Inside U.S. Trade | August 20, 2003
Brazil, India and China today presented their own version of a framework for agricultural negotiations in the World Trade Organization as a counterproposal to one championed by the U.S. and European Union last week.
The paper covers all main areas of the agriculture talks, and proposes the elimination of export subsidies, with an earlier deadline for products of interest to developing countries than for other commodities. On market access, the new paper proposes a formula for tariff cuts that would force industrialized countries to do more than developing countries.
The joint proposal is also supported by Argentina, Bolivia, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Mexico, Paraguay, Peru, Philippines, Thailand and South Africa.
On domestic subsidies, the paper calls for the elimination of the "blue box" on domestic support considered less trade-distorting because it is tied to acreage limits, delegation sources said. It also proposes a cap and disciplines "as appropriate" for certain "green box" spending on subsidies considered not or minimally trade-distorting. Some WTO members like Australia have argued that green box subsidies are actually distorting trade.
Specifically, the paper calls for a cap on direct payments to producers such as crop insurance and disaster assistance, which are among the payments covered in paragraphs 5-13 in Annex II of the WTO Agreement on Agriculture. Brazil in particular was frustrated with the lack of any disciplines on green box spending in the U.S.-EU framework, which developed at the request of other WTO members at a meeting of select trade ministers in Montreal last month. The hope was that this framework would spark negotiations, which have been stalled for months.
The new developing country proposal retains a provision in the U.S.-EU framework for all trade-distorting amber box support to be reduced in a range, but adds that this should be done on a product-specific basis. This would make it more difficult to protect subsidies for certain commodities from cuts. It also calls for the elimination of domestic support when that support accounts for a certain percentage of exports.
The paper includes the concept of a "blended" formula for reducing tariffs that is also contained in the U.S.-EU framework. It would mix the harmonizing formula favored by developing countries that are agricultural exporters and the Uruguay Round formula backed by India, but it would only impose this concept on developed countries. For developing countries, the paper envisions a fixed formula reduction for one category of tariffs on sensitive products, with a Swiss harmonizing formula used on a second category, and tariff elimination for a third category.
But tariffs in developing countries would only be subject to an average and minimum tariff cut, and would not be subject to any formula that would impose more substantial tariff reductions on high tariffs.
The paper does not include language in the U.S.-EU draft that envisions backing up tariff cuts on the first category of sensitive products with expanded access under TRQs. That provision in the U.S.-EU framework suggested but did not explicitly require an expansion of TRQs as the U.S. has advocated, Geneva sources said. One official said that this U.S.-EU language could have allowed increased market access through different TRQ management rules that would have led to a higher percentage of filled TRQs, and not through actual expansion.
But the paper does call for all TRQs in developed countries to be expanded by a percentage of domestic consumption, with in-quota tariffs reduced to zero. Developing countries would not have to make any commitments to expand TRQs or reduce in-quota tariffs under the proposal.
The new developing country paper also includes a provision that would allow developing countries to exclude certain sensitive products from formula tariff reductions, leaving conditions for this category of special products to be negotiated. The U.S.-EU framework was heavily criticized by developing countries for not including this concept. Also, the developing country paper would drop paragraph 4 from the U.S.-EU framework, which targeted Brazil and other developing country agriculture exporters in seeking different rules and disciplines on special and differential treatment for developing countries that are net food exporters.
The intent of the new paper is to provide an option separate from the U.S.-EU framework for WTO members to consider at the Cancun ministerial that begins Sept. 10, delegation sources said. The paper is being modeled after the U.S.-EU framework so that there is a potential in Cancun on a convergence between the two papers.
The U.S. is said to be unhappy with the paper as it has the potential to lead to more significant reductions to U.S. domestic subsidies programs, and because it would be less likely to deliver significant market access gains in developing countries than the U.S.-EU framework. Also, introduction of the new paper means the U.S.-EU framework alone would not serve as a new basis for the negotiations if General Council Chairman Carlos Perez del Castillo or Stuart Harbinson, chairman of the WTO agriculture talks, decide to work on a new paper, delegation sources said. The U.S. had hoped the U.S.-EU framework would be the basis for talks in Cancun.
Instead, officials like Castillo or Harbinson would now be likely to use both the U.S.-EU framework and the paper from developing countries as a basis for a new compromise text. The U.S. in private consultations has indicated to some delegations this could lower support for a WTO agriculture deal among U.S. commodity groups, one delegation source said.
A spokesman for the Office of the U.S. Trade Representative said in a prepared statement Aug. 20 that new ideas in agriculture should meet three standards set by the EU-U.S. framework. They should represent ideas different from positions taken over the last two years, should seek to narrow the differences between countries with different negotiating objectives, and should identify approaches that move toward the objective of a market-oriented agriculture system, "particularly by offering ideas that result in meaningful reforms to the policies and programs of the proposing countries."Inside U.S. Trade:
