1 August 2005
Committee on Agriculture
Agriculture Negotiations: Status report II
Looking forward to the Hong Kong Ministerial (1)
Assessment by the Chairman
Introduction > back to top
1. 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). (2)
2. 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.
3. 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.
4. 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 > back to top
5. 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.
6. 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 > back to top
7. 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.
8. 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 Box (3) fall into the tiered
formula. I see two possible solutions. It is not a matter where
any further technical work is needed (4). 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
9. 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.
10. 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 > back to top
11. 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’.
12. 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
13. 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
14. 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
15. 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.
16. 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’.
17. 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 > back to top
18. 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
19. 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
20. 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. This document was previously circulated as Job(05)163. back to text
2. This document is attached. back to text
3. More technically,
Final Total Bound AMS.
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4. A mild overstatement
but I wish to keep a political focus here.
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Committee on Agriculture
Agriculture Negotiations — Status Report
Key Issues to be addressed by 31 July 2005
Assessment by the Chairman
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Behind the phrase “First
Approximation” lies a straightforward objective: to prepare an
adequate structure in all three pillars for that more political
phase from September to December. We can only make progress
incrementally and we can only make progress from a “bottom up”
approach. A “top down” approach, imposing “elegant” technical
solutions to deeply unresolved political questions, does not
That was the whole logic of having developed a ‘Framework’
rather than attempting the impossible task of moving directly to
‘Full Modalities’ — i.e. combining structure with the precise
rules and fully elaborated formulae to define the level of
ambition of the Doha Mandate in precise terms. While we focus on
the key issues highlighted in this Paper, I would encourage
informal discussion amongst Members aimed at giving greater
precision on the level of ambition in the Doha Mandate in the
pillars of domestic support and market access. Such informal
discussion may assist the formal, text-based negotiation.
As a step in the direction towards that
for the end of July, I need some clearer guidance from the
Membership on some critical areas. Building on what we have
already in the Agreed Framework, in my view, we need to have in
place by 31 July 2005 the following:
- In the domestic support pillar, the
structure of the reduction commitments (not the size of the
reductions) relating to Trade-Distorting Domestic Support as
well as some elements of the rules (i.e. criteria); in
particular it may be possible to develop convergence on aspects
of the Green Box by 31 July.
- In the export competition pillar,
where we have already both structure and the agreed end point
(i.e. ‘elimination’), further elaboration of parallel
commitments, in particular in the areas of STEs and Food Aid,
since we have at least some ‘building blocks’ for parallel
commitments in export credits.
- In the market access pillar, the
structure of at least some central elements of the core market
access formula, and further elaboration of a number of ‘flexibilities’ (particularly aspects of Special and
Differential Treatment such as SP, but also ‘sensitive
If we cannot settle these issues, we
are simply transferring all these matters to the September to
December period with the distinct likelihood that, once more,
Ministers will be put in an acutely difficult position. I have
the ‘AVE lesson’ very much in my mind and I hope it is in yours.
A Development Round — The Crucial Role of Agriculture
This is a Development Round and I can assure Members that this
is at the forefront of my thinking and approach as the Chair.
Agriculture is critical to ensuring that we get a ‘development
return’ from the Round. It is critical for two broad reasons:
- The first reason is because many
developing country Members and LDCs, including the cotton
proponents, either already have substantial economic interests,
relative to their economies, in world agriculture markets and
can build on this; or, because they can see a future for
themselves, once the massive trade distortions are either
eliminated or substantially reduced. The interlocking nature of
the domestic and international reform ‘tracks’ here will result
in substantial new trade opportunities if we can successfully
complete this Development Round.
- The second reason is somewhat different. Many developing
countries, and particularly LDCs, have deeply vulnerable people
dependent on agriculture. Integrating these parts of their
agriculture sectors into any emerging reform framework is deeply
sensitive. Such sensitivities have to be accommodated as the
reform process takes shape. They have a different character to
other countries‘ sensitivities, politically crucial though they
are in steering this reform through successfully, domestically
To advance the first aspect of
developing country interests — call them ‘offensive’ or ‘export’
interests — we must address initially the structure of
commitments in all three pillars aimed at the source of the problem.
