Battlelines drawn

Farm trade: it's developing countries vs EU-US

By Clifford Polycarp
Published: Monday 15 September 2003

negotiations on the crucial issue of agriculture intensified in the build-up to the Fifth World Trade Organization (wto) Ministerial Conference in Cancun, Mexico, with several developing countries joining hands to take on the formidable eu-us combine. The latter presented a joint paper on August 13 at the wto general council in session at Geneva. The move was countered by six like-minded developing countries, which tabled a proposal on August 19. The next day, nine members of the Cairns Group, along with India, China, Mexico and Peru, followed suit. The developing nations' alliance may get a further boost as more countries are expected to hop aboard.

Earlier, India's Union minister for commerce and industry, Arun Jaitley, dismissed the eu-us proposal as "unacceptable" saying: "They must reduce and, thereafter, eliminate domestic subsidies." The trade commissioner of the European Commission, Pascal Lamy, was upbeat about the eu-us paper. "(It) is just what is required to enable the wto negotiations to change gear and move us into the final phase," declared Lamy. us agriculture secretary Ann Veneman shared Lamy's enthusiasm. "We were asked by the wto leadership to try and reach an accord with the eu so that the agricultural and other negotiations could move forward. We have responded," she emphasised, adding that it was now up to the other members to act.

While the group of 13 developing countries' paper follows the same structure as the eu-us joint text, it demands a higher level of ambition in all the three pillars of agricultural trade -- domestic support (subsidies), market access (tariffs and tariff rate quotas) and export competition (export subsidies).

On the issue of trade distorting domestic support, the eu-us paper calls on all developed countries to achieve reductions larger than in the Uruguay Round but requires countries that have higher trade distorting subsidies to make greater efforts. It, however, doesn't propose the elimination of subsidies. The 13 developing countries have called for a total elimination of domestic support on products designated for export.

With regard to market access, while the developing bloc suggests a simple uniform tariff cut, the eu-us proposal also envisages a minimum cut for some "import sensitive" products -- a flexibility particularly sought by the European countries. On special and differential treatment to developing countries, the eu-us text offers lower tariff cuts and longer implementation periods but does not refer to the concept of "special products" of interest to developing countries. This is a principal demand of developing countries. The group of six developing countries makes one additional suggestion on modalities to tackle tariff escalation, which implies higher tariffs on more processed goods.

Both the eu-us and the group of 13 developing countries' papers envisage elimination of export subsidies, and disciplining of export credits and food aid. The former, however, proposes elimination for only products of particular interest to developing countries and a reduction of the rest.

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