MEMBERS FOCUS ON CHAIR'S 'QUESTIONS' ABOUT WTO AGRICULTURE TALKS

An 'agriculture week' is underway at the WTO, with Members discussing a set of specific questions about each issue that remains unresolved in the contentious Doha Round farm trade talks. Produced by Chair Ambassador Crawford Falconer (New Zealand), the questions were intended to focus Members' formal and informal discussions on how they might overcome their differences. At the 13 February meeting of the Committee on Agriculture Special (negotiating) Session that opened the discussions, Falconer told delegates that they needed to make progress this week in order for them to meet the end-April deadline for 'full modalities' -- including formulas and figures for reducing farm tariffs and subsidies -- that they set themselves at the December Ministerial Conference in Hong Kong. Sources report that although Members expressed agreement with the chair's assessment of the situation, they did little more than re-state past positions at the meeting.

Based primarily on the July 2004 Framework (WT/L/579) and the Hong Kong Declaration (WT/MIN(05)/DEC), the questions focus on issues that Members need to finalise by the end of April. In a note sent to delegations along with the document on February 9, Falconer observed that the long list, which included all three pillars of the agriculture negotiations (i.e., export competition, domestic support, and market access), in addition to cotton, underlined the "huge amount of work" that remained to be done.

He emphasised that while Members have to cover all the issues, the list made clear that "we cannot do everything at once... We will have to accept that we need to start in depth somewhere rather than everywhere." Falconer urged Members to use the week's talks to build "working hypotheses" -- not necessarily full-blown solutions -- on individual issues that would be "without prejudice" to the final outcome of the negotiations. "The only way to swallow the elephant is to do so slice by slice," he said.

Potential for convergence on subsidy thresholds and cuts?

Falconer's 'non-exhaustive list of questions' isolates the sections of both the July Framework and the Hong Kong Declaration relevant to each issue in the farm trade talks, and asks Members about how persistent differences might be bridged, and the negotiating mandate achieved.

On domestic support, Falconer asked Members whether they could accept the threshold values referred to in the agriculture annex (Annex A) of the Hong Kong Declaration for the three bands into which overall trade-distorting domestic subsidy levels would be classified for reduction -- above USD 60 billion, USD 60-10 billion, and under USD 10 billion. Annex A, which was based on the agriculture chair's pre-Hong Kong report on the negotiations, described the range of reductions proposed by Members for each band -- 70-80 percent, 53-75 percent, and 31-70 percent, respectively. Falconer asked Members if they could "find a basis for further convergence" on what the cuts in each band should be. Members were similarly asked if they could come closer to agreement on the percentage cuts to be made to 'amber box' support, as well as if they could resolve their differences on whether the lowest band for such subsidies should extend to USD 12 or 15 billion. According to the Hong Kong Declaration, the EU would be in the top band, the US and Japan in the second, and all other Members in the bottom band.

Members are asked if convergence could be achieved with regard to their varying negotiating positions on how to restrain 'de minimis' support -- the maximum level of exempted trade-distorting subsidisation -- as well as 'blue box' payments that are partially decoupled from production. Both are currently capped for developed countries at 5 percent of the total value of agricultural production. The US in particular wants to ensure that any new rules on the latter allow it to shelter its controversial 'counter-cyclical' grants, which rise when the market price of a product falls, in the blue box.

The list also inquires whether new criteria are necessary to ensure that 'green box' support, which is exempt from reduction commitments, does not distort trade and production.

Members asked about tariff formula, flexibilities

With regard to market access, the pillar on which Members are most deeply divided, the list asks Members how they might achieve further convergence on the thresholds and reductions for each of the four tariff bands, as well as on the level of potential tariff caps for developed and developing countries.

Falconer requested Members to consider how they might narrow their differences on the number of tariff lines that both developed and developing countries would be able to designate as 'sensitive' and thus eligible for lower tariff reductions than those required by the formula, as well as on how to fulfill their mandate to provide a 'substantial improvement' in market access even for such products.

The list also asked Members to specify how many tariff lines developing countries would be able to designate as 'special products,' along with precisely what would be entailed by the "more flexible treatment" for which they would be eligible. It also enjoined them to clarify details about the product coverage and functioning of the 'special safeguard mechanism,' which developing countries would use to protect themselves from import surges.

Members were also asked to define what the Hong Kong mandate on tropical products and cotton would entail in practice.

The only issue that generated controversy at the 13 February committee gathering was preference erosion. Falconer's list cited a paragraph on preference erosion taken from the draft agriculture modalities text put together by a previous chair in 2003 in preparation for the failed Cancun Ministerial Conference (TN/AG/W/1/Rev.1, commonly known as the 'Harbinson' text after the chair), and asked Members about the extent to which it could serve as a basis for addressing preference erosion. For tariff cuts on products that have benefited from longstanding trade preferences, paragraph 16 of the Harbinson text provided for a longer implementation period and a delayed phase-in, so long as the product accounted for a certain percentage of the total exports of the beneficiary country (the bracketed suggestion in the text was 20 percent). At the meeting, Colombia, Costa Rica, and Nicaragua argued that the paragraph could not serve as a basis for discussions, since the Harbinson text had been rejected at Cancun. However, preference beneficiaries Jamaica, Kenya, and Mauritius countered that the July 2004 Framework, which did receive consensus support, specified that sections of the Harbinson text, including the paragraph in question, would "be used as a reference" when addressing preference erosion.

Advancing the negotiations on export competition

With regard to export competition, Falconer asked Members about precisely how they would go about fulfilling the Hong Kong mandate to ensure that "a substantial part" of export subsidies are phased out during the first half of the Doha Round implementation period, ahead of the 2013 date for their complete elimination.

The Hong Kong Declaration requires countries to agree on rules for practices such as export credits, food aid, and state trading enterprises, so that those with effects tantamount to export subsidies can be eliminated by 2013 as well. The chair asked Members about how to develop disciplines on these 'parallel forms' of export support. Specifically with regard to food aid, he requested that they define what would constitute "emergency situations," and consider parameters for the functioning of a 'safe box' through which bona fide food aid could be provided during such emergencies.

Need 'working hypotheses' for next agriculture week

Delegations are currently meeting informally amongst each other as well as with the chair in an attempt to move forward on at least some of the outstanding issues pointed to in Falconer's list of questions. The week's discussions will conclude on 17 February, with another meeting of the Committee on Agriculture Special Session.

Falconer warned Members at the outset of the discussions that if they did not have a more concrete 'working hypothesis starting point' ready in time for the next agriculture week, scheduled for 20-24 March, "all you will have is the prospect of a re-run of this meeting."

The next issue of BRIDGES Weekly will provide an update on the remainder of the
agriculture week.

ICTSD reporting.