NEW AG DRAFT TEXT DELAYED BY DIFFERENCES ON SENSITIVE PRODUCTS DATA

Progress in the Doha Round agriculture talks is unlikely unless a handful of competitive farm exporters and major import markets manage to resolve some technical issues affecting future market-opening for the 'sensitive' agricultural products eligible for gentler tariff cuts, the chair of the WTO negotiating committee suggested last week.

Agreement among the five exporters and some six importers would be necessary before the issue can be discussed by the WTO Membership as a whole, Chair Ambassador Crawford Falconer (New Zealand) told the negotiating committee on 14 March.

Falconer urged the two camps to reach a compromise during their ongoing meetings, in which they are looking at individual products to see how different countries' anxieties might be addressed. These consultations are intended to create a coherent methodology that could address their specific concerns while also being applicable to the WTO membership as a whole.

One day earlier, on 13 March, participants at an invitation-only 'green room' meeting convened by WTO Director-General Pascal Lamy agreed that sensitive farm products was one of the key issues on which Members would have to make progress in order to move towards a 'horizontal' negotiation process of cross-sectoral tradeoffs between agriculture and manufacturing trade, a crucial prerequisite for a broader agreement. The other such issues included the relationship between overall post-Doha manufacturing tariff levels and the extent to which developing countries will be able to shield industrial products from tariff reduction (see related story, this issue).

As part of a potential Doha round deal, all WTO Members will be allowed to make smaller-than-normal tariff cuts on some sensitive farm products, in exchange for expanded import quotas.

The extent to which these quotas expand will be based on domestic consumption - which is why consumption data from target markets is significant. However, the availability of such data may be a problem, particularly at the level of specificity (8-digit level of the harmonised system) at which importers would like to designate sensitive products in order to be able to pinpoint protection over a broader range of products.

Exporters Argentina, Australia, Brazil, New Zealand, and Uruguay had been discussing such data for months with major markets Canada, the EU, Japan, Norway, Switzerland, and the US. And when the importers finally came through with detailed data two weeks ago, the exporters complained that the figures would imply even less market-opening than they had anticipated for products such as rice and sugar.

Domestic consumption figures - and the consequent expansion in tariff rate quotas - will vary significantly based on technical considerations such as the level of detail at which commodities are designated as sensitive (certain cuts of beef versus beef in general, for example), or how processed products are factored in to the calculation.

At the time of writing on 19 March, capital-based officials from the countries in question were trying to reach a consensus on how to account for processed products in consumption data. Processed products are contentious because the way in which their ingredients are counted could heavily affect an importing country's domestic consumption levels, and thus the size of its future import quotas.

For instance, including all of the sugar used in soft drinks would lead to a much higher figure for domestic sugar consumption - which is precisely why importers are keen to avoid doing just that.

Officials are looking at ways to address importers' concerns about specific products, and then reverse-engineer that into an overall solution that could then be discussed with the broader Membership, in an attempt to find a compromise acceptable to all parties. One approach would have ingredients in processed foods count less than their equivalent primary commodities in the calculation of domestic consumption - with a 'coefficient' of some sort determining how much less. Although many of the countries in the consultations have expressed support for this, Japan has not, fearing that the concept would fail to address its concerns about certain specific products.

According to a source involved in the discussions, "you can hear that the sense of urgency is being felt." Another official said that the talks were moving forward, albeit very slowly.

Negotiators are aware that if a compromise on sensitive products cannot be reached soon, it will threaten their chances for concluding the round this year.

Falconer told the negotiating committee that further progress would be necessary for him to revise the draft agreement text he circulated to Members on 8 February. New texts, on agriculture as well as non-agricultural market access (NAMA), will be a prerequisite for starting horizontal negotiations.

The agriculture chair said that if the countries discussing sensitive product data managed to sort out their differences, the issue could then be addressed in the so-called 'Room E' meetings involving a representative group of about three dozen delegations. This in turn, Falconer suggested, could unlock other issues, such as tropical products, tariff escalation on more processed forms of commodities, and the 'special products' that developing countries alone will be able to shield from tariff reduction for food and livelihood security reasons.

Some delegates suggest that a revised text might be circulated in the first week of April, or even the last week of March. Regardless of whether there is progress, Falconer is expected to convene a Room 'E' meeting by 31 March.

ICTSD reporting.