EASTER MINI-MINISTERIAL UNLIKELY, SAYS WTO AG CHAIR

The chair of the WTO agriculture negotiations has admitted what many trade diplomats have been saying privately for some time: a 'mini-ministerial' meeting around Easter to finalise a framework global deal on cutting tariffs and subsidies is not a realistic possibility.

"I can't see myself how ministers could meet in March," Chair Ambassador Crawford Falconer (New Zealand) said on 29 February, reports Reuters. "The way things are going it would require a miracle. April is still possible." Many delegates have been warning for several weeks that the unofficial target date of 'around' Easter -- 23 March this year -- was over-ambitious.

Prospects for convening ministers soon have receded further over the last fortnight, as Members made no progress in informal consultations hosted by Falconer over a revised draft deal he circulated earlier in February (see BRIDGES Weekly, 13 February 2008).

In a bid to resolve some of the many undecided issues in the draft text so as to make it easier for ministers to strike a deal, Falconer had convened so-called 'room E' talks among 37 delegations representing a cross-section of negotiating interests. However, participating officials simply reiterated long-standing positions, rather than attempting to compromise.

Although such posturing may be an inevitable response to a new text, one delegate expressed frustration at the lack of movement. "We don't have time to go through this painful dance," said the source.

Members to meet amongst themselves

Given the lack of progress, the chair did not schedule any meetings for this week. Instead, he encouraged negotiators to meet amongst themselves for private bilateral or small-group discussions. However, one trade source noted with concern that most capital-based officials were just returning home, rather than staying in Geneva to thrash out progress with their counterparts from other countries.

Competitive farm exporters in the Cairns Group claim that progress in the recent talks has been held up by the reluctance of import-sensitive countries to provide complete and accurate data on domestic food consumption. This information will be critical in calculating the expansion of import quotas for the 'sensitive' farm products that both developed and developing countries will be able to shield from the standard tariff cuts. It is therefore of interest to exporters, who are eager for greater access to those potentially lucrative markets. One Cairns Group member said that, in market access, "all our gains from the round will be delivered via sensitive products," to explain the group's reluctance to make concessions elsewhere in the talks without greater clarity in this area.

Over the past two and a half months, Argentina, Australia, Brazil, New Zealand and Uruguay have met sporadically with six countries that expect to use the sensitive product mechanism - the EU, the US, Norway, Japan, Switzerland and Canada. The latter, known informally as the 'data six', have been trying to provide data that will be used as a basis for calculations and further negotiations. After repeated promises, all six made this data available this week - although not for some controversial products, such as cereals or certain dairy products such as yoghurt and ice cream.

There now appears to be tacit agreement that importers will be allowed to designate products at the more detailed eight-digit level under the 'harmonised system' of tariffs, something exporters had previously opposed since it would allow countries to pinpoint protection across a wider range of specific products.

However, negotiators remain divided over the extent to which Members will be allowed to include individual processed products in their domestic consumption figures at the broad product level. Including sugary drinks, for example, could skew sugar consumption figures upwards. Exporters therefore have favoured excluding processed products, whilst importers would like them to be included. A pragmatic approach - excluding products such as communion wafers, but allowing some other processed wheat products - could form the basis of an eventual compromise approach, said one source familiar with the issue.

Falconer warned a 29 February meeting open to all Members that even after the data is submitted, exporting countries would also need time to analyse it and hold discussions with importers.

New willingness to talk?

At the same meeting, Falconer also suggested that one of the few emerging signs of progress was a fresh willingness to talk among opposing camps, notably between Latin American countries that favour rapid liberalisation of trade in tropical products, and the African Caribbean and Pacific (ACP) countries concerned about losing trade preferences for some of the same products. The Latin Americans have clashed repeatedly with the ACP and EU (which grants the ACP group preferences) over whether a few products, in particular bananas and sugar, should be liberalised extra-quickly or extra-slowly (the latter would soften the effects of preference erosion).

Progress may be made on the rival tropical product lists proposed by the Cairns Group and the EU if the two could identify products that were uncontroversial because they overlapped or already faced very low tariffs. A second stage could involve tackling the more controversial products, the chair said, indicating that in the case of a conflict the tropical products approach should prevail, perhaps with an exception for a few products.

Cairns Group countries, which had previously insisted that increased aid was the only way to address preference erosion, were reported now to be willing to contemplate trade-related solutions - a move that has allowed Members to focus discussion on the period for implementing tariff cuts for affected products.

Special products: exporters circulate new paper

The depth of divisions on another issue in the talks, the 'special products' that developing countries alone will be able to shield from tariff cuts, on the basis of food security, livelihood security and rural development concerns, was underlined last week when a group of developed and developing country exporters tabled a new paper. The document, sponsored by Australia, Canada, Costa Rica, Malaysia, New Zealand, Paraguay, Thailand, the United States and Uruguay, proposed restricting the number of special products to no more than 8 percent of tariff lines, to be divided into two tiers of 4 percent each. Products in each tier would be subject to cuts of 25 and 15 percent respectively.

The sponsors of the new paper proposed that an additional category of 'super specials' -- taken from the second tier and representing no more than 1 percent of tariff lines, could be eligible for lower tariff cuts (and could possibly be completely exempt from them). However, these would have to fulfil a series of requirements, such as not accounting for more than a certain percentage of the value of total agricultural imports.

In contrast, the G-33 group of developing countries including Indonesia and China, have proposed allowing up to 20 percent of tariff lines to be designated as special. They insist that 8 percent of tariff lines be exempt from any cut, and have rejected efforts to impose trade-related conditions onto what they argue is essentially a tool to help protect subsistence farmers and rural communities.

Negotiators from the G-33 described the exporters' new proposal as a 'maximalist' negotiating position that is unhelpful in forging consensus at this stage in the talks.

At the 29 February meeting, Falconer warned that the 'indicators' proposed by the G-33 for guiding the selection of special products may be too broad. He implied that one in particular - granting eligibility to any product that has received 'amber' or 'blue' box trade-distorting support in any year since 1995 -- should be discussed further, as it could allow almost any product to be selected as 'special'.

Next steps

Falconer said he would reconvene Members on 10 March to decide what to do next.

Much would depend on the outcome of the private bilateral or small-group discussions being held in the week of 3 March, especially on sensitive products.

In theory, progress in talks on Falconer's draft text and a separate draft deal on industrial goods trade were supposed to set the stage for senior negotiators to come to Geneva to discuss trade-offs across the two negotiating areas, and possibly others. Despite the lack of movement, some trade sources suggested that a two-week 'horizontal' process of senior officials could start in the last week of March. This would, if all goes well, set up a 'long week' starting 7 April for ministers to come together to finalise a deal. Another expected this process to begin around 14 April.

Whenever such a meeting is held - if at all -- a revised text, with greatly reduced numbers of 'square brackets' on issues requiring resolution would be a prerequisite. However, Falconer told Members on 29 February that the sluggish pace of recent discussions made it "virtually inconceivable" that any such text would be ready by 10 March.

ICTSD reporting; "WTO farm talks not moving fast enough - chairman" REUTERS, 29 February 2008.