Rev. 4 text must be basis, insist majority of South nations

At a recent negotiating session on agricultural market access, most developing-country WTO members maintained that the Rev. 4 draft text on reform modalities should remain the basis for the agriculture talks.

by Kanaga Raja

GENEVA: A majority of developing countries, at an informal meeting of the Special Session of the WTO Agriculture Committee on 16 June, underlined that the Rev. 4 draft agriculture modalities text should remain the basis for moving forward the negotiations in agriculture.

At the session dedicated to the issue of market access, the developing countries also called on those members who are in favour of alternative approaches to come forward and present concrete proposals.

According to trade officials, the Chair of the Committee in Special Session, Ambassador John Adank of New Zealand, welcomed the “encouraging” exchanges among members on the issue of agricultural market access. He however reported that members were “still a long way from where we should be” with regard to finalizing a work programme for the agriculture negotiations.

According to trade officials, most of the interventions at the session focused on the proposed formulae for tariff reduction.

Members especially voiced their views on an earlier communication circulated by the chair in late May in which he cited a growing willingness among members to explore alternative approaches to the tariff negotiations than those set out in the Rev. 4 text.

According to trade officials, Adank said in the communication that, in addition to proposals and ideas put forward by Argentina, Paraguay and Norway, a range of potential alternatives have been brought to his attention (he did not name the proponents of these proposals), including:

l     a modified version of the tiered formula set out in the 2008 draft text (option A);

l     a combination of the tiered formula plus, using the outcome of this as the starting point, a cut in the overall tariff average (option B); and

l     the tiered formula plus, using the outcome of this as the starting point, an average cut of tariff lines (option C).

Need to move towards convergence

In his opening remarks at the informal meeting, the chair said the discussions he has held on these alternative approaches over the past weeks “have not revealed any clear collective preferences.”

“At the risk of stating the obvious, we are at the stage where members will need to make choices in order to achieve the objectives set out for us by Ministers” of securing a work programme by the end of July for advancing the Doha Round talks, the chair said.

“Discussions now need to move to a more decisive phase,” he said, noting that members have consistently drawn attention to the linkages between the market access pillars in agriculture and non-agricultural market access (NAMA) as well as to linkages among the three main agriculture pillars (market access, domestic support and export competition).

Adank said it was “clear that it won’t be possible for any of these issues to be resolved in complete isolation from the others.”

According to trade officials, the chair told delegations, “We urgently need to move towards convergence. We’ve got to know what’s possible and what’s impossible.”

Some 40 delegations took the floor at the informal meeting, voicing their views on the state of play in the market access negotiations and on the alternative formulae cited by the chair in his communication, trade officials said.

Brazil, on behalf of the G20 grouping, Indonesia, on behalf of the G33, Egypt, for the African Group, and others said that the 2008 Rev. 4 draft text should remain the basis for further discussions.

Chile, Colombia, South Africa, Mexico, the Philippines, Pakistan, Thailand and Nigeria said they were not in a position to take a stance on the alternative formula approaches, because they either needed to carry out their own simulations first or needed a better clarification/understanding of what the alternative formulae mean.

According to trade officials, India pointed out that all the three options use the tiered formula. Hence it was difficult to digest why the tiered formula is considered not good by some but is then used in these different approaches. There is a need for clarity, India said, on whether “we want to use the tiered formula or not.”

All ministerial decisions have to be respected, and the tiered formula is part of the ministerial decisions. If the formula is being dumped, the reasons for doing this have to be clear, India said.

There is also a need to clarify what the problems are with the Rev. 4 text, said India. For almost a year, it has been hearing about low ambition, but till today there are no proposals on the table. It pointed out that in fact Argentina’s proposal is the only one that has been circulated formally.

India said that the opponents of the tiered formula need to come forward and state why they cannot accept this approach.

According to trade officials, India asked how special and differential treatment will be available for developing countries if the ambition is lowered. What are we lowering it against, it asked. For India, all three pillars of the agriculture negotiations have to move together; stabilizing only one pillar may not succeed. Domestic support is important for levelling the playing field, it added.

