WTO AG TALKS: PROGRESS ON SUBSTANCE MUST DETERMINE DEADLINES, WARN MEMBERS

If trade ministers are indeed to meet in the foreseeable future to try to hammer out a Doha Round deal on cutting tariffs and farm subsidies, their gathering must be scheduled on the basis of substantive progress in the talks and not on arbitrary deadlines, agriculture negotiators from several countries stressed last week.

Most WTO Member delegations broadly welcomed a new potential draft deal from the chair of the agriculture negotiations as a basis for further talks, though they also pointed to areas where they disagreed with his assessment of where consensus might lie.

The 15 February meeting of the agriculture negotiating committee, open to all WTO Members, was their first opportunity to exchange views on the draft text, which set out different options for tariff and subsidy reforms, as well as much-contested exceptions to them (see BRIDGES Weekly, 13 February 2008, http://www.ictsd.org/weekly/08-02-13/story1.htm). Many delegations simply reiterated established positions, sources said.

WTO Director-General Pascal Lamy has said that “it is substance which drives the timing” of the negotiating process. However, he has also proposed that the 8 February release of draft texts on agriculture and industrial tariffs should lead to a ‘horizontal’ negotiating process involving trade-offs across the two negotiating areas (and possibly others), culminating in a ministerial meeting to finalise a ‘modalities’ deal around Easter (23 March this year). Earlier this month, he said that Members had demonstrated “a collective determination to conclude the talks by the end of 2008,” which would require a framework deal on agriculture and industrial goods trade six to eight months earlier.

Agriculture negotiations chair Ambassador Crawford Falconer (New Zealand) has echoed this approach. He told Members at the meeting that starting 18 February, he would begin one or maybe two weeks of informal consultations with an invited group of 37 delegations, representing all the major negotiating blocs. He would hold another ‘transparency meeting’ open to all Members at the end of the week on 22 February, when he would decide whether enough progress was being made to justify another week of informal so-called ‘room E’ consultations.

Many negotiators seem already to be anticipating a second week of discussions.

A number of delegates told Bridges that negotiators would have to do much more to remove from the text the square brackets that indicate areas on which there is no consensus – the number of which many put at around 170. However, this does not necessarily correspond to the number of issues to be resolved, since the text often includes multiple different bracketed options for single issues. Some negotiators have noted that many of the square brackets surround just a few issues that have only recently been discussed in detail – such as the special safeguard mechanism.

Falconer warned Members that the number of unresolved issues would have to come down to around half a dozen to a dozen before ministers could reasonably be invited to Geneva to take decisions on the text.

One source also reported that a number of developing countries - Brazil, India, Pakistan and the African Group - asked the chair to produce a revised version of his text, incorporating any progress achieved in the current room E talks. The chair indicated that he would be open to doing this. The timing for any such revision remained unclear, however. If senior officials are to be presented a text containing fewer options for unresolved issues when they meet, some sort of revision of the text would be necessary, whether as a publicly available text or an informal negotiating document.

Falconer has suggested that Members could remove many of the remaining brackets relatively easily, if really determined to do so. “On a wet Sunday afternoon in Geneva, people with a good will could actually do this in an hour or two”, he told journalists at a press conference after the draft text was released, giving product-specific subsidies as an example.

However, the chair is now focussing discussion on the more complex and controversial questions in the market access talks, whose resolution is widely seen as being less straightforward.

Some negotiators warn that there is “still a lot of work to be done” before the numerous outstanding technical issues, particularly on market access, can be resolved. These include the ‘special products’ which developing countries will be able to shield from tariff cuts on the basis of food security, livelihood security and rural development; the special safeguard mechanism which will allow developing countries to raise tariffs temporarily in the event of import surges and price depressions; and the ‘sensitive products’ which both developed and developing countries will be able to slate for gentler tariff cuts in exchange for expanded import quotas. It remains unclear, however, precisely which issues could be dealt with at a technical level and which would require ministerial involvement.

Some suggested that a sort of two-track process might be envisaged, in which senior negotiators could begin to discuss trade-offs across negotiating areas, while technical work continued on issues such as sensitive agricultural products..

Average tariff cut and SSM controversial

The chair’s inclusion of a 54 percent minimum average tariff cut for developed countries was “hotly debated,” said one negotiator, with another describing this as one of the few “surprises” that the new text had to offer. This provision would require countries to make additional duty cuts in order to meet this figure, in case their tariff structures mean that the tiered reduction formula would result in a lower average reduction.

Whilst the G-20 group of developing countries that had originally proposed this provision welcomed the move, others, such as the EU and G-10 group of countries with highly-protected agricultural sectors, opposed it.

The controversy over this issue continued in the room E consultations held on 18 February, where the EU and G-10 also advocated deleting a footnote that would have excluded from the 54 percent average calculation the extra-steep cuts made on tropical products and products subject to ‘tariff escalation’.

Also controversial was the special safeguard mechanism. The G-33 told the 15 February meeting that the draft text on the special safeguard mechanism (SSM) was “extremely inadequate,” and would “only provide a stringent, restrictive, burdensome, ineffective and non-operational mechanism for developing countries and LDCs”. The group warned that restrictions – the text has options for limiting the range of products to be covered, making the safeguard harder to ‘trigger’, or caps on the additional safeguard duties themselves – should not compromise the mechanism’s effectiveness and operability. The safeguard should be permanently available “as long as there is abnormality and imbalances in the world trading system,” the group said, in a coded reference to rich country farm subsidies. One delegate characterised the chair’s proposal for the SSM as “useless” because of the various potential restrictions.

In meetings on Monday, the EU and G-10 also argued that their permitted allowance of sensitive products should be defined as a percentage of all tariff lines – and not just a share of ‘dutiable’ tariff lines, as currently proposed by the text, which would amount to a lower number. In contrast, the Cairns Group of agricultural exporters argued that tariff lines already bound at zero should be excluded from the calculation.

One trade source also suggested that sensitive products were likely to be discussed further by a small group of countries, outside the room E process convened by Falconer. A group of around eight countries, including Argentina, Australia, Brazil, Canada, the EU, India, Japan and the US, had earlier been meeting on an irregular basis since September to try to achieve greater convergence in their positions. While these meetings have led to some progress, most notably by providing a forum for Members to share information on the domestic consumption data that will be used as the basis for import quota expansion, numerous technical issues remain unsolved (see for example BRIDGES Weekly, 16 January 2008, http://www.ictsd.org/weekly/08-01-16/story1.htm).

Many trade diplomats remain sceptical about prospects for a successful ministerial meeting around Easter, pointing to recent comments by Japan and the US referring to the need to strike a modalities deal by June or July. Each year since 2005 has seen efforts to achieve a modalities breakthrough before the WTO’s August summer holiday. Nevertheless, some developed country negotiators pointed to external political factors such as November’s US presidential elections and the appointment of new EU Commissioners in late 2009 to justify the emphasis on an Easter ministerial and subsequent completion of the round this year.

Next steps

Members were reported to have discussed the tariff reduction formula and sensitive products on 18 February, with tariff escalation, commodities, tariff simplification, the special agricultural safeguard, and tariff rate quota administration for discussion the following day. Special products and the special safeguard mechanism would be discussed later in the week, sources reported. Subsequent developments would depend on Falconer’s verdict on how much progress was being achieved, due in the ‘transparency meeting’ planned for 22 February.

ICTSD reporting.