- As the Hong Kong conference drew to a close on Sunday, an agreement was made on the end-date for agricultural export subsidies. All forms of this type of support are due to be phased out by the end of 2013, with a "substantial" part of the reduction due to occur in the first half of the implementation period (by 2010). This part of the negotiations has been agreed quicker than expected, although this may help to hide limited progress elsewhere.
On market access, agreement was reached on "duty-free and quota-free" access for 97% of agricultural products from 32 least-developed countries into certain developed countries. However, this agreement will not apply to so-called "sensitive" products, such as cotton and sugar into the US and rice into Japan. Negotiations on a general tariff reduction agreement were left unresolved, with the EU failing to submit a further proposal on reducing its barriers to agricultural market access. Very little progress was made in the area of domestic support, although it is hoped that attention will switch to this area in the next few months, if an agreement on market access can be reached.
The next few months are expected to be crucial if the Doha round of negotiations is to be successful. Members are aiming to produce a full set of draft proposals in agriculture and other areas by the end of April 2006. With these proposals needing at least a few months before they can become full WTO legislation, the race is on to produce a full agreement by late-2006 - the date many members see as the absolute final deadline for the round to be completed.
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- The sixth WTO ministerial conference began in Hong Kong on December 13th. The first meeting of the agricultural negotiating group at the conference took place yesterday. In the meeting, every member in attendance, except the EU and Switzerland, endorsed a 2010 end-date for agricultural export subsidies. Full agreement is yet to be made on the end-date however. Further updates will occur in the coming days.
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- Negotiations aimed at reaching a major breakthrough before the Hong Kong Ministerial starts on December 13th appear to have suffered a major setback. Analysts report that ministers believe that reaching an agreement on a detailed framework regarding how to conclude the Doha Round is highly unlikely to occur within the next month. Consensus seems to now have shifted to "getting as far as possible" before the Ministerial Conference begins.
An intensive period of negotiation over the last couple of months has seen only partial progress on the key issues. Regarding Market Access, presently the most controversial of the all negotiation areas, 5 different proposals on reducing tariff levels have been submitted by members recently. Despite having accounted for two of these, the EU is still under pressure to submit a more ambitious proposal on tariff reduction. However, the EU has stated it is unwilling to do this unless concessions are made in other areas of the Doha package, such as the proposed reduction of industrial tariffs in the Non-Agricultural Market Access (NAMA) negotiations.
Divisions in other areas are less severe. The US has expressed a reluctant willingness to consider reductions in domestic support payments if progress is made in the market access pillar, a major development in this area. Export competition appears to be the least problematic area, with the main remaining issue being the date and method of complete elimination of export subsidies.
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Pascal Lamy has taken over as the new Director-General of the WTO and faces a huge task in getting the Doha Round back on track. Following a lengthy delay on finding a solution to the ad-valorem tariff equivalent issue, ministers now face an uphill task agreeing on the exact details of any agreement to be made before the next Ministerial Conference in Hong Kong in December. Market Access still remains the trickiest area, although divisions also exist in export competition and domestic support.
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- Some WTO members are starting to get concerned with the progress made in the Agricultural negotiations, with the Hong Kong Ministerial looming large in 5 months time. Although a full set of draft modalities looks unlikely to be produced by the end of this month, negotiators are determined to make as much progress as possible in producing a framework for debate in December, with the WTO summer break occurring next month.
On the plus side, the impasse over market access appears to be have been resolved. Talks regarding this pillar have progressed slowly but surely over the last couple of months. First, members agreed a formula for the conversion of fixed tariffs into ad-valorem equivalents, a technical issue that had been delaying progress for a number of weeks.
Given this breakthrough, members then progressed to attempting to calculate a formula by which agricultural tariffs could be unilaterally reduced. This issue also proved a controversial one. Some members, such as the EU, favoured a flat rate tariff cut over all members and products. Other members, such as those belonging to the Cairns group, preferred a system where the higher the tariff rate was, the larger percentage cut it was subject to.
Eventually, the members have agreed on a system that involves a blend of the two approaches, where tariffs are separated into five bands, dependant on their size. All tariffs in the same band are subject to the same tariff reduction but those in the higher band will be subject to larger percentage cuts.
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- After significant progress was made in the first few Agriculture Negotiation Weeks and Mini-Ministerial meetings, Agricultural Negotiations have recently been delayed by the issue of Ad-Valorem tariff equivalents.
Currently, the import tariffs charged on many agricultural products are "fixed" at a set currency figure per tonne. However, many other countries have tariffs that are sensitive to the value of the product and hence change magnitude as the product value alters. These Ad-Valorem tariffs are set as a percentage of the product value.
In order to calculate unilateral tariff reductions, as part of the Market Access Pillar of the WTO Agricultural Negotiations, a method of calculating equivalents between the two tariff types needs to be found. Unfortunately, members have yet to agree on a suitable method. Leading negotiators have stressed the importance of agreeing on a conversion method before the "First Approximations" of a possible agreement for Hong Kong 2005 are due to be published, in July.
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- The dates for the first five "agriculture weeks" of negotiations to prepare for Hong Kong 2005 were announced in the WTO General Council last week. These are: 7th - 11th February, 14th - 18th March, 13th - 19th April, 30th May - 3rd June and 11th - 15th July. News from these meetings will appear on this page shortly after.
In the most recent informal meetings of the Committee, the main two issues that were discussed were revisions of the AoA text regarding government-backed export financing and the first look into possible criteria by which Blue Box support payments could be limited (as was decided in the August Agreement).
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- Following the August Agreement, members attended a meeting intended to organise the agricultural discussions that would take place before the next Ministerial Conference scheduled to take place in Hong Kong from 13th to 18th December 2005.
Initially, talks will focus on technical issues that need to be addressed before the Hong Kong conference. These include issues related to the review of the Green Box definition, the use of Special Product exemptions and also creating numerical parallels between the use of different forms of export support (subsidies, credits, guarantees etc). Updates on these meetings will be included on this page shortly.
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- The WTO Peace Clause expired in January 2004. This meant that a member could now bring another member in front of the disciplinary mechanism of the WTO (called the Dispute Settlement Understanding or DSU) for infringements of the WTO Agreement on Agriculture. On 15th September, the WTO confirmed the result of two such complaints that had been made.
Brazil claimed partial victory over the US regarding cotton export subsidies and Brazil, Thailand and Australia also achieved partial success after taking action on the EU Sugar Regime. The DSU made recommendations to the US and EU to reduce distortion in these regimes. These partial victories open up the possibility of action against the US and EU for support in the cereals and oilseeds sectors.
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A significant deal was struck in WTO negotiations on 31st July 2004. It is hoped that the "August Decision" deal will help to break the deadlock that existed in the Agricultural Negotiations of the Cancun Ministerial Conference.
Progress was made in three areas. Firstly, a commitment to negotiate a date for the complete elimination of export subsidies was made. Members differ greatly on when subsidies should be discontinued and as such elimination may not occur until 2015. However, the WTO believed this represented progress in one of the key areas of the Agreement on Agriculture.
Various issues regarding the WTO Boxes, that classify different types of domestic support, were also discussed. There is to be a negotiated ceiling set on the amount of domestic support that can be placed in the Blue Box, which contains support that is significantly distorting but has measures to limit production. This ceiling will complement the existing limit set on Amber Box Support. There will also be a review of the current Green Box definition of support that is "zero or minimally trade distorting."
Finally, discussions regarding the use of "Special Product" exemptions have been organised. These products will be excluded from commitments regarding tariff reductions on grounds such as they are important to food security and livelihoods in developing countries.
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