JOB(05)/163 Page 3 JOB(05)/163 Committee On Agriculture 28 July

job(05)/163 page 3 job(05)/163 committee on agriculture 28 july 2005 special session agriculture negotiations: status repor

JOB(05)/163
Page 3
JOB(05)/163
Committee on Agriculture 28 July 2005
Special Session
AGRICULTURE NEGOTIATIONS: STATUS REPORT II
LOOKING FORWARD TO THE HONG KONG MINISTERIAL
Assessment by the Chairman
Introduction
This assessment should be read alongside what I describe as the
‘foundation document’ of the July Framework (WT/L/579) adopted by all
Members and building on the Doha mandate and my earlier personal
status report of 27 June 2005 (JOB(05)/126).
As was the case in the earlier status report of 27 June, I am basing
this second assessment on the following three key operational
negotiating principles.
*
Progress must continue to be made in all three ‘pillars’ of
domestic support, export competition and market access.
*
The negotiations can only succeed with an incremental approach
that seeks simultaneous movement on identifiable ‘packages’ of
issues.
*
The ‘acquis’ of the negotiations remains the July 2004 Framework,
adopted by Members, and which elaborated in some detail the Doha
Mandate. This fully protects all Members positions on issues,
including various aspects of the crucial issue of Special and
Differential Treatment in favour of Developing Countries, where
limited movement has been possible in the last 12 months.
The intensive discussions, at both political and official level, since
my personal assessment of June, have not changed in any deep sense my
underlying thinking on the key issues to be addressed – they have not
gone away, simply because clear guidance has not yet been provided.
However, the discussions have certainly brought more clearly into
sight some key political trade-offs that were not so clear to me or
the Members a month ago.
The agriculture negotiations are stalled – there is no way to conceal
that reality. But a set of clear political decisions – none of them
easy, but at least we can now more readily identify the essential
decisions – can restart this negotiation and still pave the way for a
successful Ministerial meeting in December. The purpose of this brief
assessment is to try to highlight those matters. Regrettably, the
intensive consultations over the last 12 months have shown that we
must settle some central matters before we can address effectively a
much broader range of issues.
Export Competition
For reasons spelled out in my earlier assessment, this is clearly the
most advanced ‘pillar’ of the negotiation (precisely because of the
clarity of some key political decisions taken earlier). We now need,
and the sooner the better, some additional building blocks in
‘parallel commitments’. With respect to STEs, we need to agree quickly
on a more targeted definition of what precisely are the new
disciplines on the matter of ‘Subsidies, Government Financing and
Underwriting of Losses’ and the institutions of primary concern. On
Food Aid, I regret to report that the concerns of many developing
countries, which I referred to a month ago, about the practical
effects of any new disciplines still need to be addressed. I still see
value in advancing our understanding of what might constitute genuine
emergency food aid. This could facilitate our work on defining the
operational disciplines on commercial displacement.
A negotiating approach based on finding a reasonable way forward here
will then permit a sharper focus in the autumn on what is clearly the
over-arching issue in this pillar: the schedule and modalities for
phasing out all forms of export subsidies and how this might take
account of the need for some coherence with internal reform steps of
Members. This is a very political matter and of major commercial
significance. Our Ministers need to be put in a position where the
centre of the matter is the focus of their attention.
Domestic Support
My earlier assessment provided a reasonably comprehensive view of the
key issues to be addressed in this pillar. I can now see more clearly,
thanks to the intensive discussions, what are the first order
questions to be settled.
If we are to continue with an incremental approach in this pillar, two
decisions are now required. In my view, however, such decisions will
be taken only in the context of a set of decisions to unblock the
market access formula.
*
A decision – not a discussion – is required on where the three
largest users of the Amber Box1 fall into the tiered formula. I
see two possible solutions. It is not a matter where any further
technical work is needed2. I am not prepared to describe the two
solutions I can see, because I have accepted good advice that
sometimes stating the obvious can finally complicate Members
adjusting their positions.
*
The rationale for the ‘Blue Box’ is that it is a half-way house
between highly trade and production distorting amber box payments
and the low or minimally trade and production distorting payments
that properly meet the rigorous criteria of the Green Box.
Decisions on the disciplines to apply on Blue Box payments that
will reinforce that reform objective are now required.
With respect to the Green Box, I can only repeat the earlier view in
my assessment a month ago: there is the basis of a political deal
whereby:
*
existing heavy users of Green Box payments examine sympathetically
some proposals for clarifying the criteria that would not
undermine their reforms; and, at the same time,
*
the Membership agree that it would be desirable to develop some
new provisions that would meet the realities of developing country
agriculture but still clearly subject to, and consistent with, the
key test that such payments would met the fundamental test of at
most minimal trade-distortion.
Such a broad political direction to experts to pursue the middle
ground here, might then allow the experts to develop some real
incremental progress in the review and clarification of the Green Box.
Market Access
This is by far the most complex matter and will still require more
time than other pillars to build convergence. Pursuing a ‘step by
step’ approach to building up the structure of modalities means
identifying sets of issues that, for political reasons alone, need to
be settled at the same time without crossing over to the fatal mistake
of trying to settle too much at once. It is a matter of making
responsible judgements, given that the argument can always be made
that ‘everything is linked to everything else’.
I was grateful to the G20 in providing a comprehensive proposal
providing their answers to the four key questions I posed in the first
assessment a month ago. I note in particular that the principle of
Special and Differential Treatment in favour of Developing Countries
is an integral part of this proposal.
Following guidance from many Members, I have used the G20 proposal as
a starting point for the most recent consultations. Some Members of
course have reservations about aspects of the G20 comprehensive market
access proposal, but it is clear that this approach is a constructive
initiative to map out the middle ground and provided others with a
platform to raise associated ideas, including the possibility of
introducing some degree of additional progressivity into the formula.
It was notable that certain Members with the greatest difficulties in
this area found the related discussion on sensitive products the most
useful yet. Although any immediate solution is not apparent, this is
hardly surprising, given its relationship to the tariff formula.
It is evident from discussions based on the G20 proposal that a key
issue is whether there is to be any flexibility within the formula or
all such flexibilities would be provided in some other way. Members
with exporter interests at the forefront of their attention are not
going to give a blank cheque on flexibilities. With respect to
providing any flexibility within the formula, there would, therefore,
need to be a high level of specificity on what such flexibilities
would be.
Additionally, since any such flexibility, by its very nature, reduces
the market opening for some products and avoids the TRQ expansion
envisaged for ‘sensitive products’, exporters would expect to see a
more robust formula agreed upon. It also needs to be borne in mind
that, without any such constrained flexibility at all in the formula,
it will be even more difficult for Members with difficulties in this
area to agree to a higher level of ambition when the moment arrives to
define the size of the cuts.
I am very much aware that this highly focussed commentary on the last
few weeks’ market access discussions has not taken forward our
thinking on, say, the types of indicators that might be agreed to give
operational force to the criteria established for Special Products in
the July Framework, how the fullest liberalisation for Tropical
Products, the treatment of Recently Acceding Members or how we might
address preference erosion, might be advanced. I simply repeat my
strong concern that these, and other issues of great interest to many
Members, cannot be left to one side for too long and an attempt be
made to rush through some ‘fix’.
It is imperative therefore that the above key elements relating to the
structure of the market access pillar be settled as quickly as
possible.
The Sub-Committee on Cotton
Work in the Sub-Committee on Cotton with respect to the ‘development
track’ seems finally to be producing a more focussed effort by the
donor countries, and not just with respect to the cotton proponent
countries. However, the urgent matter related to the current sharp
price decline remains a matter of acute concern, particularly for
those developing country cotton producers with a very high dependence
on the world market.
With respect to the ‘trade track’, representatives of cotton producing
developing countries with whom I have consulted closely in recent
weeks will have seen that some decisions on the above set of issues in
all three pillars are crucial to advancing the ‘trade track’ of the
work of the Sub-Committee on Cotton.
I can add little here to what I said a month ago: the longer it takes
to provide answers to such core concerns, the more difficult it will
be to envisage reaching agreement at the Hong Kong Ministerial Meeting
on the agreed objective of an ‘ambitious, expeditious and specific’
treatment of cotton within the agriculture negotiations. Members need
to bear this additional dimension very much in mind as they reflect on
this assessment of the state of the agriculture negotiations.
__________
1 More technically, Final Total Bound AMS.
2 A mild overstatement but I wish to keep a political focus here.