AG CONSULTATIONS 'PRETTY GOOD' BUT NOT ENOUGH, SAYS FALCONER

The chair of the troubled WTO agriculture negotiations on 30 May said that a round of consultations with a group of about 20 Members was "slightly more positive" than expected, but did not point the way to any imminent bridging of divisions in the talks.

Chair Ambassador Crawford Falconer (New Zealand) held a series of informal consultations with negotiators, covering export competition and domestic support from 22-25 May, and market access on 29-30 May. The object of the meetings was to gauge Members' reactions to a 30 April 'challenges' paper in which he outlined parameters for what he deemed to be a plausible potential agreement on some of the most contentious issues in the talks, including tariff and subsidy cuts. Reporting on the consultations to a 30 May informal session of the agriculture committee, Falconer said that they had been "pretty good… but at this stage we needed something that was spectacularly good."

Trade sources familiar with the discussions reported that they had been "productive and engaged". While there was no immediate progress towards consensus, negotiators were explaining clearly the difficulties which they would have with certain concessions, and discussing what would and would not work for them. Issues being discussed by the so-called 'G-4' - the US, Brazil, India, and the EU -- were also being brought into the consultation process, which delegates described as positive.

Another source who present in the meetings reported that some subtle flexibilities were evident on domestic support, although these were conditional. Negotiators from the EU and the US were exploring possible concessions, by describing different scenarios in which movement might be possible. Falconer said that there had even been a constructive discussion, with rare hints of flexibility, on the 'special products' that developing countries will be able to shelter from the full force of tariff cuts for food and livelihood security and rural development concerns.

One delegate expressed concern, however, that persistent differences could make it difficult for the chair to draft a revised 'modalities' document with formulae and numbers by the middle or end of June.

Falconer issued a second 'challenges' paper to Members on 25 May, and is set to hold consultations on it on 1 June.

Further coverage of the consultations will be provided in the next issue of BRIDGES Weekly.

ICTSD reporting.

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FTA US ASKS FOR PANEL TO INVESTIGATE INDIAN TARIFFS ON WINE AND SPIRITS

The US on 25 May requested the establishment of a WTO dispute panel to investigate its claim that India is levying illegally high duties on foreign wines and spirits. Washington initiated its complaint on 6 March, requesting consultations with India regarding the taxes.

The crux of the dispute is a series of additional charges that the US claims that New Delhi applies to imported wines and spirits, pushing total taxes as high as 550 percent -- well in excess of the country's bound tariff ceilings of 150 percent (see BRIDGES Weekly, 7 March 2007).

The US government claims that as a result of these taxes, total sales of American wine and liquor in India have grown slowly, even though duty-free sales to airports and luxury hotels in the fast-growing economy more than doubled between 2000 and 2005.

"We believe that the layers of customs duties India applies to US products, in particular to wine and distilled spirits, are not in line with its WTO commitments," said US Trade Representative Susan Schwab. "We must ensure a level playing field for US products around the world."

A WTO dispute panel was established in April to examine a similar complaint from the EU (see BRIDGES Weekly, 25 April 2007).

Indian press reports suggest that New Delhi may slash liquor and wine taxes within one month.

ICTSD reporting; "United States requests WTO panel in challenge of India's duties on wine and spirits and other imports from the United States," USTR NEWS, 25 May 2007; "US wants WTO probe of Indian duties on wine and spirits," ASSOCIATED PRESS, 26 May 2007; "Mallya effect: Govt to cut import duty on liquor," FINANCIAL EXPRESS, 30 May 2007.