In practice, we cannot address in the next few weeks
features of the instruments foreshadowed in the Framework to
address the second aspect of developing country interests — i.e.
instruments designed specifically to take account of the
realities of much developing country agriculture, such as SSM.
This can only be done when we have some basic structures in
place in the domestic support and market access pillars (we have
the basic structure in place in the export competition pillar,
thanks to key decisions taken in July 2004).
However, I am
not suggesting in this paper that all these ‘instruments’ are to be left aside for the post-July phase of
this negotiation. You will see this when you read the pillars on
domestic support (Green Box, the Final Bound Total AMS
reductions, for example) and market access (the need to have
comparable level of specificity in elaborating SP as with
‘sensitive products’). But the ineluctable logic of this
negotiation, and of this paper, is that we need structure on the
matters that are primarily responsible for the large distortions
in world agriculture markets.
I do not wish to imply here that the major developed countries
are not fully seized of this — that would be quite unfair to the
developed countries. In some cases, deep reforms are underway
and pave the way for important international reforms. In other
cases, some developed countries have only limited work to do to
contribute to international reform. All will play their part, of
I also have to consider the important matter of the work of the
Cotton Sub-Committee, which has two tracks to it — the trade and
development tracks. To maintain the confidence of the Membership
that the Agriculture Negotiations can indeed deliver concrete
results in the field of trade reform related to cotton, we have
to have something credible to show for our efforts in the
agriculture negotiations in the 12 months that have passed since
the adoption of the July 2004 Framework.
KEY ISSUES FOR JULY
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It is particularly
important that this paper be read in conjunction with the July
2004 Framework . That paper, endorsed by the Membership, and
building on the Doha Mandate, represents the ‘acquis’ of the
agriculture negotiation to date. There are a number of key
matters in the Framework (5) which, for good reasons generally
related to a prudent ‘sequencing’ of such a complex negotiation,
are not covered in this discussion paper; their standing in this
negotiation remains therefore fully intact. All these issues
have been subject to intense and numerous consultations since
adoption of the July Framework.
I believe that the Membership fully understands that not all
issues — even vital ones — can be progressed simultaneously.
There are some issues which, for purely logical reasons, cannot
be addressed until certain prior matters become somewhat
clearer. That is, there is a certain unavoidable ‘sequencing’ of
issues in any complex negotiation. It is, I would argue,
impossible to consider seriously how we factor in, say, ‘tariff
escalation’, or the concerns of Recently Acceded Members, into
our market access equation before we have some reasonable shape
of the core market access formula. Yet at the same time, given
the concerns of Members behind these and other important issues,
they cannot be left aside to the last minute.
By the end of July, I thus hope to be in a position to put down
a paper capturing the level of convergence on key issues in each
of the three pillars of export competition, domestic support and
market access. However, I need guidance from the Membership to
do this and I need it now.
Realistically, I do not expect any Member, having reflected on
the questions I put, to come back to Geneva with an entirely
‘new position’ fully coordinated with its constituencies,
lobbies and political decision-making procedures. Rather, I hope
that Members might return with a clearer idea of what is
possible, where negotiating ‘openings’ can be offered to your
partners on previously intractable positions — and expect
comparable treatment in return. In some cases, you will need to
consult your Ministers, at least informally, and give them a
frank and honest assessment of how your respective negotiating
positions are aligned with the current needs and real timetable
for these negotiations.
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In this pillar, there are two
broad matters that need to be settled by the end of this
negotiation: the disciplines and commitments on Trade-Distorting
Domestic Support and the review and clarification of the
disciplines (rules) to ensure that Green Box measures have no or
at most minimal effects on trade and production.
