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WTO farm accord unlikely before 2006
By Ashfak Bokhari
Ever since July framework agreement approved by
the General Council of the World Trade
Organization, an eerie atmosphere marked by
confusion, uncertainty and anxiety prevails in
its secretariat. No tangible progress in any
area has taken place since then. First, it was a
long recess, then the US elections and a change
in top leadership of the European Union. Things,
it seems, will start moving after January, 2005.
 Meantime, assessments and interpretations of the
framework accord are continuing and it seems
none is happy with it. The general view is that
it is flawed in several respects, but posed a
fait accompli for all the members to save the
Doha Development Round. It was agreed upon not
by the General Council but was brokered by what
has come to be known as Five Interested Parties
(FIPs) which are the US, the EU, Brazil, India
and Australia. This option is resorted to when
the General Council fails to break a deadlock
and a final decision can no longer be postponed.
The five countries are supposed to be
representing the broad spectrum of interests in
the WTO.
Washington, already unhappy by the slow process
of talks and reluctance of developing countries
to concede to its terms, has now officially
stated that an agreement on agriculture is
unlikely before 2006. Jim Grueff, assistant
deputy administrator for international trade,
USDA, said in an interview last week that
completion of agriculture negotiations by the
end of 2005 is possible but not likely.
However, on October 20 the WTO General Council
(GC) agreed on the dates for the sixth
ministerial conference, to be held in Hong Kong.
These are December 13 to 18, 2005. Although no
specific goals have been set for the meeting
yet, the ministerial is likely to take stock of
and confirm progress in the Doha round.
According to the original schedule, the Doha
round was meant to wrap up by January 1, 2005.
But since numerous deadlines fixed in the past
could not be met, members thought it better to
go ahead with another ministerial meeting
without determining a date for completing the
round.
One important event next year will be the
replacement of the WTO Director-General Supachai
Panitchpakdi whose term ends on September 1,
2005. Uruguayan former GC Chairman Carlos Perez
del Castillo and the Brazilian ambassador to the
WTO, Felipe De Seixas Correa, are already in the
race and the Mauritius trade minister
Jayakrishna Cuttarree announced his candidature
at the last month's meeting. Also at the
meeting, the members agreed to extend by six
months the time they have to engage in
discussions with the EC on compensation for
possible trade losses due to the EC expansion
that took effect on May 1, this year. The next
GC meeting is scheduled for December 13.
Meanwhile, in an informal meeting held on
October 25 the delegates exchanged views on how
to break grounds in agriculture negotiations.
The meeting was open-ended and was attended by
delegates from all groups, including the EC, the
G-20 developing countries, the G-33 group (favouring
special products for developing countries), the
G-10 group (comprising agriculture importers),
and the Africa Group.
The informal meeting revealed differences among
members as to which technical issues should
first be addressed because many developing
countries wanted to know what developed
countries were willing to concede on export
competition and domestic support before they
could proceed ahead to take up contentious
issues such as the special safeguard mechanism (SSM,
protecting developing countries from import
surges).
The Philippines stressed that the SSM was a
priority, while Costa Rica favoured the need to
address tropical products. These preferences
apart, there was a broad agreement on the need
to equally address all three pillars (market
access, domestic support and export competition)
in forthcoming special session meetings.
The Cairns Group countries gave priority to
tariff escalation; tariff rate quota (TRQs)
administration and expansion; the conversion of
non ad valorem tariffs to ad valorem tariffs
(tariffs based on the value of the import);
export credits; base periods for the Blue Box
("production-limiting" subsidies); and review of
Green Box (non trade-distorting support)
criteria.
The EC said that the issues should be taken up
in two parts during the special session meeting
in November. In the first part, members could
consider issues related to Green Box review,
export credits, food aid and state trading
enterprises (STEs), as well as the conversion of
non ad valorem tariffs and the SSM. The second
part would then focus on 'new issues': TRQ
administration under the market access pillar;
and base periods and de-minimis for developing
countries under the domestic support pillar.
So, from now until March 2005 there will be a
stocktaking exercise to outline all the issues
that require further discussion. Only then,
trade negotiators expect things to become
clearer, with some of the more sensitive issues,
such as definitions of the blue box and
sensitive products in the agriculture
negotiations, likely to surface once more.
The importance of the agriculture negotiations
can hardly be denied. It is the progress in
these negotiations that is viewed as crucial for
making progress in the other WTO negotiations,
especially those on industrial tariffs and
services. The agricultural negotiations had been
continuing without meaningful progress from 2000
through mid-2003, with wide differences
persisting between developed and developing
countries and within those groups as well.
The talks had finally collapsed at the September
2003 WTO ministerial meeting in Cancun, Mexico.
The United States and the EU remain the two
biggest players in the negotiations ahead.
Another key player is the G-20 group of
developing countries led by Brazil, India and
China.
For the United States, the July framework
agreement's requirement for ending agricultural
export subsidies "by a credible end date" was a
desired achievement because it can be
interpreted in any manner and the date can be
extended ? indefinitely. Regarding domestic
support, the EU is allowed to spend more than
three times as much to its farmers as the United
States, under the existing WTO commitments,
while Japan is allowed to spend 1-1/2 times as
much.
Under the framework agreement, countries must
commit to "substantive reduction" in what is
called their aggregate measure of support (AMS).
Developed countries have already promised to
reduce overall trade-distorting domestic support
from bound levels - levels they cannot exceed
under the existing WTO agreement - by 20 per
cent in the first year of implementing any new
WTO agreement.
The WTO categorizes domestic support in what are
called the amber, blue and green boxes. The
amber box comprises most of the kinds of support
that distort agricultural production and trade.
In order to harmonize domestic supports at a
lower level, the WTO members, with the highest
spending, will have to make the deepest cuts,
and the size of the cuts and timetable for
making them to be negotiated.
Existing WTO commitments impose no cap on
spendings in the blue box category, which
comprises somewhat less trade-distorting
support, because it requires farmers to limit
production. The framework requires capping blue
box spending at five per cent of each WTO
member's average value of agricultural
production over some historical period to be
negotiated. The developing countries wanted the
blue box to be eliminated as it favours the
developed countries only, but the framework
actually extended blue box coverage which allows
the US to make counter-cyclical payments to its
farmers, presumably to protect them from swings
in commodity prices.
This is certain to be manipulated by the US to
retain its huge subsidies to the farmers by
diverting them to the blue box. How far the
negotiators can develop new criteria to make
sure that blue box support is not misused will
be of interest to watch. The negotiators are
expected to review criteria for green box
support, spendings on it supposed to cause no or
minimal distortions to agricultural trade and
production. Developing countries had wanted caps
on green box spendings.
Unlike agriculture, market access negotiations
in services are pursued bilaterally. The number
of countries which have already tabled offers
for services liberalization are more than 40 and
the bilateral negotiations are continuing.
The July agreement has fixed May 25 as a
deadline for revised services offer but the
negotiators and even the Chairman of the
services negotiation committee Chilean
ambassador Alejandro Jara are unsure of meeting
the deadline. After the first offers were tabled
last year, the members started their assessment.
Developing countries have repeatedly pointed
out, that in the area of most interest to them
Mode 4 (the temporary movement of persons)
offers tabled by developed countries fell far
short of their expectations.
The US is also waking up to the fact that the
deadline for revised offers might not be too
good for the developed countries either. It is
facing much political pressure on the issue of
job losses through outsourcing, while US states
are becoming more critical of Mode 4 proposals
and their implications for federal immigration
laws.
Courtesy: The Dawn |
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Pakissan.com; Advisory Point
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