AG NEGOTIATORS TWIDDLE THUMBS AS TRADING POWERS SAY NO PROGRESS MADE IN LONDON

A series of bilateral talks between five major trading powers last week in London made no significant progress in the deadlocked Doha Round negotiations and were simply 'exploratory', according to officials from the participating countries. Negotiators from other countries appear to be growing impatient with the lack of movement.

Sources indicate that the meetings in the UK capital involved senior representatives from the EU, the US, India and Brazil, with some participation by their Japanese counterparts. They met bilaterally, rather than jointly, to sound out options for moving out of the impasse.

Regular meetings of the multilateral negotiating committees at WTO headquarters resumed earlier this month, even though governments had not come forward with the concrete new offers of tariff and subsidy cuts originally thought necessary to end a six-month hiatus (see BRIDGES Weekly, 14 February 2007).

Nevertheless, Geneva-based trade diplomats have generally suggested that progress in the talks is more likely to occur in smaller, informal discussions such as those in London. This did not happen last week, delegates from some of the Members present there reported to an informal 'special session' of the agriculture negotiating committee on 23 February.

Without specifically mentioning London, delegates from the countries present there acknowledged that a variety of bilateral and other meetings had taken place in recent weeks. Officials have been quite reticent about the details of these talks, which some trade analysts took as a positive sign suggesting potentially-controversial progress, however incremental.

In any case, the EU representative told the agriculture negotiating committee that some steps forward had been taken, but that differences persisted. Indian Ambassador Ujal Singh Bhatia reportedly said that nothing tangible had emerged from the various bilateral talks, and that Members remained wedded to their established positions.

One source told Bridges that at the meeting in London, officials did not attempt to negotiate concessions on specific issues, and did not discuss numbers for tariff and subsidy cuts or future import quotas. Instead, their talks had simply been 'exploratory' in nature, to try to better understand where flexibilities might lie.

Delegates in the agriculture committee in Geneva broadly recognised that small group and bilateral discussions were important. Nevertheless, many urged the group of five Members (sometimes dubbed the G-4 plus Japan) to 'multilateralise' the negotiations - i.e., bring them back to the multilateral setting - as soon as they could.

One developing country delegate said that formally restarting talks in the absence of concrete changes in position risked leaving Members in Geneva increasingly frustrated with the lack of progress. The diplomat pointed to the irony of the current situation: the wheels of the WTO's negotiating process had been set in motion once again, but negotiators were attending meetings simply in order to try to learn what was being discussed elsewhere.

Ag chair ponders text

Agriculture negotiations Chair Ambassador Crawford Falconer (New Zealand) appeared to share some of these concerns. He told Members at the 23 February gathering that extended consultations outside the multilateral forum could cause anxiety to build up "within weeks rather than months."

As at the previous meeting, the agriculture chair had indicated his intention to produce some sort of updated document to serve as a basis for future discussions: whether a revised version of his June 2006 paper on "draft possible modalities" that covered the spectrum of virtually all the proposals that Members had made in the negotiations, or a series of updated 'reference papers' in which he could point to Members' convergence or differences on specific issue areas. This would allow him to reflect areas of progress that had emerged since the talks were suspended last summer, he suggested.

Even if bilateral consultations do not produce results in a few weeks time, Falconer indicated that he would still go ahead and put out a new paper, unless Members tell him otherwise. He did, however, emphasise that such a paper would be better if it could reflect the views of key delegations.

Trade sources suggested that Falconer is likely to hesitate before circulating a new text in the absence of clear signals from the major players. They say that he will be reluctant to "push the button" on a new modalities document unless he is reasonably sure that it could command a degree of consensus among Members.

Some Members worried about exclusion from quotas

Falconer reported on his recent 'fireside chats' with ambassadors from close to two dozen Member delegations. He said that the first examined the sort of rules that might be used to prevent countries from concentrating their domestic farm subsidies on a handful of products (with greater potential to distort production and trade).

The second focused on the 'sensitive products' on which both developed and developing countries will be able to make relatively smaller tariff cuts in return for creating new import quotas. Falconer said he had the impression that Members had little appetite for discussing the issue since they were waiting for 'movement elsewhere'.

Notably, he added that some Members feared that attempts to broker a deal on agricultural market access might end up with the key players agreeing to have import quotas assigned to specific countries in order to guarantee them a certain amount of export opportunities.

Country-specific tariff rate quotas may prove politically unfeasible - that is, unable to win consensus support at the WTO. And the July 2004 Framework agreement says that the new import quotas created for sensitive products should be opened to all Members on a non-discriminatory basis. However, country-specific quotas could still conceivably be legally permissible.

The rules for administering quantitative import restrictions set out in GATT Article XIII allow Members to divide up an import quota in agreement with all countries "having a substantial interest in supplying" the product in question. Moreover, they potentially allow Members to unilaterally allocate parts of a quota to each of the "substantial" suppliers of the product - so long as these shares are based upon the relative proportion of imports that each supplier had accounted for "during a previous representative period." The article does not clarify what a "substantial interest" means. Broadly speaking, quotas are not supposed to significantly alter the market shares that countries would get in their absence.

It is noteworthy that several country-specific tariff quotas currently exist in the WTO - they were created during the Uruguay Round in order to ensure that Members would not lose pre-existing levels of market access.

Nevertheless, it is unclear whether new tariff rate quotas created as part of the Doha Round would pass muster with Article XIII unless they were either open to all Members or agreed to with all suppliers. Any government that sets up a country-specific quota system that leaves some Members dissatisfied would be liable to be dragged into dispute settlement, as the EU learned with its banana import regime.

Falconer's informal meetings appear set to continue in the coming weeks. He has said that he is planning a 'fireside chat' on agricultural market access issues of particular interest to developing countries. These include the 'special products' that they will be able to shield from regular tariff reduction for food security, livelihood security, and rural development concerns, and a 'special safeguard mechanism' against import surges. Both issues have divided the G-33 bloc of developing countries from farm exporters concerned about diminished future market access opportunities.

Different member groups have also been meeting to discuss different aspects of the farm trade talks. G-20 members are trying to refine their positions. The Cairns Group is expected to come up with new papers on sensitive and tropical products.

The next meeting of the agriculture negotiating committee is expected to be held around 9 March.

ICTSD reporting; "The Law of International Trade In Agricultural Products," by Melaku Geboye Desta (Kluwer Law International, 2002); "International Trade Regulation," Thomas Cottier and Matthias Oesch eds. (Staempfli and Cameron May, 2005).