Trade-Distorting Domestic Support
believe that by 31 July 2005 we need the structure of a tiered
formula for the cuts in Final Bound Total AMS and the structure
of a tiered formula for cutting overall TDS. Without settling
some of the broad parameters on the structure of these formulae,
it is difficult to see how far more difficult decisions can be
taken in the more ‘political phase’ from September to December
Again, I emphasise the relationship here in this pillar and the
work of the Sub-Committee on Cotton. There seems general
convergence in the Membership around the concept of developing
these two tiered formulae on the basis of absolute, not
relative, levels of TDS. This reflects a fundamentally important
fact: we are focussing on ‘fixing the real problem’ of the large
distortions in world agriculture markets caused by high levels
of TDS, not ‘scoring a political point’.
Nevertheless, before I were to ask the Membership to formalise a
real consensus on this key matter, it is clear that there is an
expectation that certain developed countries with very high
relative levels of TDS, but which (because of their limited
size of their agriculture sectors in world terms, do not
constitute large shares on an absolute basis) make a serious
contribution to the reform effort. There is, in effect, a
‘trade-off’ here: the Membership is prepared to be ‘reasonable’
to them, provided they in turn are ‘reasonable’ to the Members
in this negotiation.
The Formula for Final Bound Total AMS
Given that we are targeting absolute levels of distortion, it is
already clear that any formula we might agree on will be driven
by the absolute scheduled levels in three Members: the EC
(US$59.8 billion), the US (US$19.1 billion) and Japan (US$35.9
This already accounts for some 82% of the sum of all scheduled
AMS support for all WTO Members.
With respect to the numbers of tiers, most Members are
reflecting on either 3 or 4 tiers. I need some clarity here.
However, the fundamental question — and it must be addressed now
— is where the three largest users of TDS fit into the tiers,
whether the tiers number 3 or 4.
There is an additional important question as to how about 17
developing country Members with scheduled Final Bound Total AMS
commitments be treated.
Arithmetically, all these developing countries, given their
absolute levels of Final Bound Total AMS, would seem to fall
into any lowest tier. There appears to be broad convergence on
this key point. Is it therefore technically difficult in this context to ensure that the over-arching principle of lesser cuts
over longer time frames is met?
Overall Reduction in TDS
Similarly, the structure of this formula will be driven by the
data. There is a high degree of convergence amongst the Members
that, with this particular formula, there would be three bands,
with the largest single user in the top band and the next two
highest users in the middle band. This already provides, in
effect, the foundation element of the structure of the overall
TDS formula and paves the way for decisions in the post-July
phase on the level of harmonised cuts.
The treatment of developing countries in this formula raises
complex issues for reasons I do not intend to summarise here (7).
Unless I get clear guidance from the Membership in July, this
may need to be resolved in the subsequent negotiating phase from
September to December.
Product-Specific AMS Caps
Within the architecture of disciplines over trade-distorting
domestic support, we have an agreement in the July Framework to
develop product-specific AMS caps.
There are some difficult issues to be negotiated here and, for a
variety of reasons, a few countries would face acute
difficulties with almost any common base that might be
negotiated for the purpose of setting the caps. We will need to
address these issues in due course.
The general matter of product-specific AMS caps is something far
better addressed in depth when we have greater precision on the
structure of the TDS formulae and some insight into the depth of
For developed countries, this is simply a matter of the size of
the cut. The logic of this paper is to put all such matters
concerning the size of reductions (i.e. level of ambition) in
the domestic support pillar into the negotiation process after
the Summer Break.
For developing countries, there are particular sensitivities in
the light of the fact that for most developing countries, de
minimis and the 5% cap on Blue Box entitlements are the only
‘allowances’ for providing TDS. This is not the right moment to
address solutions to these issues, but we need to keep them in
Blue Box Criteria
The review of the criteria of the Blue Box is an important
element in the area of trade-distorting support. The objective
here is to ensure that Blue Box payments are less
trade-distorting than AMS measures. We have a number of
proposals and ideas on the table but strictly limited
convergence at this stage.
lies a number of complex negotiating linkages. But a key linkage
for many Members relates to the size of cuts in the formulae
governing Trade-Distorting Domestic Support. Put in the simplest
terms, the more modest the final decision on cutting AMS and de
minimis, the more pressure Blue Box users, current or potential,
can expect to see on additional criteria — even given the
provision in the Framework to cap the Blue Box at 5%.
We need further work on this during July. But the size of the
cuts will — at least according to the assumptions behind this
paper — be a matter for the post-Summer Break negotiating phase.
Fundamentally, there are two
broad directions, or ‘strands’ in thinking, involved in this
review and clarification:
- Those developed and developing
country Members which are at most light users of any form of
subsidisation, are seeking reassurance that the complex
specific provisions of the Green Box are indeed consistent
with the overarching criterion of ‘no or at most minimal
trade-distorting effects or effects on production’ (8)
- The wish of developing countries
to introduce new provisions or language that take account of
the types of programmes suited to the realities of developing
country agriculture and which could meet the fundamental test
of at most minimal trade-distorting support. They argue that
some provisions of the Green Box are difficult to apply in a
developing country context or there is no suitable explicit
provision for them.
There is a danger here of the
Membership talking past each other. With respect to the first
broad direction, those developed countries embarked on deep
reform of coupled support policies are deeply concerned that any
change to the existing language might have the perverse effect
of undermining their reforms.
With respect to the second broad ‘strand’ or direction in this
review and clarification of the Green Box (i.e., introducing
‘development friendly’ language), those existing large users of
the Green Box and some other Members are worried that
introducing ‘development friendly’ language into the Green Box
may open a ‘Pandora’s Box‘ for large-scale subsidisation by
developing countries in the future.
Clearly, both sides need to accept that there are legitimate
concerns on both sides and listen carefully and rationally to
constructive proposals from each side. I think many understand
Ultimately, with respect to introducing some ’development
friendly’ provisions suited to the specific realities of
developing country agriculture, lies a potential ‘win-win’
outcome. It is in everyone’s interests to encourage developing
countries to avoid repeating the chequered history of developed
countries’ subsidisation. That is, in order to achieve their
social and other non-trade concerns, it is obviously desirable
that developing countries, as they gain increasing financial
strength, look directly to the Green Box as the appropriate
avenue for policies, targeted at their social, political and
other non-trade concerns, rather than utilising trade-distorting
We should, in my personal view, accommodate this reform impetus
by introducing at least some of the core ideas of the
proponents. If we could establish a general political-level
understanding on both sides, the specific drafting by technical
experts should follow much more easily.
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We already have both
structure and the agreed end point (‘elimination’) in this
pillar. The remaining issues are:
- To flesh out the parallel
commitments in export credits, STEs and Food Aid. Further
progress here is essential by 31 July. We have ‘building
blocks’ in some elements of parallelism. More are required by
the Summer Break.
- Defining the ‘credible end date’ and the implementation
path. There is a strong view within the Membership that these
issues are better left to the post-Summer Break phase.
We have in practice focussed on
identifying which policies, within the scope of export credits (9)
with repayment terms of 180 days or below, certain types of Food
Aid, and certain practices of exporting STEs, might be
considered (in the precise language of paragraph 17 of the
Framework) under either of the headings:
- “All forms of export subsidies”
- “export measures with equivalent
These agreed criteria clearly define the scope of our
examination at the general level. Additionally, there are
further provisions within the Framework that focus our attention
on certain measures. With the above in mind, I would like the
Membership to focus on the following matters.
We have already a
provision in the July Framework on the key issue — export
credits exceeding 180 days: they are to be eliminated.
Nevertheless, additional disciplines need to be developed on
export credits of 180 days or less. They may be a far smaller
problem in world agriculture markets today than long-term export
credits, but in a future without long-term export credits, and
equally importantly, without export subsidies, the pressure
could build — even in countries that are today relying on the
other export competition policy instruments — to exploit any
‘looseness’ in provisions relating to short term export credits.
Further work here will be required. We have made some progress
on this deeply technical issue but it is unlikely to be
completed by 31 July.
