WTO agricultural negotiators met in late March for deeper discussions on trade policy issues for a program of work to be outlined by July 31 that would lead to a conclusion of the Doha Round of negotiations. Negotiators are becoming more familiar with the issues, but convergence still appears to be beyond their reach.
According to agricultural talk’s chairperson John Adank, New Zealand Ambassador to the WTO, they have focused primarily on domestic supports and market access. On domestic support, the attention has been on ‘overall trade-distorting domestic support’. This is the total of three categories: Amber Box (the most trade-distorting), Blue Box (similar to Amber Box, but with constraints to reduce the distortions) and de minimis (small amount of Amber Box support currently limited to 5 percent of the value of production for developed countries, 10 percent for developing countries). This would limit ‘box shifting’ and total domestic support.
Some negotiators said the highest supports should be reduced the most, which has been the assumption in past discussions. Others pushed for less ambitious disciplines as being more pragmatic and doable. One said there are two main questions: What is the U.S. prepared to do if others do or do not make reductions? And, what is China prepared to do?
Cotton policy remains as an issue to be addressed before deciding on overall domestic supports. The Bali ministerial meeting continued a dedicated discussion process, but actual negotiations have not taken place. The ACP (African, Caribbean and Pacific) group of developing countries stressed in its recent proposal that a solution on cotton should be part of any Doha outcome, and that agriculture-related results should be concluded before the WTO ministerial conference in Nairobi, Kenya in December of this year.
When the Doha Round talks stalled in 2008, the negotiators had tentatively agreed on the so-called Swiss formula for reduction in tariffs with the highest tariffs cut the most and developed countries cutting more than developing one. The 2008 tentative proposal set out rules for a ‘special safeguard mechanism’ (SSM) that would allow developing countries to protect their domestic producers and allowed them to decide for themselves which agricultural products could be shielded from tariff cuts by designating them as ‘special products’, with some exempted from any cut at all. All of this was done under the theme of ‘development’.
Controversy over these provisions helped to cause the negotiations to collapse in 2008. Alternatives have begun to surface. Argentina has proposed a return to past rounds when negotiators put forward requests for greater access to other countries’ markets, in exchange for trade concessions they would offer in return. These concessions would ultimately be applied to all members under the most favored nation principle.
Paraguay has proposed a minimum reduction on all agricultural tariff lines for all developed and developing countries, but set a different level for developed and developing countries. Developed countries would have minimum tariff reductions of 20 percent and an average of 54 percent; developing countries at a 15 percent minimum and 36 percent average. Implementation would be over five years for developed countries and ten years for developing ones. Countries would use the average formula with minimum cuts for each tariff line similar to the method used in the Uruguay Round in 1986-94 with the additional step of allowing members to seek additional cuts through bilateral and pluri-lateral requests and offers.
The proposals by Argentina and Paraguay appear to be in response to calls by some to reduce the complexity of proposed cuts to limits on tariffs and farm subsidies. The EU, U.S., Canada and less so South Korea believe that the 2008 proposed tariffs should not be used in a new framework, while many developing countries believe the 2008 tariffs should be the basis for negotiations. China has insisted on the Swiss formula because it objects to the request-offer approach that could make it a target of a lot of requests. Developing countries fought for exceptions to the Swiss formula and do not know if they could be repeated under a different formula.
The agricultural talks also have public stockholding issues for food programs in developing countries. These are left over from last year’s implementation of a trade facilitation agreement approved at the WTO ministerial meeting in Bali in December 2013. Those talks have a year-end target date deadline set by the WTO General Council in November 2014 for producing a permanent deal to replace the interim agreement approved in Bali. The U.S. suggestion that countries ‘evaluate and review’ public food stockholding policies has been met with critical responses from developing countries. The U.S. has previously argued that subsidized food purchased at government-set prices distort markets and are an inefficient way of achieving food security objectives. The differences of opinions have not been reduced and no movement has been made toward a consensus.
There is nothing so far in the talks that would indicate a different outcome from 2008. Developing countries have the same entitlement attitude that developed countries make all the adjustments and developing countries pursue protectionist policies that retard economic reforms. There appears to be no recognition of the economic changes in the world that have occurred since November 2001. The talks are stuck in a time warp.
As agricultural negotiations Chairman Adank said, “There is a clear need for further consultations aimed at getting deeper into the substance of a possible outcome.” WTO Director-General Roberto Azevedo is likely to hold off on conducting intensive consultations until the chairmen of the negotiating committees work through more issues. Based on what is publically known about the talks to date, that could be a long wait.
Ross Korves is a Trade and Economic Policy Analyst with Truth About Trade & Technology (www.truthabouttrade.org). Follow us: @TruthAboutTrade and @World_Farmers on Twitter | Truth About Trade & Technology on Facebook.