International Trade Reporter | Volume 19 Number 7 | February 14, 2002 | By Daniel Pruzin
GENEVA--Major agricultural trading nations have thrown cold water on calls from developing countries for the creation of a "development box" exempting them from liberalization commitments made as part of the new Doha round of trade talks. A group of nine developing countries--Cuba, the Dominican Republic, El Salvador, Honduras, Kenya, Nigeria, Pakistan, Sri Lanka, and Zimbabwe--put forward a joint proposal at a Feb. 4-7 special negotiating session on agriculture at the World Trade Organization outlining their ideas on how the "development box" would work. The phrase reflects the terminology under the WTO's Agriculture Agreement, which divides domestic support for farmers into trade-distorting "amber box," nontrade-distorting "green box," and production-linked "blue box" subsidies.
The special negotiating session is part of the WTO's talks on the further liberalization of farm trade, talks which began in early 2000 and have now been wrapped up into the new Doha round launched last November.
Under the joint proposal, developing countries should be allowed to exempt so-called basic food security crops from subsidy reductions and other commitments and renegotiate low tariff bindings on these crops. Subsidies used to increase production of staple crops, to provide credit to farmers aimed at improving their competitiveness and marketing, and to lower transportation costs should also be considered exempt from WTO reduction commitments.
In addition, the proposal calls for the creation of a simplified safeguard mechanism for developing countries that could be used to respond to surging imports of food security crops as well as the possible creation of penalty measure to be applied when subsidized farm imports displace domestic production in developing countries.
Developing Nations Peace Clause
The proposal also calls for developing countries to be exempt from any legal challenges once the so-called "peace clause" on WTO disputes involving farm subsidy programs expires at the end of 2003, as long as the programs qualify as "green box" subsidies or under special and differential treatment provisions of the Agriculture Agreement. But the United States, the 18-member Cairns Group, and even the European Union were critical of the proposal. U.S. officials said it was important for all members to reduce trade-distorting measures and cited the declaration adopted at the WTO's Nov. 9-14 ministerial conference in Doha, where members committed themselves to "substantial improvements" in market access for farm exports, as the principle to be followed in the negotiations.
U.S. officials also said the idea of allowing developing countries to pick and choose products which could be exempt from liberalization commitments and to maintain or even increase tariff-binding levels was inconsistent with the Doha mandate calling on all WTO members to make commitments on all farm goods.
Cairns Group members Argentina, Chile, and Thailand said the idea of giving developing countries more flexibility to use domestic support was not in their interest, since these countries do not have large amounts of money to spend on farm subsidies. They also said WTO members needed to encourage more trade among developing countries and should not take measures that would hinder this. Fellow Cairns member Australia said it could not support a development box that would exempt countries from further agricultural reform commitments.
The European Union was more circumspect in its criticisms. David Roberts, deputy director-general for international affairs at the European Commission's agriculture directorate, said that the EU does "not believe that it would be in the interest of developing countries to accept the idea that they should actually increase their tariffs. ... All forecasters agree that the greatest potential for increase in agricultural trade lies in increasing demand in developing countries."
Roberts nevertheless said the EU "recognizes that developing countries may require more flexibility than developed countries in the case of domestic subsidies" and that Brussels has already put forward a proposal calling for an increase in the minimum domestic support levels that would automatically be exempted from subsidy reduction commitments.
Copyright c 2002 by The Bureau of National Affairs, Inc., Washington D.C.International Trade Reporter:
