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Background Note

March 2003

Thematic File: Post-Doha Agenda
Doha Work Programme Negotiations on Agriculture:
Summary and Commentary on the Chairman’s Draft Mark Two

Market Access
Export Competition
Domestic Support
Concluding remarks

I. Introduction

● 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 designation—this opens up potentially broader product coverage.

● Four bands of tariff reduction targets for developing countries, rather than three—introducing 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 member’s 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”].

V.  Attachments

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. Attachment 8 –  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 Chairman’s 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 1: TN/AG/W/1, 17 February 2003. (return to text)

Note 2: TN/AG/W/1/Rev.1, 18 March 2003. (return to text)

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)