Bridges Weekly Trade News Digest • Volume 9 • Number 33 • 5th October 2005
Agriculture: Geneva Negotiations Turn To Concrete Numbers
During the week and a half since high-level talks among key WTO Members in Paris from 22-23 October (see BRIDGES Weekly, 28 September 2005), Geneva-based agriculture delegates, joined by capital-based officials, have been engaged in intense negotiations on different ’scenarios’ for cuts in tariffs and domestic support. The EU and the US tabled ideas for these reductions during their bilateral meeting in Paris; these were now expanded upon and circulated to WTO delegations in Geneva.
The Chair of the WTO farm negotiations, New Zealand Ambassador Crawford Falconer, has welcomed the fact that Members are now engaged in real negotiations. He has, however, warned that it is late in the game and that much work remains to be done before the Hong Kong Ministerial Conference in December. On 30 September and 4 October,Falconer convened informal meetings — which he termed ‘clinics’ — as transparency exercises to discuss new developments with the WTO’s broader Membership.
New market access proposals get mixed reviews
Both the EU and the US have tabled market access scenarios based on the approach put forward by the G-20 at a mini-ministerial in Dalian, China in July this year (see BRIDGES Weekly, 13 July 2005). The EU’s scenarios would divide countries’ tariffs into four bands, and allow developing countries to make cuts two-thirds the size of those made by developed countries in equivalent bands. Its four scenarios varied in ambition: the average reductions ranged from 24.5 to 36.4 percent, with tariffs in the highest bands to be cut most steeply. The US, on the other hand, presented a single scenario with significantly steeper cuts, ranging between 55 and 85 percent depending on the level of the current tariff.
In addition to differences in the overall level of ambition, the EU provided for additional flexibility in making tariff cuts, while the US put forward measures for increased harmonisation. The EU proposed adding "pivots" to the formula, meaning tariffs on some products could be reduced by less than the standard percentage cut within a band if this was compensated by a higher-percentage cut for other products within the same band. The US, on the other hand, proposed a harmonising element that would see progressively increasing tariff cuts on products from the low to the high end of each band.
At Falconer’s ‘clinics,’ both the G-10 (agricultural importers mainly from developed countries) and the EU criticised the US approach as too radical, arguing that it could lead to cuts at least as deep as those under earlier US proposals based on the harmonising ‘Swiss’ formula (which cuts higher tariffs more steeply). A number of developing country groupings, including the G-20 and the G-33 countries (which support allowing developing countries to designate Special Products for lower tariff cuts based on food security, livelihood security and rural development criteria), said the US proposal on market access failed to adequately take into account special and differential treatment (S&D) for developing countries. Developed country members of the Cairns Group of agricultural exporters, on the other hand, supported the US proposal.
Members also disagreed on if, or how, to cap tariffs. While the EU has accepted the G-20 proposal to cap developed country tariff lines at 100 percent and those of developing countries at 150 percent, the US suggested capping them at 75 percent and 100 percent, respectively. The G-10 and African, Caribbean and Pacific (ACP) countries expressed discomfort about tariff ceilings in general.
Sensitive products a sensitive issue
The EU saw a trade-off between the extent of flexibility built directly into the formula in the form of pivots and the number of items it would seek to designate as ’sensitive products,’ which would be subject to tariff cuts smaller than those required by the formula. The US, Australia and New Zealand expressed doubts about the EU’s approach, arguing that it would give countries double flexibility, both within the tariff reduction formula and outside it.
The US proposed that in the case of sensitive products with existing tariff rate quotas (TRQs), the quotas should be expanded, in-quota tariffs brought down to zero, and tariffs outside the quotas halved. The US would like to see potential sensitive products without TRQs remain that way, and suggested other options to provide a measure of protection, such as longer phase-in periods for tariff cuts.
Developing country issues, Zurich mini-ministerial next
As negotiations continue to take place in smaller meetings between influential Members, others have complained that they are being left outside the process, unable to properly follow and influence it. The G-33 Chair, Indonesia, made this position clear during the agriculture ‘clinic’ on 4 October. Several countries also said they wanted more attention paid to the development dimension of the talks. Falconer is planning consultations on developing country issues such as Special Products and the Special Safeguard Mechanism during the course of this week.
There are also some rifts among developing countries, specifically between those for which preference erosion is a high priority and those seeking expanded market access, especially with regard to tropical products and products to substitute the cultivation of illegal drugs.
Geneva delegates are permanently ‘on call’ during the period left before Hong Kong, and continue to hold discussions amongst themselves in different configurations. Falconer has said he will hold an informal ‘clinic’ for information sharing on the agriculture negotiations on 7 October. Next week, US Trade Representative Robert Portman has called a mini-ministerial meeting in Zurich, encouraging high-level engagement in the lead-up to the WTO ‘agriculture week’ scheduled to kick off on 17 October.
ICTSD reporting; "WTO farm talks show deep divisions persist," REUTERS, 4 October 2005; "U.S. proposes 75% cap on farm product tariffs," KYODO NEWS, 7 October 2005.