G-20, G-33 MINISTERS UNDERLINE PRIORITIES BEFORE "DECISIVE PHASE" IN DOHA TALKS

Ministers and top officials from a wide range of developing countries came to Geneva on 11 June to express solidarity and call for action on their countries' concerns, as the troubled Doha round talks enter what they described as a "decisive phase." They reiterated calls for rich countries, especially the US, to offer deeper farm subsidy cuts; several warned that they would not accept disproportionate demands to reduce their own industrial tariffs.

Representatives from the G-20, the leading group of developing countries, met to discuss the 'state of play' of the agriculture negotiations. This came ahead of a meeting in Potsdam next week at which ministers from G-20 members India and Brazil will try to hash out differences with their counterparts from the EU and the US. Senior officials from the four trading powers - together dubbed the G-4 - are meeting in Paris this week to prepare for the 19-22 June summit in Germany.

Also present in Geneva was the G-33 group, a coalition that wants developing countries to be allowed to shield some commodities from liberalisation in order to respond to rural development and food and livelihood security needs. The group includes several countries that are also part of the G-20, including China, India, Indonesia, and the Philippines.

The G-20 met with the coordinators of other developing country regional alliances such as the African Group and the African, Caribbean, and Pacific (ACP) Group, as well as with interest-specific blocs such as the G-33, the least-developed countries (LDCs), the small and vulnerable economies (SVEs), and the 'Cotton-4' group of West African nations seeking cotton trade reform. Also present was the coordinator of the NAMA-11 alliance on industrial tariffs.

Talks shift into new gear

Trade diplomats report that the agriculture talks have shifted into a new gear as the chair of the negotiating group, Ambassador Crawford Falconer (New Zealand), seeks to shepherd Members towards agreement by the end of July. After issuing a two-part 'challenges' paper that tried to identify the terms of a plausible agreement on many issues in the talks, Falconer held a series of intensive consultations to gauge delegations' reactions (see BRIDGES Weekly, 6 June 2007, http://www.ictsd.org/weekly/07-06-06/story2.htm).

In statements issued after their respective meetings, the G-20 and G-33 indicated that they believed that the round could be concluded by the year's end, and emphasised their willingness to work constructively towards this goal. Most observers say that meeting this timeframe would require an end-July deal on modalities - the contentious formulae and figures for calculating tariff and subsidy cuts, and exceptions to these. At the same time, both blocs served notice that they would not yield on some negotiating positions. They called for the 'development round' to respond to developing country needs, with the G-33 highlighting the fact that these countries represent more than two-thirds of the WTO membership.

The G-20 suggested that there was "growing support for the view" that the bloc's positions on market access, domestic support, and export competition constitute the "balanced centre of gravity in the agricultural negotiations."

Domestic support

The G-20 called for "real and effective cuts" to farm subsidies, signalling that they would not let the US get away with capping subsidies far above current spending levels.

The group declared that a "low-teen" number in billions of US dollars reflects the "only possible outcome" for the limit on overall trade-distorting support (OTDS) by the US. This announcement came in response to Falconer's assessment that a realistic 'centre of gravity' for an agreement lies "certainly below 19 [billion USD] and somewhere above the very low teens." The chair later clarified that by "low teens" he meant anything in double digits.

Washington has offered to bind its OTDS at roughly USD 22.5 billion, already well above the USD 19 billion it paid out to farmers in 2001, let alone the USD 11 billion that some governments estimate it spent last year. (The decline in spending was due to subsidy programmes that cut payments when commodity prices rise.)

Sources familiar with the G-33's discussions said that participants agreed that further concessions would be impossible without progress on levels of overall trade-distorting support.

Market access

The G-20 argued that their proposal represents "the most balanced possible outcome" on market access, "combining ambition together with respect for the sensitivities of developing countries." The bloc's call for developed countries to slash farm tariffs by an average of 54 percent falls between the EU's formal proposal for a 39-percent cut and the US' favoured 66-percent reduction, and thus in the middle of the 'centre of gravity' zone identified by the chair. In recent weeks, there have also been suggestions that the Cairns Group farm exporters and even the US might be able to water down their demands to accept the G-20's proposal for developed countries to cut tariffs above 75 percent by three-quarters.

Notably, G-33 members insisted that some special products should be completely exempt from tariff reduction, rebutting Falconer's suggestion that all tariff lines should be subject to some minimum cut. They emphasised that the mandate on special products does not require developing countries to guarantee exporters a minimum level of new market access, whether through tariff cuts or new import quotas.

The G-33 welcomed the US' newly expressed willingness to engage on indicators relating to rural development and food and livelihood security, which are meant to help guide developing countries' selection of 'special products'. Washington had earlier refused to debate this issue, insisting instead that Members agree first on the permitted number of tariff lines, which it said should not exceed five. However, the US now argues that these indicators must be based on 'internationally-verifiable data'. This has prompted some G-33 Members to counter that this standard far exceeds that which is usually required for other data on tariffs and subsidies at the WTO. While the US favours using data collected by bodies such as the UN's Food and Agriculture Organisation (FAO), they say that these statistics are in any case based on national data, and may not be comprehensive. Some Members, such as Canada and New Zealand, were reported to be moving towards a less demanding standard of 'publicly available data'.

The G-33 reiterated its belief that the indicators that its member governments agreed at a March meeting in Jakarta should form the basis for discussions (see BRIDGES Weekly, 28 March 2007, http://www.ictsd.org/weekly/07-03-28/story1.htm). That list, a trimmed-down version of an earlier one, included considerations such as a product's share in the total value of agricultural production or household agricultural income.

The bloc also reiterated the importance of a relatively easy-to-invoke 'special safeguard mechanism' (SSM) that developing countries will be able to use to raise tariffs temporarily above their bound ceiling levels to protect farmers from import surges and price depressions. The group stressed that the new mechanism should be "more favourable" than the existing 'special safeguard', which most developing countries have been unable to use.

The group's statement reaffirmed its unity and shared commitment to common goals, following an April proposal by G-33 member Pakistan that suggested that Members should be allowed less flexibility to protect special products than what the coalition had previously agreed.

The chair is now widely expected to issue a draft 'modalities' paper some time in the last week of June, after the Potsdam meeting. This document would in principle be a basis for finalising an overall agriculture deal, setting out formulae and figures for subsidy and tariff cuts, and exceptions. Falconer would thus have to try to fill the gaps that Members have failed to bridge. Delegations will be given a chance to react to this paper, which might lead to a revised version in July.

ICTSD reporting.