South Africa had concerns over the uneven application of the recalibration approach. On the specific proposals, it said that it is too early to make a determination and there is a need to run simulations. It is open to exploring alternative tiered formulae along the lines of average cut targets but can only decide when there is clarity on domestic support.

Clarity is needed on how provisions on special and differential treatment will be applied, it said. The proponents of the alternative approaches should put forward proposals with rationale and motivation to allow for interactive engagement. While ambition is being reduced in agriculture, ideas are being advanced in NAMA that suggest a high level of ambition in this area.

Brazil noted that many members have said that they are still considering their options, including option A. It said that there is a need for technical analysis.

On behalf of the G20, Brazil said that an outcome in all three pillars of the agriculture negotiations is essential for an outcome to the Doha Round. The Rev. 4 text remains the basis for conversations, it added.

Indonesia, on behalf of the G33, another developing-country grouping on agriculture, said it is concerned that the approaches members are now looking at won’t lead in the direction that many developing countries were looking for in the Doha Round. The promise of doable outcomes continues to be elusive, it added.

There cannot be a revisiting of virtually all aspects of the Rev. 4 text, including the stabilized parts of that text, only to find the negotiations in a more complicated position, it said. It urged members who favour alternative approaches to come forward and present concrete proposals and avoid putting members in perplexity.

Barbados, speaking for the Africa, Caribbean and Pacific (ACP) Group, said results are needed on all three pillars, and “we can’t harvest market access only.” Special Products (SP) and Special Safeguard Mechanism (SSM) and treatment of cotton must be integral elements. It called upon members with ideas to circulate their proposals so that they can be discussed and evaluated. The development dimension must be preserved, it said.

Benin, for the Cotton 4 grouping, said that it wants duty-free, quota-free (DFQF) market access. It called for predictable rules of origin. The difficult situation of the least developed countries (LDCs) and their constraints should guide the members. It also wants the benefits of the DFQF regime for cotton and cotton products.

Egypt, on behalf of the African Group, called for balanced and equitable outcomes on all three pillars. Subsidized exports are distorting African markets and high levels of domestic support are a concern. While it welcomed new approaches, any new approach should ensure substantial improvement in market access for developing countries and protect small-scale farmers from import surges. Flexible treatment should also be included for SP and the SSM.

New approaches on market access should address tariff escalation and tariff peaks, and whatever approach is taken should not reduce the margin of preferences that some countries currently enjoy, said Egypt. It said that it cannot accept any dilution of special and differential treatment. It encouraged the proponents of alternative approaches to table their proposals. The Rev. 4 text should remain the basis for moving the negotiations forward.

Speaking on behalf of the LDCs, Rwanda, supporting the African Group, said it is unacceptable that the agricultural reforms promised long ago are not forthcoming. It called on members to eliminate trade-distorting subsidies without conditioning this on any other element of the negotiations.

According to trade officials, China associated itself with the statements of the G20, G33 and recently acceded members (RAMs). Negotiations are at a critical juncture, it said, adding that it is fully committed to concluding the negotiations but the fundamental principles have to be preserved. Market access in particular should be fully in line with the existing mandate.

China underscored that SP and SSM shall be integral parts of the negotiations, as mandated in the 2005 Hong Kong Ministerial Conference of the WTO. Under no circumstances should these be abandoned simply because the level of ambition has been lowered. Any recalibration of the level of ambition should be based on the Rev. 4 text, which is the benchmark. China said it took note of the alternative approaches mentioned by the chair.

Argentina said that the issues of tariff peaks, tariff caps and tariff escalation, amongst others, need to be addressed as part of the market access discussions.

Against the tiered formula

According to trade officials, some members said that they cannot accept the tiered formula in the Rev. 4 text.

Australia and New Zealand said that because the alternatives being suggested would lower the ambition on market access, the flexibilities should be limited or simplified.

Australia, the US, Norway and the EU said that the LDCs and small and vulnerable economies would not be expected to make any market access commitments as part of a final Doha Round outcome.