State Trade Entities
Future Use of
The ‘issue of the
future use of monopoly powers’ remains under negotiation, as
specified in the Framework. This more general, and deeply
sensitive, question would, in my view, be better considered in
the subsequent ‘more political’ phase from September to
Financing and Underwriting of Losses
have achieved some important convergence of views amongst key
participants on the above. Let us take advantage of this
progress and move the discussion forward on specific details and
so establish at least some ‘building blocks’ in this area of
I recommend we develop, by 31 July, language foreshadowing new
Beyond subsidies, Government financing and underwriting of
losses, we are making little or no progress. I see two problems:
- Some Members are concerned that
proposed definitions of entities to be covered by the
new provisions could have unintended effects for all manner of
- There is a closely associated
concern that some proposals for new disciplines could
have unforeseeable legal consequences for what many Members
consider legitimate practices.
I need further guidance from the
We have an explicit provision in
the Framework that STEs in developing countries which enjoy
special provisions to preserve domestic price stability, and to
ensure food security will receive ‘special consideration for
maintaining monopoly status’.
I am assuming in this paper that the over-arching question of
the monopoly status of even exporting STEs in
developed countries is a matter for negotiation in the next,
post-Summer Break phase. At that point, I am confident that the
special position of such STEs in developing countries with these
objectives at the heart of their operations will be taken fully
With respect to developing country STE specific practices — even
when their focus is on facilitating their exports rather than
the criteria referred to immediately above, it is difficult to
take this further, given the lack of convergence on ‘other
issues’. It may be necessary to take into account the actual
impact of such developing country STEs on world trade, since the
trade flows concerned are, in many cases, very small.
We have some helpful guidance
here in the Framework, but there has been little or no
convergence on Food Aid since July 2004. I believe it is
essential that some building blocks are put in place by 31 July
There are proposals on the table that aim to change
fundamentally the existing food aid system via WTO disciplines.
If there were agreement to do this, it would not be the first
time that the WTO had deeply refashioned disciplines and
institutional machinery in areas of international cooperation —
even in agriculture.
These proposals have generated some concerns. Within the
Membership, the main concern is that such potential new
disciplines might have negative implications for meeting
humanitarian and development needs. This fear is very strongly
held by certain Members.
My sense is that all Members firmly believe that any WTO rules
aimed at preventing ‘commercial displacement’ we might develop
must not compromise efforts to help the most vulnerable people
in developing countries. Their interests must be put first.
With this perspective very much in mind, I suggest that our
discussions up to the end of July focus strongly on developing
language to ensure that food aid in emergency situations is not
compromised. This will provide important reassurance to
vulnerable populations as well as ensure that we are making some
progress on ‘parallelism’ with respect to food aid.
A focus in July on emergency situations will need input from
those with expertise broader than trade negotiators, given the
If this were successful, then beyond July, a number of other
major issues will need to be addressed, such as aid in fully
grant form, in-kind aid and monetization.
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This is the most complex
and least advanced pillar of the three. Conditional, sequential
progress is the only way to move forward, given the
interrelationship of so many of the market access elements of
the Framework. Nothing could have demonstrated this more clearly
than the last intensive consultation on the fullest
liberalisation for Tropical Products. At the end of the
discussion, a number of delegations (approaching the matter from
quite different perspectives) observed that it was impossible to
move that question forward without some structure in place in
the core market access formula. The same applies to a whole
range of issues. This is why I believe that, by 31 July, Members
need to reach some convergence on at least some of the basic
structural issues of this pillar.
Tiers and Formula
We need to develop a
‘single approach’ to achieve ‘substantial improvements in market
access….for all products’ (10)
with two additional objectives in mind: (a) “progressivity” —
i.e. deeper cuts in higher tariffs; and (b) providing for more
flexibility to deal with a range of sensitivities.
