TRADE MINISTERS MEET FOR LAST-DITCH SHOT AT WTO DEAL

30 June 2006

TRADE MINISTERS MEET FOR LAST-DITCH SHOT AT WTO DEAL

Ministers meeting in Geneva from 29 June to 3 July will have to overcome substantial disagreements if they are to finalise an elusive WTO trade deal this year. Negotiations are likely to focus on US farm subsidies, EU agricultural tariffs and developing country industrial tariffs. WTO Director-General Pascal Lamy has long identified these as a 'triangle' of issues on which more movement is needed if a breakthrough is to be achieved. On 30 June, he suggested that the high-level meeting was likely the last opportunity to make key decisions necessary for the Doha Round trade talks to be finalised by the year-end target.

The intensive talks are being held in the awareness that, if the talks are not completed by the end of 2006, it may be difficult for the WTO to reach any agreement in coming years because the Bush administration's authority to negotiate and submit trade deals to Congress as a yes or no vote, without the possibility of major amendments, expires in early 2007. The so-called "mini-ministerial" is thus the most major WTO meeting since the Hong Kong Ministerial Conference in December 2005 (see Bridges Trade BioRes, 9 December 2005), with some trade sources suggesting that it might be even more important to the future of the organization.

A deal on numbers and rules in agriculture and NAMA negotiations will enable WTO Members to take up other issues critical to sustainable development including fisheries subsidies, environmental goods and services, disclosure requirements in patent applications and services negotiations.

Agriculture negotiations a major sticking point

A draft agriculture text circulated on 22 June highlights the hundreds of outstanding issues on which WTO Members differ. The 74-page document includes almost every proposal put forward by negotiators in recent months, reflecting persistent divergences that have prevented consensus text from emerging. Ministers are expected to focus on a few key political issues that are crucial to unlocking the stalemate, rather than working through the draft from start to finish.

On market access for agricultural products, countries differ dramatically on the tariff cuts which developed and developing countries should make. The US has proposed slashing average farm tariffs by 66 percent, and the G-20 group of developing countries led by Brazil and India has called for a 54 percent cut. While the EU has claimed their own proposal would involve a 46 percent reduction, others say it would only amount to 39 percent. Members have rejected the chair's suggestion that consensus may be likely to emerge somewhere in the region of the G-20 proposal.

Also contentious is the number and treatment of 'sensitive products' - a category of products which developed and developing countries will be allowed to earmark for shallower tariff cuts because of any number of political or economic reasons. The G-10 group of countries with highly-protected farm sectors wants 15 percent of dutiable tariff lines to be eligible, but the US, G-20 and Cairns Group of farm exporters seek a 1 percent limit. The EU proposes 8 percent coverage.

Members will also debate 'special products', which developing countries alone will be able to shield from tariff cuts so as to promote food security, livelihood security and rural development. The G-33 developing country group seek substantial flexibility in this area, although exporters such as Thailand and Malaysia argue that this could affect South-South trade. The US is also opposed. Divisions also exist on the 'Special Safeguard Mechanism' -- a new tool for developing countries to defend themselves against import surges.

Ministers will also address subsidies, known as 'domestic support', where they have already agreed to classify themselves into three tiers: first the EU, with the highest subsidies and thus slated for the deepest cuts; second, the US and Japan; and third, all other countries. Overall trade-distorting domestic support will be cut, so subsidies are not simply shifted between permitted categories -- but Members disagree on the depth of reductions. The G-20 wants the EU to slash subsidies by 80 percent and the US and Japan to do so by 75 percent. The EU has proposed it cuts its own subsidies by 70 percent, and that the US and Japan make a 60 percent reduction. Both the US and G-10 want the EU to make a 75 percent cut; but the US suggests a 53 percent cut for themselves and Japan. The US has come under heavy pressure to improve its subsidy offer.

Ministers will also tackle subsidies with the most trade-distorting effect ('amber box'), those with a lesser trade-distorting effect ('blue box'), and the minimal amounts of permitted trade distorting subsidies ('de minimis'). While countries have presented different proposals on the depth of cuts for amber box subsidies, the chair has suggested there may be an emerging consensus around reducing permitted blue box support from 5 percent of the average total value of agricultural production to no more than 2.5 percent. Cuts and disciplines on these subsidies will be negotiated, as will support for cotton - where US subsidies have a massive impact on West African farmers in particular. Subsidies with no, or minimal, trade-distorting effects ('green box') will be discussed at this stage, including subsidies for social and environmental programmes. The G-20 and Canada have made proposals that would enable developing countries to use the green box more easily and to limit any trade-distorting effect which subsidies in this category may in fact have, but the EU has resisted any wide-ranging reform.

Non-Agricultural Market Access

Progress on negotiations on industrial goods -- in WTO parlance, non-agricultural market access (NAMA) -- is expected to hinge on developments in agricultural talks (Bridges Weekly, 28 June 2006). Pending such an agreement, Members face primarily two major challenges in NAMA negotiations. Firstly, there is broad disagreement over the value of the coefficient to be used in the tariff reduction formula, where a higher coefficient would involve lower cuts. The Chair of the NAMA negotiations, Ambassador Don Stephenson (Canada), has indicated that his discussions with Members have led him to believe that there is broader and stronger support for a formula that makes steeper cuts on higher tariffs (a 'simple Swiss formula') with different coefficients for developed or developing countries, but that a political decision was necessary to decide on the exact numbers.

Second, Members differ over the number of tariff lines that developing countries should be able to exempt from the total amount of tariff cuts. While the July Framework contained a mechanism for allowing developing countries to make cuts half as deep as those demanded by the formula for a certain percentage of tariff lines, Members have not agreed on what the percentage should be.

ICTSD Reporting.

30 June 2006
CODEX ADOPTS STANDARDS ON TRACEABILITY AND IMPORTED FOOD INSPECTION The Codex Alimentarius Commission -- the UN body charged with setting international standards related to food safety -- at its...
Share: 
30 June 2006
MODEL AGREEMENT ADOPTED FOR ACCESS & BENEFIT-SHARING OF GENETIC RESOURCES After two years of negotiations, a model contract to facilitate access and benefit sharing of genetic resources was...
Share: