Inside US Trade | July 4, 2003
The chairman of multilateral agriculture negotiations faces conflicting pressures from key members in the World Trade Organization on whether to alter his proposal for how members should conduct the negotiations as trade ministers get ready for the next informal meeting in Canada later this month. At the same time, members are failing to heed the chairman's call that they begin negotiating with each other to narrow their differences, according to Geneva sources.
The European Union and Japan are among the members that are pressing Agriculture Chairman Stuart Harbinson to alter his pending proposal, while the U.S. and members of the Cairns Group have been cool to that idea. The issue was raised both at the meetings of the WTO agriculture negotiations group this week as well as the mini-ministerial held in Egypt late last month, sources said.
When the demand emerged in Egypt, it was strongly opposed by U.S. Trade Representative Robert Zoellick and Cairns members such as Australia and Canada, who argued that the Harbinson draft should continue as the basis for negotiations. But when the issue was raised again in the Geneva agriculture negotiations, the U.S. remained silent, sources said. The WTO agriculture negotiating group met on June 26-27 and on July 1.
In response to the demands that he change his pending proposal, Harbinson this week called on members to "focus on developing compromise solutions that are capable of delivering on the further reform objectives enunciated by Ministers at Doha." He indicated that he could not produce a new document without new ideas that would emerge from negotiations of WTO members among themselves, sources said.
But at this point, there are still no signs of engagement by the major players in the talks. "The real negotiations have yet to begin," one Geneva delegation source said. A U.S. private-sector source amplified this point saying nothing will get done in the negotiations "unless Washington and Brussels find a common approach."
In addition to calling on member countries to show flexibility, Harbinson is also setting out to meet privately with U.S. and EU officials in an effort to assess their positions. Harbinson was scheduled to meet with EU Agriculture Commissioner Franz Fischler on July 3 to discuss the new reforms to the Common Agricultural Policy, which member states approved on June 26. EU officials in Geneva have signaled the reform could allow the EU to agree to the reforms on domestic support included in Harbinson's paper, delegation sources said. The EU could also meet the Harbinson paper's call for the eventual elimination of export subsidies, these sources said, although it would likely need an extension of the current nine-year timeframe for eliminating export subsidies.
In this week's meetings, Harbinson said the EU agreement to reform is a timely development that "should also give some impetus to our negotiations." Harbinson next week will visit the U.S., where he will meet Secretary of Agriculture Ann Veneman, U.S. Chief Agriculture Negotiator Allen Johnson, members of the Senate and House Agriculture Committees and members of the House Ways and Means and Senate Finance Committees.
Delegation and private-sector sources pointed to a Montreal meeting July 28-30 of selected WTO trade ministers as the next possible point at which a new framework for agriculture talks could be floated. In the wake of the CAP agreement, U.S. commodity groups are worried that the U.S. might be willing to agree to the Harbinson paper for reform to trade-distorting domestic support, even though this would not meet their demand that a new WTO agreement harmonize allowable limits on trade-distorting support between the U.S. and EU (see related story).
During the formal and informal agriculture committee meetings in Geneva, the EU backed by Japan, Switzerland, Norway and Barbados said the modalities draft issued by Harbinson in February cannot be the basis for future negotiations because it is not balancing the demands of the U.S. and members of the Cairns group with those of the EU and its allies. These members also called for a substantially different text, a Geneva source said. When these countries raised the same issue in Egypt, Singapore Trade Minister George Yeo, who served as the facilitator on agriculture during the meeting, urged Harbinson to come up with a new paper before the Montreal mini-ministerial.
In Geneva, the EU demanded that its views be reflected in Harbinson's report to the Trade Negotiations Committee later this month, which is submitted on his own responsibility.
Members also fought over whether Harbinson's TNC report will mention the peace clause, sources said. Harbinson included the peace clause as one of several key issues that members need to address, even though the peace clause, under which members do not challenge agricultural export subsidies and domestic support through WTO dispute settlement or domestic countervailing duties, is not covered in his draft modalities. The TNC note Harbinson prepared states that participants will be aware that the peace clause is set to expire at the end of 2003.
Brazil and other members of the Cairns group said this should not be included in the TNC note because it is not relevant to the negotiations, since ministers in Doha did not include it in their instructions on agriculture. A delegation source said Harbinson should not make an implicit link between the modalities and the peace clause by including a reference to it in his note to the TNC. But the EU said the question of whether to extend the peace clause is an essential element of a new WTO agreement, a Geneva source said. The U.S. did not comment on this debate on the peace clause.
Cairns members can be expected to use extension of the peace clause as a trump card in the negotiations to secure deeper liberalization, private-sector and delegation sources said.
Much of the Geneva meetings also were taken up by a debate over the terms for two provisions in the Harbinson draft to grant developing countries further special and differential treatment in protecting their agricultural markets. Developing countries themselves are split on the terms, with agricultural exporters joining developed countries in arguing for restrictions on a possible special safeguard for developing countries. They also object to a provision allowing developing countries to designate "special products" which would make them subject to less-stringent tariff reductions.
Indonesia, India and China argued at the June 26 meeting that developing countries should be allowed to self designate products both as SP and as eligible for the special safeguard without special criteria. They said this was necessary to protect vulnerable farmers in developing countries against cheap, subsidized imports.
But Colombia and Chile said specific criteria should be agreed for use of the SP designation and the special safeguard. Without criteria, these countries said, too much emphasis would be placed in the system on protectionist tools that could negate south-south trade instead of attacking the domestic supports and export subsidies used by rich countries.
The SP designation would allow developing countries to designate certain tariff lines as subject to much lower tariff reductions than other products. In Harbinson's draft, an SP product would be subject to a 10 percent average tariff reduction and a 5 percent minimum reduction over 10 years. The special safeguard would be based on the current safeguard used by developed countries in Article 5 of the Agreement on Agriculture and would allow members to place high tariffs on surging imports.
In his meetings with Harbinson, Fischler will not unveil a final EU position on the WTO agriculture negotiations, since there will likely be subsequent meetings between the two, according to a senior EU official. Fischler will push Harbinson to more substantially address EU demands on non-trade concerns such as animal welfare and protections for foods with regional names in a future modalities paper. Fischler also will make clear that the EU cannot agree to any deal that would alter the Uruguay Round categories for domestic subsidies, the official said.
Fischler also will likely underscore the EU's demand that the elimination of the de minimis exemption for trade-distorting support be included in a final deal. The U.S. opposes any change to the two de minimis exemptions included in the Uruguay Round agriculture agreement that allow WTO members to spend beyond their allowable limits on trade-distorting domestic subsidies. The first exemption is equal to 5 percent of the value of production of a country's given product, while the second is equal to 5 percent of a country's total agricultural production.Inside US Trade:
