MARKET ACCESS KICK-STARTS DEBATE ON CHAIR'S DRAFT WTO AG DEAL

Market access issues have dominated the start of a three-week phase of intensive consultations by the chair of the WTO agriculture negotiations.

The talks, centring on the draft agreement text issued in July by Chair Ambassador Crawford Falconer (New Zealand), are widely seen as an especially serious 'make-or-break' moment for the Doha Round, with delegates warning that substantial progress is needed now if any deal is to be achieved.

Falconer has been meeting with Members in groups of varying size and composition in an attempt to search for ways forward on different issues in the contentious negotiations. He is expected to revise the parameters set out in his paper based on what he hears.

Since talks resumed on 3 September, Falconer has held invitation-only 'Room E' consultations with a group of 36 delegations representing a broad range of different interests in the negotiations, first on market access issues specific to developed countries, followed by talks this week on developing country market access. Alongside these afternoon sessions, delegates have continued to meet with members of their respective negotiating blocs to share information and strategise.

Some took the chair's decision to break for WTO holidays on 6 and 7 September - ostensibly for Members to hold consultations amongst each other - as a sign that the talks would not proceed at the fast pace originally anticipated.

In addition to the 'Room E' consultations (named for the room at WTO headquarters in which they take place), sources report that Falconer has also convened a small group of countries focusing specifically on technical issues around the protection of 'sensitive products'.

A similar group, meeting on their own initiative, is seeking to identify potential ways to achieve consensus on various issues: this is composed of eight major trading powers (Argentina, Australia, Brazil, Canada, the EU, India, Japan and the US), supplemented by other Members with a strong interest in the particular matter under discussion.

Sensitive products: Members explore options

Sources suggest that Members have paid special attention to arrangements for the 'sensitive products' which both developed and developing countries will be able to slate for gentler tariff reductions in exchange for expanded import quotas. While the EU and the G-10 group of countries with highly-protected farm sectors want to minimise quota expansion and preserve substantial flexibility to make lower tariff cuts, this has been opposed by the US and the Cairns Group of agricultural exporters.

In particular, agriculture negotiators have been exploring the implications of allowing countries to designate sensitive products at the more specific '8-digit' level of the Harmonised System used for classifying tariff lines. The Cairns Group had previously proposed that sensitive products be classified at the level of the current tariff quota - this, in practice, would often mean the much more general 4-digit or 6-digit level.

In principle, designating sensitive products at the more detailed 8-digit level would allow importing countries to pick and choose among specific products, protecting, say, certain types of beef products without having to use up their allotment on less sensitive ones. Exporters would stand to benefit from a less specific designation.

Negotiators also discussed the implications of the two approaches in light of data on domestic consumption, the principal measure used to determine the future size of tariff rate quotas.

Delegates report that they have neared consensus on the share of dutiable tariff lines eligible for designation as sensitive: this is believed to approximate the 4 to 6 percent figure in Falconer's draft text. However, the HS level at which they are designated is an important variable which would affect countries' export interests and import-related anxieties.

Members also looked at the issue of tariff quota administration, where Cairns Group countries have criticised their more heavily-protected trading partners for restricting imports with excessive amounts of red tape. Exporters called for more discipline on quota management, with penalties for countries that fail to fill their import quotas.

Special products: Members discuss data, indicators

On 11 and 12 September, the chair convened 'Room E' meetings to discuss protection for the 'special products' which developing countries alone will be able to slate for gentler tariff cuts on the basis of food security, livelihood security and rural development criteria. Members were also due to discuss arrangements for the special safeguard mechanism, intended to afford developing countries a level of protection against import surges.

The chair's draft text contained few specific provisions on both issues; Members are aiming to fill in the gaps. Falconer did suggest that delegates base discussions of how to determine special products on a list of indicators prepared by the G-33. This group of developing countries has championed the notion of allowing special products to remain substantially protected.

However, when challenged by Falconer, exporters pushing to minimise restrictions on future market access voiced opposition to this idea. One of the G-33's proposed indicators is a product's proportion in the total value of agricultural production or household agricultural income. Importance to women and disadvantaged communities is another. G-33 members argued that a product should only have to qualify under at least one indicator in order to qualify as 'special'.

Falconer warned exporters seeking universally-applicable thresholds for each indicator that it may be unrealistic to expect Members to reach agreement on conditions that could apply to all developing countries at once. At his suggestion, delegates were expected to discuss the G-33's indicators one by one on 12 September.

Members have already agreed that developing countries will be able to "self-designate" special products. The G-33 cautioned that any requirements for selection indicators to be transparent, objective and verifiable -- as recommended by the chair -- should not undermine this ability.

In response to an earlier debate about whether the data measured against the indicators and thresholds should be 'internationally-verifiable', sources say that Canada reported that relevant international data held by the UN Food and Agriculture Organisation (FAO) appeared to be available for all G-33 member countries. The G-33 had previously questioned the comprehensiveness of FAO data, suggesting that national data may be more appropriate (see BRIDGES Weekly, 13 June 2007).

The G-33 broadly welcomed a separate suggestion in Falconer's text for Members to move away from a one-size-fits-all indicators approach and instead try to first reach agreement on a minimum proportion of special products that would be available to all developing countries.

Moving forward quickly?

Agriculture negotiators in Geneva were rushing between meetings, with many reporting satisfaction with the pace at which talks were proceeding.

One described the consultations as "very intense and very focused", whilst emphasising that, the momentum risked being lost if rapid progress was not made soon. Another, however, said the talks were moving slower than anticipated, and suggested that not all major players were really engaged.

Next steps

Falconer has told delegates that he plans to address a series of other issues related to developing country market access this week. These include preference erosion; duty- and quota-free market access for products from least-developed countries (LDCs); special treatment for small and vulnerable economies (SVEs) and for recently-acceded WTO Members.

He is then expected to turn his attention to the controversial issue of domestic subsidies, and then to export competition issues. Many governments argue that any breakthrough in Doha Round talks will be impossible unless the US offers a lower cap on its trade-distorting farm spending.

Meanwhile, Falconer has scheduled a meeting open to all Members on 14 September in order to communicate the results of his small-group consultations and take stock of progress.

Negotiators indicated that the current round of consultations was unlikely to last much longer than three weeks in total, after which the chair would give delegates a fortnight's break as he prepared a revised draft text, expected in mid-October.

Some delegates speculate that WTO Director-General Pascal Lamy may try to convene a 'mini-ministerial' meeting at some point in the next couple of months, although others warn that this is unlikely unless a draft agreement is close to conclusion.

If the Doha Round is not concluded by early 2008, trade officials expect a lengthy if not indefinite hibernation period as elections in the US and India leave negotiators even more constrained.

ICTSD reporting.