Eight Latin American WTO Members have put forward a new proposal seeking the elimination of all duties and quotas on tropical agricultural products. The proposal quickly drew fire from the EU, as well as from several countries that currently benefit from preferential access to the EU market.

According to the July 2004 Framework Agreement (WT/L/579), the "full implementation of the long-standing commitment to achieve the fullest liberalisation of trade in tropical agricultural products [...] is overdue and will be addressed effectively in the market access negotiations."

Bolivia, Colombia, Costa Rica, Ecuador, Guatemala, Nicaragua, Panama and Peru circulated their new proposal on 28 April. In it, they interpreted 'fullest liberalisation' to mean the complete, expeditious elimination of tariffs and quotas on tropical products, which they defined as "products growing between the Tropic of Cancer and the Tropic of Capricorn." Furthermore, they argued that no tropical product should be eligible for designation as 'sensitive,' as this would allow Members to partially shield such products from tariff cuts. The sponsors of the proposal called for identical treatment for 'alternative products' which could replace the cultivation of illicit narcotic crops.

The proposal specifically mentions several product categories, including such tariff lines as sugar and bananas, but not rice.

The EU and several African, Caribbean and Pacific (ACP) countries strongly opposed both the proposal's liberalisation demands as well as its list of products. The EU said that the list could account for up to half of all agricultural products.

Many ACP countries, whose bananas and sugar have preferential access to the EU, would like Brussels to designate tropical products as 'sensitive' -- in direct opposition to the eight Latin American countries. Allowing the EU to retain higher MFN tariffs for these products would enhance the effective value of their trade preferences.

ICTSD reporting.

WTO MEMBERS EXPRESS SOME SUPPORT FOR COTTON PROPOSAL

At the WTO Cotton Sub-Committee meeting held on 28 April, several Members expressed support for various aspects of the submission from Benin, Burkina Faso, Chad, and Mali calling for trade-distorting subsidies for cotton to be cut more deeply and quickly than those for other agricultural commodities (see BRIDGES Weekly, 5 April 2006). The so-called 'cotton four' have proposed a formula for cuts to cotton subsidies over and above the general reduction, in order to ensure that they would be cut steeply even if the overall reduction were relatively modest. The size of the supplemental cut would decrease as the ambition of the general cut increased.

At this meeting, which was delegations' second opportunity to react to the proposal, the US hailed Members' enthusiasm for the deep cuts in the cotton four's proposal, and expressed the hope that this would be reflected in their level of ambition for the farm trade talks as a whole, cotton included. The US, which heavily subsidies its cotton farmers, had earlier expressed opposition to the proposal, arguing that it risked distracting Members from their pursuit of an overall agreement on agriculture.

Egypt called for technical discussions on the proposal similar to those currently underway in the agriculture negotiations. Chair Ambassador Crawford Falconer (New Zealand) said that these would be necessary, but should not overlap with those being held for the overall talks.

On the development aspect of the cotton talks, the Secretariat reported that cotton projects sponsored by bilateral donors and multilateral institutions were functioning well, and had been buttressed by domestic cotton sector reforms. It also said that it was collaborating with international financial institutions to examine potential future cotton-related development assistance

The next meeting of the Sub-Committtee is tentatively scheduled for 8 June.

ICTSD reporting.