1. On 17 February, the Chairman of the Special Session of the Committee on Agriculture, Stuart Harbinson, tabled a first draft of possible Modalities for the Further Commitments. [Note 1] Agreement on such modalities is necessary to provide numeric targets and precise negotiating directives for the ongoing agricultural negotiations under the Doha Ministerial Declaration. In principle, agreement must be secured by 31 March 2003. On this basis, WTO members would be required to present detailed draft lists of specific commitments (schedules) by the time of the Cancún Ministerial Conference, from 10-14 September 2003.
2. The Chairmans First Draft (hereafter simply Chairmans draft), follows an overview paper, issued in December 2002, [Note 2] in which most of the negotiating proposals that have emerged during the formal and informal Special Sessions of the Committee on Agriculture were assembled with some indications of areas of commonality and difference. The Chairman is expected to redraft the current paper before the negotiating sessions at the end of March.
3. The Chairmans draft takes up many specific proposals by WTO members, while maintaining an overall structure similar to that adopted in the Uruguay Round: principally, reform under the three pillars of market access, domestic support and export competition. All the target figures for new reduction commitments are termed indicative only and are clearly intended as a basis for negotiation. This paper outlines the mainstream proposals, the special and differential treatment provisions envisaged for developing countries and, where appropriate, makes comparisons with commitments made in the Uruguay Round. It also includes some limited initial commentary.
4. National proposals were sharply divided between those advocating a formula approach, forcing much larger cuts on very high existing tariffs than on more moderate ones (often referred to as the Swiss Formula [Note 3]) and those insisting on the Uruguay Round route in which essentially all tariffs were reduced by the same percentage. The Chairmans draft takes the bound tariffs (as opposed to the applied) as the basis for reduction and uses a hybrid approach, setting different levels of commitments for different bands of current tariffs, each to be implemented over a period of five years:
i. All tariffs now higher than 90 per cent to be cut by a simple average of 60 per cent. The minimum cut on any single tariff line would be 45 per cent.
ii. All tariffs now between 15 and 90 per cent to be cut by a simple average of 50 per cent. A minimum cut of 35 per cent on any single tariff line.
iii. All tariffs now below 15 per cent to be cut by 40 per cent with a minimum of 25 per cent on any single tariff line.
5. The Chairmans draft sets out a significant number of special terms for developing countries. In general, tariff reduction commitments would be implemented in equal instalments over ten rather than five years. The commitments themselves would be less stringent:
i. Current tariffs above 120 per cent to be cut by a simple average of 40 per cent with a minimum tariff line cut of 30 per cent.
ii. Tariffs now between 20 and 120 per cent to be cut by a simple average on 33 per cent with a minimum tariff line cut of 23 per cent.
iii. Tariffs below 20 per cent to be cut by 27 per cent on average with a tariff line minimum of 17 per cent.
6. However, the concept of Strategic Products (SP products) is introduced for developing countries. Any such member could name SP products tied to food security, rural development and/or livelihood security. Current tariffs on SP products would be subject to a simple average cut of ten per cent with a tariff line minimum of 5 per cent.
7. Least-developed countries would not be required to make any reduction commitments¾though they may be encouraged to do so voluntarily.
8. In terms of market access concessions in favour of developing countries, three points stand out. First, the Chairmans draft calls on developed country members to provide for greater market access opportunities for products of particular interest to developing countries, notably tropical products and products that will encourage diversification away from illicit narcotic crops or other products harmful to human health. Developed countries are called upon to offer duty¾and quota-free access for all imports from least-developed countries.
9. Second, the paper recognises the problem of tariff escalation by calling for higher tariff reductions on processed products than on the corresponding primary products where the former is currently higher than the latter.
10. Third, the Chairmans draft makes some concessions with respect to the potential loss of preferential margins currently enjoyed by many developing countries, including the ACP Group. In making commitments, participants are urged to maintain, to the extent possible, the nominal margins and other conditions of tariff preferences they currently accord developing countries. In this context, an exception to the targets (in para.4 above) is to be available for products that, over the three most recent years, have accounted for at least 25 per cent of the total merchandise exports of the preference beneficiary. For these products the reduction commitment by the preference-granting country would be implemented over eight rather than five years.
11. In general, in the Uruguay Round, all customs duties on agricultural products were reduced on a simple average basis by 36 per cent in equal annual installments over six years. Developing countries received proportionately similar advantages to those proposed by the Chairmans draft; notably, a 24 per cent average reduction in customs duties implemented over ten years. Least-developed countries were exempt from reduction commitments.
B. Tariff quotas