mike Johanns. Both sides expressed their satisfaction with the discussions, which will continue in Paris from 22-23 September, where they are set to meet with counterparts from Brazil and India in an effort to find a way forward in the stalled Doha Round trade negotiations.
WTO Director-General Pascal Lamy told the press in Geneva that "it is necessary that [the EU and the US] advance on some issues to allow the rest to be unblocked." The chair of the farm trade talks at the WTO, Ambassador Crawford Falconer of New Zealand, also welcomed the EU-US bilateral efforts, noting that "some momentum from that corner" was a precondition for movement in the agriculture negotiations.
Parallel movement required; EU-US talks to focus on "scenarios"
The US and the EU have divergent interests in the agriculture talks. The US wants expanded market access for its agricultural products, and is reluctant to commit to further reductions in domestic support without guarantees of opened markets elsewhere. In an earlier stage of the talks, the US managed to have its counter-cyclical payments classified in the ‘Blue Box’ for partially decoupled production-limiting programmes, which are subject to less stringent cuts than trade-distorting ‘Amber Box’ subsidies. Other countries would like to see steeper cuts to these grants.
Though it remains the largest subsidiser in terms of total financial support to farms, the EU, after reforming its Common Agricultural Policy (CAP) in 2003 and offering to eliminate export subsidies, is reluctant to make further concessions in the area of domestic support. Market access will also be difficult to achieve — the EU stresses that it already is the world’s largest importer of agricultural products from developing countries. In the current talks, the EU is pushing for flexibility in the designation of ’sensitive products,’ which will be subject to more lenient tariff cuts than those required for other commodities.
However, following the bilateral meetings, officials noted that the two powers had agreed to work together on moving forward in parallel. This would require the US to agree to cuts in the area of domestic support, while the EU would move on market access. In practice, the two will begin to discuss "scenarios," considering potential figures for the depth and timeframe for reducing subsidies and tariffs. The EU will present data on scenarios for their sensitive products. They will be basing their discussions on a G-20 compromise proposal for the agriculture negotiations that was first made at a July mini-ministerial meeting in Dalian, China (see BRIDGES Weekly, 13 July 2005). "It is not perfect from our point of view, nor is it from the EU point of view, but it does provide a basis for discussions," said Portman of the formula.
After the meetings, Fischer-Boel said "I’m more optimistic about the next weeks than I was before we arrived… We have stopped talking across each other and are talking to each other. We are going from the process and onto the substance of the negotiations."
Portman emphasised that "What we need to see is real market access in order for us to consider subsidy reform… We also need to see that they reduce their subsidies more than we do."
Bush: ready to scrap ag support
Meanwhile, at the UN World Summit in New York (see related story, this issue), US President George W. Bush directly addressed the issue of farm trade. In his 14 September address to assembled world leaders, he called on them to eliminate trade-distorting agricultural subsidies, and to eliminate tariffs and other barriers facing farmers worldwide. Reiterating a call he made in July at the G-8 summit at Gleneagles, Bush pledged that the US was prepared to eliminate all tariffs and subsidies and other barriers to trade in goods and services — if other countries do so as well (see BRIDGES Weekly, 13 July 2005).
The impact of the current high-level political focus on the actual agriculture negotiations in Geneva remains to be seen, and illustrates the tension between calls for political impetus and leadership by the big players on the one hand, and the need for consensus-building and an inclusive approach on the other. As one senior US trade delegate pointed out, bilateral agreement on key points is not enough to move the agriculture talks forward. Both the EU and US have said they realise that they need to be sensitive to the interests of the Membership as a whole, and engage with all of the different groups in the negotiations.
ICTSD reporting; "Key WTO mediator: next week’s Paris mini-ministerial crucial for advancing trade round," ASSOCIATED PRESS, 16 September 2005; "US trade chief hopeful on farm trade talks," REUTERS, 16 September 2005; "U.S., EU trade negotiators pledge intensified effort to get deal in agriculture," ASSOCIATED PRESS, 14 September 2005.