The agriculture ‘crisis’

meta-creation_date: 12 September, 2003
The state of play as of Thursday 11 September is that agreement on all other issues in these negotiations * access to markets for industrial goods
* improvements in services trade
* agreement to improve government procurement practices
* agreement to work on measures to simplify and streamline trade regulations and documentation (‘trade facilitation&#8217)
* etc., etc. …depends on participants reaching agreement on agriculture. But on that subject, there is still a wide gap. Meetings held by the ‘facilitator’ (Amb George Yeo of Singapore) among the main protagonist groups (US-EU, G21, Cairns Group) have been difficult to arrange and have collapsed quickly when they took place. One of the key problems is that the G21 has very limited internal cohesion on some key issues such as the degree to which developing countries (its members) must open their own markets. This means that the Group can’t effectively negotiate compromises on its own proposals and no-one wants to deal with them on that basis …
The US negotiators—under criticism from both Cairns Group members, their own industry advisors and from the world’s press—have told Ambassador Yeo, who is facilitating the consultations on agriculture that they would be happy to back away fromt the ‘joint text’ with the EU if they could find broad agreement with others on a stronger agreement on market access and export subsidies. Naturally, this was an unpleasant surprise for the EU, which may have thought that it had reached an agreement with the United States. There is little—if any—opposition to the idea that export subsidies should be eliminated on all products, except from the world’s largest trading bloc, the European Union. The EU accounts for most of the export subsidies, but has offered only a vague promise to eliminate them, at some future date, on products ‘of interest to developing countries’. They have refused to provide any clearer characterization of their offer; for example, the products that would be affected. This guarded response doesn’t engender much confidence among other countries that they plan to make any big cuts in their subsidies any time soon. So the EU is feeling somewhat friendless… and may be looking for a compromise already: particularly one that would unblock the talks on other issues such as services that are more economically significant for future EU growth. The early signs of compromise from the EU—tentative and informal— nevertheless amount to a remarkable change in posture for Europe in agriculture negotiations. [Although, perhaps they feel they can afford to compromise on a ‘framework’ text that has few definite commitments.] The G21 text on market access has several advantages over the text in the draft chairman’s text. For example, it provides for a clear obligation to expand the tariff quotas that provide ‘minimum’ levels of access to markets protected by high tariffs. But it’s far from perfect. Finding broad agreement on a stronger market access agreement than is in the EU-US joint text—an agreement that would lead the US to abandon its support for the joint text — is far from easy. Some of the problems: * An agreement on market access has to be stronger than the EU-US joint text to attract the support of the G21 or the remaining Cairns Group members. But it can’t be “too strong” or it will be vigorously opposed by protected sectors of US agriculture; preventing the US from jumping-ship
* An agreement on market access has to requuire developing countries to open up their own markets more than is provided in the the current G21 text or neither the US (nor the EU), nor the remaining Cairns Group members will sign-on. In fact, some members of the G21 are also now hoping that this aspect of the G21 paper will be amended since they send a high proportion of their agricultural exports to other developing countries
* An agreement that requires China (a developing country) to make significant further cuts to its tariffs on top of those it made when it joined the WTO two years ago will probably not win Chinese support

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