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TWN Info Service on
WTO and Trade Issues (Oct05/21) Agriculture:
ACP Group proposes lower tariff cuts for developing countries The African, Caribbean and Pacific (ACP) Group of countries in the WTO on Friday 21 October submitted a proposal on market access in agriculture, with its own set of thresholds in the tariff reduction formula for developed and developing countries, and with suggested tariff reduction rates for developing countries. The proposal was supported by many members of the Group, while several other developing countries welcomed the fact that the ACP Group was engaging in the process with its own proposal. The ACP proposal's most notable feature is that developing countries are required to reduce their tariffs by lower rates than the rates contained in other proposals, such as those of the US and the Group of 20 developing countries. The proposal is however silent on what should constitute the tariff reduction rates for developed countries. The paper proposes four bands with different thresholds for developing and developed countries. For developing countries, the thresholds for tariff lines are 0-50%; 50-100%; 100-150%; and 150% and above. The proposed reduction rates are 15% for the lowest tier and 20%, 25% and 30% for the other tiers respectively. These reduction rates are significantly lower than those proposed for developing countries by the US and G20. In addition, the ACP said that the overall average reduction for the developing countries should not exceed 24%. The ACP paper also covered other aspects, such as the treatment of developing countries with ceiling bindings, long standing preferences, sensitive products, special products and special safeguard mechanism. The ACP countries indicated that they are putting forward their own proposal as they differed in their views with positions in several areas put forward by the other members and groupings. They wanted to ensure that the reform in agriculture is compatible with the financial and development needs and policy objectives of the ACP countries. The ACP proposal has introduced a new dynamics into the agriculture negotiations in WTO, as the group reperesents a large number of developing countries. Please see below a report on the ACP proposal and the responses it received. With best wishes -------------------------------
By Tetteh Hormeku (TWN Africa), Geneva 21 October 2005
The ACP paper was presented by the Group coordinator, Mauritius, at an informal agriculture meeting on market access held at the WTO Friday morning. The proposal was supported by many members of the Group, while several other developing countries welcomed the fact that the ACP Group was engaging in the process with its own proposal. The ACP proposal's most notable feature is that developing countries are required to reduce their tariffs by lower rates than the rates contained in other proposals, such as those of the US and the Group of 20 developing countries. The proposal is however silent on what should constitute the tariff reduction rates for developed countries. The paper proposes four bands with different thresholds for developing and developed countries. For developing countries, the thresholds for tariff lines are 0-50%; 50-100%; 100-150%; and 150% and above. The proposed reduction rates are 15% for the lowest tier and 20%, 25% and 30% for the other tiers respectively. These reduction rates are significantly lower than those proposed for developing countries by the US and G20. In addition, the ACP said that the overall average reduction for the developing countries should not exceed 24%. For developed countries, the thresholds are 0-20%; 20-50%; 50-80%; and 80 and above. It has not given reduction rates for these countries, saying it will soon provide numbers. The proposal also rejects the setting of caps (maximum levels) on tariffs for developing or developed countries. The US, G20 and EU proposals have accepted tariff capping. The ACP paper also covered other aspects, such as the treatment of developing countries with ceiling bindings, long standing preferences, sensitive products, special products and special safeguard mechanism. The ACP countries indicated that they are putting forward their own proposal as they differed in their views with positions in several areas put forward by the other members and groupings. They wanted to ensure that the reform in agriculture is compatible with the financial and development needs and policy objectives of the ACP countries. The ACP proposal rejects the harmonising or progressive formulae within the bands. Instead it proposes a linear uniform cut within the various bands, and with flexibility to allow for certain tariff lines within the bands to be cut less. Furthermore, it proposes that developing countries with tariff ceilings and homogenous low bindings, be subject only to overall average reduction, and be exempted from undertaking any cuts in the highest of the tiers, whatever thresholds are agreed for the tiers. In its paper submitted to the informal open-ended meeting of the Committee on Agriculture (Special Session), the ACP stated that "the group will not accept an outcome in the market access negotiations that disproportionately places the burden of reform on developing countries". It added that the contribution that the group is willing to make to the reform process that is conditioned on the "full and satisfactory operationalisation of the Doha mandate on Special and Differential Treatment for developing countries in all the pillars of the negotiations". The ACP group also stressed the importance of a transparent and inclusive process at this critical moment in the negotiations. "The ACP is not willing to accept a fait accompli in the negotiations", the paper stated, adding that the group expects to be closely involved in the consultations, especially those related to the tariff reduction formula and other aspects of market access. Introducing the paper, the Coordinator of the ACP Group, Ambassador S. B. C. Servansing of Mauritius said that the Group had taken note of the various proposals on the table, namely of the EU, US, G10, G20 and G33 and would strongly urge that "the ACP position be fully taken into consideration in determining the middle ground" . He added that "a fair and realistic middle ground acceptable to the whole membership, can be obtained, only when all proposals on the table are considered and not only a selective few." He stressed that the ACP Group had a broad membership comprising essentially the weak and vulnerable developing countries and that in a development round the interests of the ACP should not be ignored. He said that the ACP paper outlines in detail the ACP position on critical elements under the market access pillar. On the formula for tariff reductions, the paper asserts that "harmonising or progressive formulae within bands as well as a single set of thresholds for developed and developing countries are simply not acceptable to the ACP." As a counter to this, the ACP puts forward a proposal for tariff cuts with the following elements. The first is that proportionality will be achieved by guaranteeing that the overall outcome of tariff reduction commitment by developing countries must be lower than that required from developed countries. The average reduction of tariffs by developing countries must be adjusted downwards to guarantee satisfactory implementation of the proportionality principle. The second is "a linear uniform cut within the bands with flexibility