from: BRIDGES Weekly Trade News Digest / Vol. 4, Number 44
Agricultural liberalisation was a topical issue this past week as meetings were convened by both the WTO Committee on Agriculture, 14-15 November and the Fourth Special Session of the Committee on Agriculture, 15-17 November. Meanwhile, corresponding negotiations that sought to regulate the use of export credits in agricultural commodity trade were underway at the Organization for Economic Cooperation and Development (OECD). Debates at both fora on agriculture policy this past week underscore the persistent sensitivities over agriculture in the world trade system.
Fourth Special Session of the Committee on Agriculture
As per Article 20 of the AoA, Members are mandated to negotiate agreed disciplines on export subsidies, domestic support and market access. To do so, the Committee on Agriculture established the Special Session. Thus far, the Article 20 Special Session has met four times to consider both proposals and discussion papers, and the actual negotiation process is set to begin in mid-2001. (For more on the Article 20 process visit the WTO website at http://www.wto.org/english/tratop_e/agric_e/agric_e.htm).
At the Special Session, in total seven proposals were tabled: a US proposal on Tariff Rate Quotas; 2 proposals -- one on domestic support and one on market access -- the transition economies of eastern and central europe; an ASEAN proposal on special and differential treatment; a Cairns Group (excluding Canada) proposal on market access; and two submissions outstanding from the Third Special Session, one on 'non-trade concerns' (from approximately 30 countries) and one on export subsidies submitted by the Southern Cone Common Market (Mercosur -- including Argentina, Brazil, Paraguay and Uruguay).
Non-Trade Concerns Garner Major Attention
Noteworthy among these was the proposal on 'non-trade concerns' (NTCs). The proposal is itself comprised of six specific papers, each detailing some aspect of NTCs, all of which were presented at a NTCs and agriculture conference in Norway this past summer. NTCs refer to issues such as the social and environmental benefits of agricultural production and food security. The discussion on the topic lasted for six hours at the WTO, suggesting that NTCs are considered a substantial issue by most countries.
In general, Members agreed that most countries have NTCs. However, there was considerable disagreement as to how each should be addressed in the context of trade negotiations. Specifically, the Cairns Group argued that green box measures (Annex 2 of the AoA) -- those which have "no, or at most minimal, trade distorting effects or effect on production..." -- are sufficient to address non-trade concerns. Other countries, Norway for example, counter-argued that some countries require trade-distorting subsidies to adequately address their non-trade concerns. Also at issue was that the language of 'non-trade concerns' should be disaggregated to better capture specialised cases.
For example, Argentina argued that Japan, which is a net-food importer, should not have access to 'food security' related subsidies, since it has a substantial enough foreign exchange to pay for food imports. Finally, there was debate as to whether NTCs could be addressed adequately by a single set of rules governing all Members, or whether NTCs are better suited to regionally distinct disciplines.
Special Cases
Three other proposals are directly relevant to the trade-sustainable development nexus, notably the two tabled by the Eastern European bloc (transition economies) and one by the Association of Southeast Asian Nations (ASEAN). The transition economies paper is important because it signals both a willingness on the part of those countries to actively engage the negotiating process, but also that the present negotiating context does not fully recognise their unique situation. The ASEAN proposal is similar, but it uses the concept of Special and Differential Treatment outlined in the so-called 'Enabling Clause' to make its case. There are four members of ASEAN that also maintain membership in the Cairns Group. These are Indonesia, Malaysia, the Philippines and Thailand.
The next meeting of the Special Session of the Committee on Agriculture is confirmed for 5-7 February 2001. On 28-29 March 2001, the Special Session will take stock of its progress thus far and set out modalities and rules for the actual negotiations process.
WTO Committee on Agriculture
Debate at last week's regular sitting of the Committee on Agriculture followed two recurring agricultural themes, namely the use of tariff rate quotas and export credit schemes.
TRQs
On the issue of tariff rate quotas, the Committee discussed notifications from Colombia (G/AG/N/COL/21), Japan (G/AG/N/JPN/58) and Norway (G/AG/N/NOR/27) on the fill rates of certain tariff rate quotas (a tariff rate quota specifies the volume and duty on specific import categories). At issue was the proposition that unfilled quotas suggest that some other technical barrier aside from the actual TRQ itself is impeding the import of TQR regulated products. In particular, major agricultural exporters such as the US, Argentina, Australia and New Zealand asked Japan to explain why so many of its import quotas on agricultural products went unfilled in 1999. Japan's response was that internal market conditions, such as low domestic demand, account for the underfill. Underfill was reported by Japan in product categories such as dairy goods, dried vegetables, and rice.
Export Credits
On the issue of export credits, the Committee responded to a request from the WTO General Council on the treatment of export credits. Export credits generally take the form of export loan guarantees and are considered by many as a method for countries to circumvent their export subsidy commitments. Others on the other hand consider export credits to be an acceptable way of marketing agriculture commodities. They are also considered among the broader basket of implementation issues currently being discussed at the General Council. Several Members acknowledged that negotiations on export credit disciplines were coincidently ongoing in the OECD, but were unwilling to recognise these disciplines as applicable to WTO rules. Instead, they argued that under Article 10.2 of the WTO Agreement on Agriculture (AoA), Members are obligated to seek export credit disciplines at the WTO. These Members included the EU and several large Cairns Group (agriculture-exporting) Members.
OECD Discussion on Export Credits Falters
The ongoing Discussion at the OECD on the use of export credits in agricultural commodity trade broke down last week over disagreement between the US and several Cairns Group countries on state trading enterprises and the amortisation periods for export loans. Presently, US rules allow debtors three years to pay back state-guaranteed loans used to purchase US farm commodities. At the OECD talks, the US conceded that it could reduce this time to 18 months, but Canada and Australia, for example, both argued that this payback term was still uncompetitive and should be further reduced to 12 months. Also, the US wanted Canada and Australia to report on the credit terms extended by their state-trading enterprises even though these loans are not state-guaranteed.
"OECD Talks On Agriculture Credits End Without Agreement," INSIDE US TRADE, 17 November 2000; "WTO Review Of Japan Highlights Need For Structural, Agricultural Reform," INSIDE US TRADE, 17 November 2000; "Agriculture Exporters Express Concern On Japanese Tariff Quotas on Diary Products," WTO REPORTER, 16 November 2000; "Cairns Group, Multifunctionality Camp Fight To Win Over Third World in WTO Farm Talks," 15 November 2000; ICTSD Internal Files.:
