1. Almost a month after the issue Negotiations on Agriculture First Draft of Modalities for the Further Commitments [Note 1] , the Chairman of the Special Session of the Committee on Agriculture, Stuart Harbinson, circulated a revised version. [Note 2]
2. In the preface to the paper, the Chairman notes that the insufficient collective guidance and constructive ideas from participants had made it difficult for him to significantly modify the first draft. Thus, the revised version contains no substantive amendments and maintains the key elements of the original proposals as they affect the major players, including the complete elimination of developed countries export subsidies within ten years, the reduction of tariffs on agricultural imports by an average of 40-60 per cent over five years and the reduction of trade distorting domestic support by 60 per cent over five years. The few changes in the revised first draft are largely restricted to provisions impacting developing countries, e.g. provision of flexibility for developing countries tariff cuts on agricultural imports and some improvement in the special and differential treatment provisions.
3. The new draft does not spell out the treatment of non-trade concerns demanded by the EU, Japan and Switzerland. Perhaps as a reaction to the criticism levelled at the original first draft that non-trade concerns were not dealt with, the revised version clarifies that these concerns were already taken into account in the text, and not only as regards market access. The need for further consideration of the non-trade concerns and the extent to which they should be allowed for in the modalities or subsequent work is reiterated.
4. The revised text leaves the detailed proposed disciplines on the use of export credits untouchedto the annoyance of both the U.S., which would prefer this issue left out, and the EU, which consider the text leaves open too many loopholesand makes only marginal changes to the provisions on food aid.
5. The Chairman maintained the banding system of tariff reductions instead of agreeing to a simple, single percentage reduction as in the Uruguay Round, despite wide support for such an approach [ Note 3]. The principal reduction targets on tariffs, domestic support and export subsidies remain firmly in place and unchanged. This will displease some of the Cairns Group and the U.S. who seek higher levels of ambition.
6. The paper will be discussed at Special Session of the Committee on Agriculture scheduled for 25-31 March 2003.
7. The most significant changes from the 17 February First Draft are as follows:
II. Market Access
8. Additional specificity on dealing with tariff escalation. The final sentence of para.8 introduces a multiplication factor (1.3) to ensure tariff reductions on processed products are larger than on the primary forms.
● Para.9 provides the possibility for those applying non-ad valorem tariffs to calculate tariff equivalents from a three-year average external reference prices, based on a representative recent five-year period, excluding the highest and the lowest entry, instead of the original representative average 1999-2001.
● Para.11 deals with special products (previously strategic products) and their exclusion from the tariff reduction commitments of developing countries. Importantly, rather than referring only to designation of SP products at the 6 digit level, the revision offers an alternative of 4 digit designationthis opens up potentially broader product coverage.
● Four bands of tariff reduction targets for developing countries, rather than threeintroducing an average reduction of 30 per cent for existing tariffs in the range 20-60 per cent, with a minimum cut of 20 per cent per tariff line. Other bands are adjusted appropriately (para.12).
B. Preferential schemes
9. The exceptions to tariff reduction commitments aimed at maintaining preference margins are deepened (para.16).
● Preference-providing countries can delay the first tariff-cut instalment on qualifying preferential products to the beginning of the third year of implementation.
● The qualifying products now have to account for 20 per cent of merchandise trade of the beneficiary (rather than 25 per cent), on a three-year average out of the most recent five-year period, thus widening the applicability of the provision.
● Preference-providing countries are required to provide technical assistance to promote export diversification.
C. Tariff quotas [Note 4] Special and Differential Treatment
10. In-quota tariffs The commitment to provide in-quota tariff duty free access to tropical products and to products of importance for diversifying from the production of illicit crops or lawful but harmful products for human health remains; the original bracketed reference to the WHO regarding recognition of the latter was dropped. More importantly, a second condition under which in-quota tariffs must be reduced was added (para.22). This concerns under-used tariff quotas. The trigger is a fill rate of less than 65 per cent over a three-year period (the most recent for which data is available). This new condition applies also to developing countries (para.23).
D. Special safeguard
11. The provision for developed countries that puts an end to the special safeguard mechanism remains unchanged. For developing countries, para.26 drops the reference to SP and notes that technical work is now underway to define a special safeguard mechanism to enable developing countries to effectively take account of development needs. A new Attachment (2) was added to the revised first draft to include this new special safeguard mechanism for developing countries once the technical work is concluded.
III. Export Competition
12. On the three important issues dealt with under separate Attachments, i.e. export credits, food aid and state trading export enterprises, the new text states that these are subject to further technical discussions. Other changes include:
A. Export subsidies Special and Differential Treatment
13. Para.35 on the exemptions for developing countries of reduction commitments during the implementation period (Article 9.4 of the AoA), two modifications are worth mentioning: instead of referring to transport and marketing subsidies, the revised version reads certain transport and marketing-cost subsidies and instead of shall be maintained, the revised version reads shall be continued for the implementation period.
B. Export restrictions and taxes
14. On the exemptions to the institution of new export prohibitions on foodstuffs, the revised draft omits paragraph 2(a) of Article XI of GATT 1994 (restrictions to prevent shortages of foodstuffs).
IV. Domestic Support
A. Article 6.5 Blue box
15. The first draft proposed that Blue Box payments be capped at the average level notified in the period 1999-2001 and bound at that level. The new draft refers merely to the most recent notified level (para.44).
16. For the developing countries using the Blue Box, the revised text includes an additional provision: the inclusion of such payments in the members calculation of the Current Total aggregate measurement of support as of the fifth year of the implementation period.
B. De minimis
17. Para. 53 clarifies developing countries flexibility to credit to non-specific de minimis support any negative product-specific support up to the equivalent of 10 per cent of the Members total value of production for the product concerned.
C. Least-developed countries
18. Para. 55 firms up a commitment by developed countries to provide duty-free and quota-free access to LDC products. [shall] is now presented as an alternative to [should].
A. Attachment 6 Food aid
19. An introductory paragraph is added to the proposed replacement for Article 10.4 of the Agreement on Agriculture. The provisions, it notes, are accordingly intended not to limit the role of bona fide international food aid, but to ensure that such aid is not used as a method of surplus disposal, now as a means of achieving commercial advantages in world export markets.
B. Attachment8 Annex 2 of the AoA Green box criteria
20. Some additional specificity on the treatment: relief from natural disasters (subpara.3(a) and of animal welfare payments (para.6). Paragraph (4) of the first draft, which provided for green box exemption for producer retirement programmes (through the modification of subparagraph 9(b) on structural adjustment assistance through these programmes) was deleted.
VI. Concluding remarks
21. It seems inevitable that the much-expected 31 March 2003 deadline for establishing the modalities for further commitments will be missed. The Chairmans few changes introduced in his revised first draft have been interpreted in two opposite ways: on the one hand, members have criticised it for failing to bring members positions closer. On the other hand, the text is the illustration of the impossibility of bridging the wide gaps that remain on the key issues. Be it as it may, without agreement on these, not much progress can be expected either in agriculture or in other areas, as members continue to regard agriculture as the linchpin of the negotiations. A face-saving device is likely to be the continuation of the technical work, to imply that negotiations have not stalled and in the hope that the crucial political decisions might be taken at Cancun. However, the agenda at the next ministerial meeting is already overloaded and last minute compromises appear unlikely. To maintain the credibility of the Doha work programme, and the agreed deadline for its completion, it is imperative that negotiators press forward; time is of the essence.
Note 3: The EU remarked that 74 WTO members favoured this approach. (return to text)
Note 4: A tariff quota is a volume of imports whose tariff is lower than the tariff charged for imports above the quota. Market access within the tariff quota is also known as in quota. Imports in excess of the specified tariff quota volume-also known as out-of-quota-face higher tariffs. (return to text)