You can access the market access proposals, as of about 12 October, here on the ICTSD site along with a fairly good coverage of the latest developments. I thought about providing some analysis of the different impacts of these proposals. But by the time I had that done, they might well have changed again—there were several significant changes between Zurich (10 October) and the informal agricultural negotiating committee session on 12 October. I decided, instead, you might get more valuefrom an graphical comparison showing the differences in the main proposals.
Clicking the thumbnail will show comparisons of the impact on tariffs of the USA, EC, G‑20 and G‑10 proposals (.png, 88k). Each chart of proposals for the developed countries shows the top ‘tier’ as a tariff of 300% for the sake of comparison, but the top tier has in fact no upper threshold. In the case of the U.S. proposal—which contains a progressive linear cut—I have shown the maximum cut in each tier.
There’s an animated version of the charts here (Quicktime movie, 2.2mb).
This is a negotiation, so the details of the offers will change as proposals are put forward, tested and evolve1. In fact, it would be more accurate to say that what’s going on is two negotiations, with the most heated being the one that happens in capitals. The U.S. Congress and farm groups and the EC Member States are trying their best to steer from the back seat, as are agricultural and food industries around the world.
It’s important to understand that USTR Portman, Trade Commissioner Mandleson share a strategy for dealing with the political economy at home: they are putting their proposals in public for a couple of reasons. On the surface, it’s the old game of trans-Atlantic one-upmanship, designed to elicit quick exchanges. But they won’t negotiate in public. The underlying strategy is more important; they’re both trying to stay ahead of the public debate, risking objections from the gallery in order to move quickly and hoping that the rapidity of exchanges and top-level support—such as Mandelson has from his Commission President and from the UK Presidency—will allow them to keep their opponents at home ‘off balance’ and always slightly out-of-touch, for now.
More than any other single factor, it’s this strategic ploy that confirms this is a determined push by both the USA and EC to ensure that most aspects of the agriculture deal can be ready for Hong Kong. There are still many other things to be done, on market access alone.
- The development aspects will be crucial—particularly the treatment of ‘special products’—but difficult to sort out before Hong Kong because their proponents are hopelessly late in coming forward with practical ideas.
- The liberalization of imports of ‘sensitive’ products in developed country markets—in effect, those imports controlled by tariff-quotas—will demand a hard and probably complex deal to ‘align’ changes in the protection parameters (size of the quota, in-quota duties, out-of-quota duties) with the level of cuts achieved in simple duties.
The number of ‘sensitive’ products allowed in each agricultural tariff schedule is also crucial to the overall impact of the deal. The EC has shaved it’s initial claim for 10% of tariff lines to 8% of tariff lines; the USA is proposing no more than 1%. As the World Bank pointed out in the Trade Note I referenced here, if just 2% of tariff lines at the 6‑digit level of tariff are exempted from full liberalization, the benefits of the deal could shrink by three-quarters.
1 Since the proposals first emerged on 10 October the EU has modified it’s stance; dropping the idea of ‘pivoting’ linear cuts in each of the four tariff tiers and accepting the tariff ‘cap’ that could not be agreed last August (the G‑10 diehards of Switzerland, Japan, Taiwan etc may be the last to hold out against the tariff cap). The G‑20, too, has offered more precision; adding to the ideas that I identified as a potential breakthrough in July.