Europe’s revised offer on agriculture ‘inadequate’

The EC Commission’s offer increas­es the cut in import duties in the high­er ranges, offers a small­er vari­able cut in import duties in the low­er ranges and reserves approx­i­mate­ly 180 tar­iff lines for ‘sen­si­tive’ prod­uct treat­ment (up to 8% of all agri­cul­tur­al tar­iff lines). The USA has called the offer ‘dis­ap­point­ing’; a nuanced reac­tion which I inter­pret as designed to allow the two sides to con­tin­ue to wrangle—between them­selves and with the G‑20 and others—beyond Hong Kong.

The EC has pro­vid­ed more detail, too, on it’s com­plex and restric­tive pro­pos­als for han­dling the expan­sion of tar­iff quotas.

I have mod­i­fied the quick-com­par­i­son charts of the main offers to reflect the ‘head­line’ num­bers in the new EC offer. Click this thumb: 

I have also obtained the full EC pro­pos­al, which you can down­load as a PDF file (about 120k) here.

The USA cal­cu­lates that the new EC offer amounts to a 39 per­cent aver­age cut in tariffs—as opposed to the 54 per­cent pro­posed by the G‑20 group of devel­op­ing countries—and has ‘too many strings attached’. 

This rejec­tion of the EC offer is not as hard-edged as it might have been. The reac­tion from the spokesper­son from the US Trade Representative’s office was:

From our ear­ly analy­sis, we are dis­ap­point­ed with the new EU pro­pos­al. While in some ways it is a step in the right direc­tion and we acknowl­edge the EC’s efforts, much more needs to be done.  First, the pro­posed tar­iff reduc­tions are low­er than pro­pos­als from the G‑20 devel­op­ing coun­tries and far low­er than the U.S. pro­pos­al.  As con­cern­ing, the large num­ber of excep­tions for so-called sen­si­tive prod­ucts appar­ent­ly has not changed from ear­li­er EU pro­pos­als, and anoth­er ele­ment – the ‘piv­ot’ – actu­al­ly walks back from their last pro­pos­al.  Both of these ele­ments would allow sub­stan­tial loop­holes to the rel­a­tive­ly low­er tar­iff cuts the EU has offered.  If the final Doha agree­ment on agri­cul­ture were to go no fur­ther than this, oth­er areas would also be weak and the Doha Round would not approach its poten­tial for pro­mot­ing devel­op­ment, oppor­tu­ni­ty and glob­al eco­nom­ic growth.”

In oth­er words: this is bet­ter, but still not good enough. This sort of lan­guage sig­nals that the USA wants to take this debate on through the Hong Kong Min­is­te­r­i­al con­fer­ence (of course).

More analy­sis to follow.

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