to allow certain tariff lines within the bands to be cut by less". Thirdly, the paper proposes four bands with different thresholds for developing and developed countries, and reduction rates for developing countries (as reported above). It adds, however, that the overall average reduction to be undertaken by the developing countries shall not exceed 24%. Fourthly, on tariff capping, the paper states that "the ACP considers the concept of tariff capping as prejudicial to its development concerns" and as such there should be no tariff capping. In addition to the above, the ACP put forward further specific proposals to address the "condition of developing country members with tariff ceilings and homogeneous low bindings". The options are that: * These countries "will be subject only to overall average reduction, keeping in mind the need for fair and equitable outcome and their capacity to contribute to the reform process. * These countries will distribute their tariff lines across the lower tiers of the formula on the basis of their own assessment of their sensitivities. * Irrespective of the thresholds for the tiers to be agreed, they will not be expected to undertake the level of cuts required in the highest tiers. On special products (SPs), the paper states that provisions on SPs must be embodied in the modalities for agriculture negotiations as these are critical for operationalising the SDT mandate under both the Doha Declaration and the Framework Agreement. It adds that both the designation and the treatment of SPs are fundamental components for the flexibilities to be granted to developing countries in the market access pillar. The ACP paper endorses the work undertaken by the G33 regarding the indicators on SPs. It also states that products designated as SPs shall be exempt from tariff reduction and commitments on TRQs, as well as have automatic access to the Special Safeguard Mechanism (SSM). With regard to the SSM, the ACP proposal "endorses the submissions made by the G33 on the SSM and calls on all other members to engage in serious discussions on these proposals." It adds that "the SSM is an integral part of any consensus modalities for agriculture to be established by the WTO members". The paper reiterated the ACP position on SSM to the effect that "all agricultural products will be eligible to use the mechanism"; that "the mechanism will include both volume and price triggers"; and that "the remedy measures will be designed to provide meaningful and effective relief from import surges and price depressions." In relation to sensitive products, the ACP paper makes two proposals to deal with this issue from the point of view of preference erosion. First is that "products relating to long-standing preferences shall be designated as sensitive products". The second is that any TRQ expansion on "an MFN basis should not be to the detriment of existing ACP quotas". Further, the paper calls for the ACP to be involved in all discussions on the designation and treatment of sensitive products to guarantee that their particular concerns are taken into account. On the issue of long-standing preferences, the ACP Group signalled the importance of this issue for it by stating that "the group will not be able to join any consensus on a modalities text that does not address the concerns with preference erosion in a meaningful and effective manner". The paper explains that failure to do so will impose a disproportionate share of the costs of the reform on the poorest and most vulnerable members of the WTO. The paper adds that the ACP group is working on a comprehensive proposal on preferences which will elaborate a number of elements. These will include such elements as the designation of products related to long-standing preferences as sensitive products by the preference-providing countries, with the treatment of these products moderated in the light of their impact on preference erosion. On LDCs, the paper reiterates the proposal that LDCs be exempt from tariff reduction, and that developed countries and developing countries in a position to do so shall provide bound duty and quota free access to products originating from LDCs. Finally, in relation to cotton, the paper proposes that "specific modalities on cotton shall be established by the latest, in the Hong Kong Ministerial Conference". It adds that these modalities should include the elimination of domestic support measures and all forms of export subsidies on cotton, as well as specific commitments for improved market access for cotton and by-products, especially those originating in LDC cotton producers and exporters. According to trade diplomats, several ACP Group members spoke in support of the paper, including Barbados, Jamaica, Kenya, Zimbabwe, Benin, and the Dominican Republic. Kenya fully associated itself with the proposals put forward by the ACP. It attached a lot of importance to the "market access pillar since it is the only pillar available to us", adding that it did not have the capacity nor the resources to utilise the other two pillars. Kenya said that it was concerned that the negotiations were not proceeding in a manner that would ensure the increase and sustainability of agricultural production in the developing countries. It added that the "burden of the reforms seem to be shifting squarely on developing countries", pointing as evidence to such issues among others as the thresholds and cuts proposed for developing countries, the failure to recognise the different tariff structures among developing countries, and the lack of concrete special and differential treatment components. Kenya said that on its country's assessment of the negotiations so far, the development prospects and livelihood of millions of farmers and rural poor which depend on agriculture seem to be at stake. It reminded members that "these are concerns that cannot simply be negotiated away". Among the elements of the ACP proposal highlighted by Kenya were issues relating to the ceiling binding countries, long-standing preferences, and special products. Other developing countries, including India and Indonesia, indicated their appreciation that the ACP Group, which comprised a large number of developing countries, was engaging in the negotiations with its own proposal. Stating that it was encouraged by the "engagement of the ACP on market access", Indonesia said that the ACP proposal "has clearly highlighted differences in the ability that developing members can contribute in the market access". It added that at this critical moment in the negotiation, this required members to "reflect on how we are going to move forward on market access". Meanwhile, the G10, comprising mainly developed countries with defensive interests in agriculture, welcomed the ACP proposal. At a press conference, the Swiss chief negotiator Luzius Wasescha mentioned that "a miracle occured - the ACP came out with their proposal, reflecting the need of great flexibilities and reflecting a great deal of realism. This realism is so apparent that up to now none of the exporters took the floor. "The ACP proposal contains realistic figures for developing countries, mentions that the cap is not useful, neither for them nor for any other colleagues. They supported the G33 SP/SSM. "I would say this is quite an achievement of a group of 81 members that constitute the majority of the WTO members. "Our hope is that the EU will come out with something reasonable, a middle ground between the reality and the dream."
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