Trans-Atlantic trade deal

There appears to be an “agree­ment of sorts(link to State Depart­ment press report)”:http://usinfo.state.gov/usinfo/Archive/2003/Aug/13–975681.html between EU and USA nego­tia­tors on a way for­ward in the WTO agri­cul­ture nego­ti­a­tions. The agreed text is “reproduced”:http://www.inquit.com/cgi-bin/blosxom/blosxom.cgi/pwg/wto/transatlanticDeal.html?seemore=y in the extend­ed sto­ry, below. As evi­dence of the high-stakes in this agree­ment, there has already been a huge amount of inter­na­tion­al press reaction—much of it skep­ti­cal if not “negative(link to com­ment in the UK Guardian)”:http://www.guardian.co.uk/business/story/0,3604,1018220,00.html. The ‘deal’ has few agreed details; it’s main­ly struc­tur­al. But the struc­ture is enough to show that what the two sides have in mind could eas­i­ly turn out to be tai­lored pro­tec­tion for so-called sen­si­tive prod­ucts rather than the forth­right reforms to world food mar­kets that the 145 Mem­bers of WTO agreed to come up with two years ago.
The text of the draft agreed between the two sides has emp­ty brack­ets where most of key num­bers are yet to be agreed. For exam­ple on the amount by which export sub­si­dies should be cut or tar­iffs reduced. The big prob­lem with the deal is not that either of the two big indus­tri­al­ized countries—the source of most of the dis­tor­tions in world food markets—made a con­ces­sion to the oth­er. That’s just the way of the world. The big prob­lem is that rather than exer­cise lead­er­ship in deal­ing with the hard­est issues, they’ve appar­ent­ly agreed to meet some “low­est com­mon denom­i­na­tor” demands from their pro­tect­ed farm sec­tors. For exam­ple: the US has backed-down, it seems, on its demand for sweep­ing cuts to all agri­cul­tur­al tar­iffs using a har­mo­niz­ing ‘swiss’ for­mu­la that would have seen high duties reduced faster than low­er duties. Now, it appears, both sides have agreed that in “sen­si­tive” areas (read ‘dairy’, ‘sug­ar’, ‘beef’, ‘rice&#8217)countries can keep high duties and make only min­i­mum cuts as a con­tri­bu­tion to an aver­age rate of cut achieved over a broad­er group of prod­uct-lines.  This is pre­cise­ly the approach that deliv­ered such poor results in the same ‘sen­si­tive’ sec­tors in the last round of nego­ti­a­tions. Also: the two sides seem to have agreed to (pos­si­bly) elim­i­nate destruc­tive export sub­si­dies in prod­ucts ‘of inter­est to devel­op­ing coun­tries’ but to (prob­a­bly) take a much small­er cut out of export sub­si­dies on prod­ucts that are of export inter­est to them­sleves. Read this as the EU cut­ting export sub­si­dies on the sug­ar it imports from devel­op­ing coun­tries and then dumps back on world mar­kets, but not mak­ing deep cuts into the absurd export sub­si­dies on dairy prod­ucts which are much more impor­tant to its own pro­tect­ed farm­ers. There’s more to come here: so it’s too ear­ly to reject or con­demn. The reac­tion of the big devel­op­ing coun­try groups in Africa, Latin Amer­i­ca and South and East Asia will be cru­cial to the suc­cess of this transat­lantic pro­pos­al. If the ini­tial rum­blings are indica­tive, how­ev­er, we may be about to wit­ness a demon­stra­tion of the dra­mat­ic change that has tak­en place in the polti­cal econ­o­my of the mul­ti­lat­er­al trad­ing sys­tem. We may be about to see—if not the end then at least the twi­light—of the US-EU hege­mo­ny of WTO.


