IN ATTEMPT FOR COMPROMISE, PAKISTAN CIRCULATES IDEAS ON AGRICULTURAL 'SPECIAL PRODUCTS'

In what it has described as an attempt to foster compromise on one of the more contentious issues in the Doha Round agriculture negotiations, Pakistan has circulated an informal paper suggesting options for dealing with 'special products' (SPs). However, its ideas have not found favour with at least some other delegations.

WTO Members have already agreed to let developing countries "self-designate" a proportion of farm products to shield from the full force of tariff cuts, "guided by indicators based on" food security, livelihood security and rural development concerns. The precise number and treatment of SPs remains to be negotiated. However, governments have sharply contrasting objectives in this area, and have thus interpreted the mandate differently.

The G-33 developing countries, the strongest proponents of the SP designation, argue that conditions across the world are too varied for any single set of binding indicators to address effectively all three areas of concern. They want to be allowed to designate up to 20 percent of all products as 'special,' based on their respective assessments of domestic circumstances. In contrast, a few developed and developing country farm exporters - notably the US - want to minimise Members' ability to designate SPs, fearing this could limit their own export opportunities (see BRIDGES Weekly, 3 July 2006).

Pakistan's paper identifies possible ways for Members to reassure trading partners that the SPs they choose would indeed reflect legitimate concerns about food security, livelihood security, and rural development. Pakistan is a member of both the import-sensitive G-33 and the export-oriented Cairns Group countries (as are Indonesia and the Philippines). The paper, which does not purport to represent the views of either group, departs from many of the established positions of the G-33.

Specifically, it suggests that SPs could be required to meet a certain number of indicators out of a total. Both numbers would have to be negotiated. Pakistan acknowledges that common numerical thresholds for all indicators may be difficult to identify.

The informal document considers the option of establishing "negative indicators." These would prevent Members from designating commodities as SPs if this could harm food security, livelihood security or rural development either domestically or in another country. Holding out an olive branch to exporters, Pakistan suggests that these indicators could include products for which developing countries account for more than a threshold percentage of world exports. Individual countries could also be prevented from designating products for which imports from developing countries cumulatively constitute more than a certain percentage of their total. Finally, to prevent SP designation from harming a country's own food security interests, Pakistan proposed excluding staple food products from eligibility if imports represent more than a certain percentage of a country's consumption.

In addition, the paper looked at the possibility of giving countries incentives to choose fewer SPs, such as allowing them to make even smaller tariff reductions if they choose to designate a smaller total number of products. Another option considered is restricting SP status to products with low bound tariffs, or those with little 'overhang' between bound and applied rates.

Pakistan contemplates the option of an overall 'cap' (in terms of a total percentage of tariff lines) on flexibilities for both special and sensitive products. Both developed and developing countries will be allowed to make gentler tariff cuts to some 'sensitive products' in exchange for creating new import quotas. The paper noted, however, that no single number is likely to satisfy all developing countries.

WTO Members also need to determine the extent to which SPs will receive favourable tariff treatment. The G-33 has proposed exempting half of SPs - or up to 10 percent of all tariff lines - from reduction commitments altogether, with reductions rising to no higher than 10 percent on the other half. Exporters such as the US and Thailand have not put forward specific figures for these reduction commitments, but are believed to be opposed to extensive flexibility.

Pakistan's submission examines several potential options for the treatment of SPs. Although it does not put forward specific numbers for tariff reduction commitments, the paper proposes a tiered approach for different groups of 'special' tariff lines similar to that proposed by the G-33. It would have Members negotiate the percentage cuts applicable to each category. The paper also proposes longer implementation periods for SP tariff reduction commitments.

Another suggestion is a tariff cap for SPs that would be higher than that for other products -- the G-33, in contrast, wants them not to be capped at all. Pakistan also proposes expanding import quotas for SPs that already have tariff rate quotas.

Finally, Pakistan floats the idea of excluding SPs from eligibility for the special safeguard mechanism, which has been designed to help developing countries protect farmers from import surges by temporarily raising tariffs beyond bound ceiling levels.

Asked to comment on the paper, one G-33 delegate said it was "very good of Pakistan" to try to see how a compromise could be reached on SPs. However, the negotiator said that the paper's suggestions might "further complicate what's [already] a complex issue in the negotiations" by, for instance, requiring Members to agree on indicators. "This is something that can be helpful at the national level, but I think it will very much complicate the negotiations. I think it's not very convenient at the multilateral level."

ICTSD reporting.