AGRICULTURE: CHAIR REPORTS ON STATUS QUO WITH A VIEW TO HONG KONG

Ambassador Crawford Falconer of New Zealand, the Chair of the WTO agriculture negotiations, presented Members with his draft report on the state of the agriculture negotiations on 22 November. In a brief meeting the same day, delegates provided their first reactions -- generally positive -- to the report.

Delegations have scaled down their expectations for the sixth WTO ministerial meeting to be held in Hong Kong from 13-18 December, recognising that they will not be in a position to agree on full modalities, i.e., specific numerical values and formulae for tariff cuts (see BRIDGES Weekly, 16 November 2005).

Falconer acknowledged this fact in his draft report, and sought to provide an "objective factual summary of where the negotiations have reached at this time," albeit one that could "orient" further discussion, as per Members' request. He particularly underlined the need for Members to build on progress that has taken place over the last few months. "You don't close divergences by taking time off to have a cup of tea," the report warned. "If you do so, you will find that everyone has moved backwards in the meantime."

A range of numbers included on domestic support

In the report, Falconer described the main offers on the table in each of the three pillars of the agriculture negotiations -- domestic subsidies, export competition, and market access -- often by providing ranges of figures that encompassed the different numbers that Members had put forward.

A table outlined convergence towards three bands for cutting overall trade-distorting domestic support. Proposals for cutting ceiling support levels over USD 60 billion ranged between 70-80 percent; from USD 10-60 billion by between 53-75 percent; and under USD 10 billion by 31-70 percent. Similarly, Members generally agreed on three bands -- but different reductions -- for Amber Box (trade distorting support) cuts. As with the reductions to overall domestic support, the EU would fall into the uppermost tier and the US in the middle one. The position of Japan remained unclear.

On the lower levels of 'de minimis' support -- the maximum level of exempted trade-distorting subsidisation -- Falconer noted that Members could generally agree that developed countries should cut the limit for such subsidies by between 50-80 percent from the current level of 5 percent of the total value of agricultural production. The situation with regard to developing countries was more open, with proposals on the table to exempt them from having to make any reductions, or to undertake cuts two-thirds the size of those made by developed countries. The report takes note of the different approaches with regard to how to further constrain Blue Box subsidies, which are to be partially de-coupled from production: for instance, the ceiling level could be lowered, or new and stricter criteria introduced.

On the review of the Green Box (decoupled, non-trade distorting subsidies), Falconer noted that Members remain in two camps: those that wish to see current disciplines remain intact, and those that want the criteria tightened. Members have also opened up to the idea of including new rules to better accommodate developing country issues and needs in the Green Box.

Responding to the draft report, some countries expressed the view that it had provided disproportionately more detail on domestic support than the other pillars, given that a range of numbers had been included in the body of the text (numbers on market access, for instance, are present only in footnotes). They emphasised that each element was contingent on progress in the other pillars as well as the overall talks. The US has said that its offer to cut domestic subsidies depends on further movement by the EU on market access, whereas the EU's proposal is strongly linked to progress in areas such as industrial market access and services by other Members.

End date for export subsidies yet to be decided

On export competition, Falconer noted that Members would have to settle on an end-date for export subsidies, which they have agreed to phase out. He also noted Members' positions diverged on some of the other export competition issues under review, namely export credits, state trading enterprises and food aid.

"Substantial progress" needed on market access

Falconer noted some general contours of agreement in the market access pillars, including the idea of classifying tariffs into four different bands, with linear-type reductions within each band. However, the report points out that Members remain far apart with regard to the depth of the actual cuts -- a footnote provides tables containing the wide range of figures proposed for tariff thresholds and reductions.

Members also differ, the report points out, in their approaches to tariff caps and the treatment and number of sensitive products (slated for milder tariff cuts), as well as how to accord special and differential treatment to developing countries.

Furthermore, the Falconer text provided an outline of where negotiations stand with regard to Special Products (SPs, products that developing countries would be able to designate for low or no tariff cuts based on food security, livelihood, and rural development concerns) and a Special Safeguard Mechanism (SSM), which developing countries would be able to use to protect themselves against import surges. He noted divergence over how SPs should be designated, with some Members preferring the use of an illustrative list of indicators used by individual countries as the basis for their selection process for SPs, and others a multilaterally agreed list against which proposed products would be screened. Falconer also took note of the G-33's (the proponents of SPs and the SSM) recent proposal that developing countries be allowed to designate 20 percent of their tariff lines as special, but noted that their suggestions had not yet been discussed by the Membership as a whole.

Ag report to be included in draft ministerial declaration

A number of negotiating group Chairs have provided similar draft reports to WTO Director-General Pascal Lamy, who is expected to provide a first draft of the full ministerial text on 25 November. This text is set to be discussed in the Trade Negotiations Committee on 30 November, which will be followed by a meeting of the General Council from 1-2 December.

Falconer's report is available at http://www.ictsd.org/ministerial/hongkong/docs/05-11-22_ag_draft_report.pdf.

ICTSD reporting.