The fol­low­ing is the text of the USEU agree­ment

13 August 2003 ECUS Joint Text Agri­cul­ture Mem­bers recon­firm the objec­tives as estab­lished in para­graphs 13 and 14 of the Doha dec­la­ra­tion, includ­ing the objec­tive to estab­lish a fair and mar­ket-ori­ent­ed sys­tem through fun­da­men­tal reform in agri­cul­ture. Mem­bers rec­og­nize that reforms in all areas of the nego­ti­a­tions are inter-relat­ed, that spe­cial and dif­fer­en­tial treat­ment for devel­op­ing coun­tries will be an inte­gral part of the nego­ti­a­tions, and that non-trade con­cerns should be tak­en into account. Min­is­ters agree to inten­si­fy work to trans­late the Doha objec­tives into reform modal­i­ties, includ­ing by adopt­ing the fol­low­ing approach­es for reduc­tion com­mit­ments and relat­ed dis­ci­plines on key out­stand­ing issues on mar­ket access, domes­tic sup­port and export com­pe­ti­tion. 1. The Doha dec­la­ra­tion calls for ”sub­stan­tial reduc­tions in trade-dis­tort­ing domes­tic sup­port”. All devel­oped coun­tries shall achieve reduc­tions in trade dis­tort­ing sup­port sig­nif­i­cant­ly larg­er than in the Uruguay Round, that will result in Mem­bers hav­ing the high­er trade dis­tort­ing sub­si­dies mak­ing greater efforts. Reduc­tions shall take place under the fol­low­ing para­me­ters: 1.1. Reduce the most trade-dis­tort­ing domes­tic sup­port mea­sures in the range of []%- []%. 1.2. Mem­bers may have recourse to less trade dis­tort­ing domes­tic sup­port under the fol­low­ing con­di­tions: (i) for direct pay­ments if: — such pay­ments are based on fixed areas and yields; or — such pay­ments are made on 85% or less of the base lev­el of pro­duc­tion; or — live­stock pay­ments are made on a fixed num­ber of head. (ii) sup­port under 1.2.(i) shall not exceed 5% of the total val­ue of agri­cul­ture pro­duc­tion by the end of the imple­men­ta­tion peri­od. (iii) the sum of allowed sup­port under the AMS, sup­port under 1.2.(i) and de min­imis shall be reduced so that it is sig­nif­i­cant­ly less than the sum of de min­imis, pay­ments under Arti­cle 6.5, and the final bound AMS lev­el, in 2004. 1.3. reduce de min­imis by []%. 2. The Doha dec­la­ra­tion calls for ”sub­stan­tial improve­ments in mar­ket access.” Nego­ti­a­tions should there­fore pro­vide increased access oppor­tu­ni­ties for all and in par­tic­u­lar for the devel­op­ing coun­tries most in need and takeac­count of the impor­tance of exist­ing and future pref­er­en­tial access for devel­op­ing coun­tries. To achieve this, com­mit­ments shall be based on the fol­low­ing para­me­ters: 2.1. The for­mu­la applic­a­ble for tar­iff reduc­tion shall be a blend­ed for­mu­la under which each ele­ment will con­tribute to sub­stan­tial improve­ment in mar­ket access. The for­mu­la shall be as fol­lows: (i) []% of tar­iff lines sub­ject to a []% aver­age tar­iff cut and a min­i­mum of []%; for these import sen­si­tive tar­iff lines mar­ket access increase will result from a com­bi­na­tion of tar­iff cuts and TRQs. (ii) []% of tar­iff lines sub­ject to a Swiss for­mu­la coef­fi­cient [] (iii) []% of tar­iff lines shall be duty-free. 2.2 For the tar­iff lines that exceed a max­i­mum of []% Mem­bers shall either reduce them to that max­i­mum, or ensure effec­tive addi­tion­al mar­ket access through a request:offer process that could include TRQs. 2.3. The use of the spe­cial agri­cul­tur­al safe­guard (SSG) remains under nego­ti­a­tion. 2.4. A spe­cial agri­cul­tur­al safe­guard (SSM) shall be estab­lished for use by devel­op­ing coun­tries as regards import-sen­si­tive tar­iff lines. 2.5. All devel­oped coun­tries will seek to pro­vide duty-free access for at least []% of imports from devel­op­ing coun­tries through a com­bi­na­tion of MFN and pref­er­en­tial access. 2.6. Hav­ing regard to their devel­op­ment and food secu­ri­ty needs, devel­op­ing coun­tries shall ben­e­fit from spe­cial and dif­fer­en­tial treat­ment, includ­ing low­er tar­iff reduc­tions and longer imple­men­ta­tion peri­ods. 3. The Doha man­date calls for ”reduc­tions of, with a view to phas­ing out, all forms of export sub­si­dies.” To achieve this, dis­ci­plines shall be estab­lished on export sub­si­dies, export cred­its, export state trad­ing enter­pris­es, and food aid pro­grams. Reduc­tion com­mit­ments shall be applied in a par­al­lel man­ner accord­ing to the fol­low­ing para­me­ters: 3. 1 With regard to export sub­si­dies: — Mem­bers shall com­mit to elim­i­nate over a [] year peri­od export sub­si­dies for the fol­low­ing prod­ucts of par­tic­u­lar inter­est to devel­op­ing coun­tries [”]; — for the remain­ing prod­ucts, Mem­bers shall com­mit to reduce bud­getary and quan­ti­ty allowances for export sub­si­dies. 3.2 With regard to export cred­its: — Mem­bers shall com­mit to elim­i­nate, over the same peri­od as in 3.1–1st indent the trade dis­tort­ing ele­ment of export cred­its through dis­ci­plines that reduce the repay­ment terms to com­mer­cial prac­tice ([] months), for the same prod­ucts in 3.1–1st indent in a man­ner that is eq uiv­a­lent in effect; — for the remain­ing prod­ucts, a reduc­tion effort that is par­al­lel to the reduc­tion in 3.1 2nd indent in its equiv­a­lent effect for export cred­its shall be under­tak­en. 3.3. With­out pre­judg­ing the out­come of the nego­ti­a­tions, reduc­tions of, with a view to phas­ing out, all forms of export sub­si­dies men­tioned in 3.1 and 3.2 will occur on a sched­ule that is par­al­lel in its equiv­a­lence of effect on export sub­si­dies and export cred­its. 3.4. Dis­ci­plines shall be agreed in order to pre­vent com­mer­cial dis­place­ment through food aid oper­a­tions. 3.5. Dis­ci­plines, includ­ing end­ing sin­gle desk export priv­i­leges, pro­hi­bi­tion of spe­cial financ­ing priv­i­leges, and dis­ci­plines on pric­ing prac­tices shall be estab­lished for export state trad­ing enter­pris­es. 4. As far as S&D treat­ment for devel­op­ing coun­tries is con­cerned, the rules and dis­ci­plines will need to be adjust­ed for sig­nif­i­cant net food export­ing coun­tries. 5. Issues of inter­est but not agreed: Peace clause, non -trade con­cerns, imple­men­ta­tion peri­od, sec­toral ini­tia­tives, con­tin­u­a­tion clause, GIs, and oth­er detailed rules.

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