Draft WTO text on agriculture prepared

By Eric Donald

A Draft Cancun ministerial text has been prepared by the Chairman of the general council of the World Trade Organisation, Carlos Perez del Castillo. This is a framework document outlining the rules for reducing agricultural subsidies and increasing market access. While many countires are not happy with this paper, it is likely be the basis for the negotiations in Mexico next month.

It contains no numbers which is serious draw back. But it's generally felt by all the concerned parties that the best possible outcome from Cancun will be an agreement on the formulas and rules to apply to import tariffs, export subsidies and domestic support.

Trying to reach agreement on the size of the reductions is seen as a bridge too far and so this framework paper has more modest ambitions. All the negotiating countries, but particularly the EU and US, are keen to avoid a failure in Cancun. The deadline of the end of March this year for agreeing the modalities paper on agriculture has already been missed.

The revised texts contains most of what was agreed between the EU and United States in a paper released a few weeks ago. But the chairman has made some additions based on subsequent submissions from the other interested parties, in particular a group of developing countries led by Argentina and Brazil.

While discussions have continued in Geneva this week, any further changes are likely to have to wait until the Ministerial meeting begins in Cancun on September 10.

The complex task of moving all the relevant documents and personnel from Geneva to Cancun will begin next week.

From an Irish agricultural perspective the paper covers three key areas, namely domestic support, market access and export subsidies.

The "blue box" (direct subsidy) payments would be retained, but at a lower level. It proposes a limit on blue box payments of 5% of the value of agriculture production in the 2000 to 2002 period. It does not specify the timeframe to achieve this.

The most trade distorting supports, that fall into the "amber box" (market supports) would be subject to the greatest reductions. The paper also addresses the "de minimis" rule, which has been a bone of contention for the Europeans. This rule currently excludes supports from any disciplines if they account for less than 5% of the value of output. The new paper now envisages these being reduced below the 5% figure but they would not specify to what level.

The rules on green box payments are still under negotiation.

On export refunds the paper does not go beyond the Doha declaration, which Ireland and France had a major input into. Importantly for the EU, the paper envisages the reductions applying to export credits, and food aid programmes, along with export refunds. But it does not include disciplines on state trading enterprises which had been agreed between the EU and US.

The paper seeks the elimination of export subsidies on products that are important for developing countries. The end date for phasing out all forms of export subsidies remains under negotiation.

The paper calls for reductions in terms of volumes and value for subsidies on other products. It also seeks to discipline food aid programmes to prevent the displacement of commercial product. Single desk sellers are to be ended. The implementation periods for reducing or phasing out export subsidies will be longer for developing countries.

On market access, the paper states "we shall continue to expeditiously pursue the objective of duty-free and quota-free market access for products originating from Least Developed countries.

The framework document reached a compromise on import tariffs. The EU favoured the Uruguay approach for reducing tariffs while other countries, including the US, wanted to use the Swiss formula.

The compromise was that "sensitive" products would be subject to reduction using the Uruguay formula. For other products, the tariffs would be reduced using the Swiss formula which reduces the higher tariffs by a larger amount.