According to trade officials, Norway, Canada and the EU said they did not believe option A would work, with Canada saying that discussions on the tiered approach had “basically been exhausted” and that consensus remained elusive.

Australia said that it favoured option B because it was more ambitious. However, it said that members it engaged with seemed more supportive of option C, a view also shared by Canada. On flexibilities for developing countries, it is prepared to consider what it can do but that conversation needs to recognize and respect the fact that these options will result in a much lower level of ambition.

According to trade officials, both the EU and the US said that recalibration of expectations is necessary to reach a deal. The EU called for recalibration because of low expectations for the outcomes in NAMA, services and the domestic support pillar of the agriculture negotiations. The US advocated recalibration due to the substantial downward revision in the level of market access ambition for the agriculture talks.

According to trade officials, the EU said that it preferred the “well-known” approach of option C, which Norway also endorsed as the simple and preferable alternative.

The EU said that it wants to deliver three messages: it will consider recalibration and the level of ambition necessary to reach a deal; it favours the average tariff cut approach; and there is a need to limit as much as possible the number of additional elements (on top of the average tariff cuts).

Recalibration is necessary if a deal is to be secured, it said. The level of market access must be calibrated with NAMA and services. In view of the state of negotiations, it has low expectations on what others can do on NAMA and services. Domestic support and market access are linked, and ambition levels need to move in parallel.

The difficulties some members have in accepting reductions augur badly for the outcome in the domestic support negotiations, the EU said, and this will have an impact on the level of ambition in market access. There cannot be a refusal to cut subsidies while expecting more to be delivered on market access, it said.

Among the three alternative approaches, option A, the EU said, is not viable for it. It supports a simpler formula and not going into the more complicated Rev. 4 text formula. It prefers option C.

According to trade officials, the US said that it “probably preferred” a simple average cut but was open to all options.

The US said that it considers the ideas by the chair in his report as a sampling of possibilities. It has considered the ideas of others including Argentina, Paraguay and Norway. For the US, and many others, it is increasingly coming to the conclusion that the ambitions in agriculture are being substantially revised downward. That is not its hope and its past expectations have taken a hit.

The simple average cut as opposed to the cut in average was probably preferable at this point but it is evaluating the ideas, said the US. It will continue to be open to ideas as presented but consensus on meaningful cuts is elusive. Those members that continue to say that they have high expectations must do two things quickly: articulate what their high expectations are and what will be their own contributions to achieving this.

Japan said it wants a simple and realistic formula with enough flexibility, adding that there is little time left to find a compromise by the July deadline. It said that the Nairobi Ministerial Conference is the last opportunity to conclude the Doha Round.

More interactive stage

In his closing remarks, the chair said: “It’s fair to say that discussions are entering a more interactive stage than in past exchanges.”

“What we are seeing in some of the comments [is] that countries are moving away from maximalist positions to say that they are able to consider something that, although it might not be in their ideal interest, they could consider in order to move forward to get an agreement.

“We saw today that in a number of exchanges countries with completely different views on market access are prepared to have that discussion. And I am very encouraged by that. But we can’t come to any conclusions on the overall approach.”

According to the chair, many members expressed a preference for the 2008 draft text but at the same time a number of statements were made saying that unless things changed significantly, it was unlikely consensus would be reached on that text.

Members were also clear in saying they wanted to know more about what the alternatives being proposed might involve and that, if it were not possible to get consensus on the 2008 draft text, it was worth exploring what the possibilities are.

The situation regarding tariff peaks, tariff caps, tariff escalation, tariff rate quotas, safeguards and other flexibilities will impact the outcome on market access, and it was understandable members wanted to talk more about that, the chair said.

Adank said he also heard from members on the need for greater clarity on the alternative formula approaches being proposed, and said he had suggested to the WTO secretariat to prepare a background paper on tariff reduction modalities.

According to trade officials, he also suggested organizing a technical workshop after the secretariat paper is issued to discuss the issue in more detail.

The chair said he would continue working intensively with members and would convene another open-ended meeting at a date to be determined. (SUNS8044)                                        

Third World Economics, Issue No. 595, 16-30 Jun 2015, pp7-9