With respect to the negotiation of a tiered formula, the
discussion to-date has focussed on two schools of thought:
proposals to achieve “progressivity” solely through the number
of tiers and proposals that rely both on the number of tiers (11)
and on the nature of the formula(e) within the tiers to achieve
“progressivity”. It is unlikely therefore that we can settle by
31 July the number of tiers without agreeing at least on a
description of the type of formula(e) to be used within the
There is a parallel and
intimately related discussion taking place on how to deal with
sensitivities. The Framework identifies certain ‘tools’ to
address those sensitivities — such as ‘sensitive products’ and
‘Special Products’ based on criteria of ‘food security,
livelihood security and rural development needs’. Additionally,
some argue that the formula itself should provide a means to
address at least some of those sensitivities.
We should aim to have some agreed structure in place for the
market access formula by 31 July. This would require convergence
- The number of tiers;
- Their thresholds;
- At the minimum, a description of
the nature of the formula(e) within the tiers;
- At the minimum, some further
elaboration of how sensitivities might be handled.
Although this will be difficult, I
believe it can be done without defining with greater precision
the level of ambition (12),
which will be determined in the subsequent phase.
With respect to the ‘sensitivities’, it would be necessary to
take closely into account, as agreed in the Framework, Members‘
tariff structures and the very sensitive needs related to the
Special Products category.
The immediate task prior to the July Agriculture Week is to
undertake a process of deep reflection on the above. After that,
it may be possible to formulate a straight choice between
different combinations of these variables.
Once again, I recognize that there are many other issues of
vital importance to all Members. Matters raised by developing
country Members such as SSM, or addressing the issue of
preference erosion will take considerable time to elaborate.
But, for the reasons summarised in this paper, the Membership
has found it impossible to develop convergence on these and
other matters without some structure of a market access formula
THE SUB-COMMITTEE ON
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The analysis immediately above
needs to take into account the very particular issue of cotton —
reflected in the General Council’s decision to establish this
Progress in both the development and trade tracks is vital.
Within the West and Central African ‘proponent countries’,
intense pressure is building up on their producers with the
recent fall in prices. This calls for immediate action on the
With respect to the trade track, I have drawn attention on
several occasions in this paper to the need to advance the
agriculture negotiations with cotton in mind. Members have
already agreed to a mandate for an ‘ambitious, expeditious and
specific treatment’ of cotton within the agriculture
negotiations. In this respect, we have received an ambitious
proposal from the Proponent Countries to this effect.
If and when some structure emerges more clearly on each of the
three pillars in the Committee on Agriculture in Special
Session, then a parallel evaluation of their possible
implications for the cotton sector can play a powerful role.
Equally, it is obvious that if we do not reach
convergence on key points in each of the three pillars by 31
July within the agriculture negotiations generally, it will
become increasingly difficult to fulfil the specific mandate for
the work of Cotton Sub-Committee, with the Hong Kong meeting
only round the corner.
5. More accurately
expressed, “Annex A to the Doha Work Programme: Decision Adopted by
the General Council on 1 August 2004”. Since this universally referred
to as the “July Framework” I prefer to use this term.
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6. Exchange rate for 200,
the final year for implementation of the results of the Uruguay Round
so as to reflect the Final Bound Total AMS in Schedules.
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7. The underlying reason
is that most developing countries do not have AMS commitments. It is
too complex, and not necessary, to explain here the implications of
this in the overall reduction. But the problem is understood and will
need to be addressed in the subsequent phase.
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8. This is the key
language from the chapeau to Annex 2 of the UR Agreement on
Agriculture. back to text
9. I am using the term of
“export credits”, to describe “all export credit guarantees or
insurance programmes”, in the more formal language of the Framework.
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10. Paragraph 29, last
dot point, July Framework.
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11. Broadly speaking,
the higher number of tiers, the more “progressivity” will be achieved,
even with a linear formula applied to each tier.
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the choice of the nature of the formula(e) within the bands is
irrelevant to the level of ambition. One can illustrate this by
deliberately extreme examples. A linear (often loosely referred to as
‘a Uruguay Round approach’ that involved a 99% average cut or a
non-linear formula (often loosely referred to as a ‘Swiss Formula’)
with a coefficient of 1000 would cause both sides to this debate to
switch sides. back to text