Flexibility’ in the agriculture negotiations

Diplo­mats in Gene­va are attempt­ing to come up with a com­mon posi­tion on the most difficult—but most important—issue in reform of agri­cul­tur­al trade poli­cies: improv­ing access to high­ly pro­tect­ed agri­cul­tur­al mar­kets. Unfor­tu­nate­ly, they are con­coct­ing a ter­ri­ble mess of ‘option­al’ and’band­ed’ tar­iff cuts that is so filled with incom­pre­hen­si­ble options that it is mov­ing away from the basic ratio­nale of mul­ti­lat­er­al trade lib­er­al­iza­tion.  The texts mak­ing their way around the room are almost inde­ci­pher­able: col­lec­tions of square-brack­et­ted ‘cas­cades’ of cuts to dif­fer­ent bands of tar­iffs. ‘Bands’ are defined by the ad-val­orem per­cent­age inci­dence of the duty. The cuts are defined as # a series of Swiss formula[1] cuts or
# (alter­na­tive­ly) a com­bi­na­tion of Swiss for­mu­la + ‘straight’ lin­ear cut + an expan­sion of the tar­iff-quo­ta ‘win­dow’ for entry of goods at a min­i­mal in-quo­ta tar­iff rate, or
# (option­al­ly for a ‘lim­it­ed num­ber of sen­si­tive tar­iff lines&#8217)no cut in the bound tar­iff but a larg­er tar­iff-quo­ta expan­sion than in (2) This ‘flex­i­bil­i­ty’ in the appli­ca­tion of tar­iff cut­ting for­mu­lae may apply either to the tar­iff as a whole or to dif­fer­ent ‘bands’ of tar­iffs in dif­fer­ent ways. Fur­ther­more, devel­op­ing coun­tries will have dif­fer­ent (low­er) co-effi­cients of cut both in the ‘straight’ cut and in the Swiss for­mu­la cuts. The also have addi­tion­al ‘flex­i­bil­i­ty’ in the use of ‘spe­cial prod­uct’ cat­e­gories that may be exempt­ed from mar­ket access cuts alto­geth­er, plus a ‘spe­cial safe­guard mech­a­nism’ that will, pre­sum­ably, amount to the same thing on an ‘as need­ed’ basis. This scholas­tic craft­ing of ‘flex­i­bil­i­ty’ is a neu­ro­sis. The GATT and WTO rounds of trade lib­er­al­iza­tion serve an impor­tant polit­i­cal need, not an eco­nom­ic one. A frame­work of simul­ta­ne­ous, rec­i­p­ro­cal, pre­dictable cuts in import bar­ri­ers by all Mem­ber economies enables gov­ern­ments to coop­er­ate to reduce pro­tec­tion in the face of domes­tic inter­ests that oppose open­ing mar­kets to import com­pe­ti­tion. Unless there is a clear sense of bal­anced “give and take” in the exchanges on mar­ket access, the WTO nego­ti­a­tions lose their attrac­tion. That is pre­cise­ly what is hap­pen­ing, now, in Gene­va. The ‘band­ed’ for­mu­la pro­pos­als are far too com­plex to allow any Mem­ber to read­i­ly assess their impact on the tar­iffs of its trad­ing part­ners. They there­fore don’t pro­vide the sort of pri­ma facie rec­i­p­ro­cal frame­work that is the only rea­son for engag­ing in mul­ti­lat­er­al trade liberalization—as opposed to cut­ting your own tar­iffs in your own time and at your own pace as domes­tic cir­cum­stances demand, or allow. Of course, the nego­tia­tors’ polit­i­cal mas­ters, the Trade Min­is­ters, should have tak­en the helm by now and put an end to this tai­lor­ing of fin­er and fin­er options for ‘flex­i­bil­i­ty’. But, as was evi­dent at Can­cún, they have not the stom­ach to do so. The best cur­rent guide to the debate is prob­a­bly the “briefing”:http://c.moreover.com/click/here.pl?r169217851 from ITCSD. They have also pro­duced an excel­lent back­ground guide to the bewil­der­ing dif­fer­ences between dif­fer­ent groups in the nego­ti­a­tions; avail­able “here”:http://www.agtradepolicy.org/output/resource/agriculturenegotiations11.pdf in PDF for­mat. fn1. A ‘Swiss’ for­mu­la—not a Swiss pro­pos­al in this negotiation—is the appli­ca­tion to each ad-val­orem tar­iff of a pro­por­tion­al cut in which the pro­por­tion is greater the high­er the ini­tial tar­iff rate. This means high tar­iffs are cut by more than low tariffs.

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