G-20 Ready To Seek Five-Year Deadline For Elimination Of Farm Export Subsidies

Original Publication Date: 
16 March, 2005

GENEVA--Trade ministers from the Group of 20 developing countries are set to endorse a declaration calling for the elimination of all export subsidies for agricultural products within five years of a final Doha Round agreement.

According to a draft text prepared for a G-20 ministerial meeting in New Delhi March 18-19, the ministers will argue that an agreement on a period for phasing out export subsidies no longer than 5 years 'can inject momentum' into the Doha talks which would allow progress in other areas under the farm negotiation mandate.

The draft text also called for a standstill on future export subsidy payments to ensure that they remain at or below current spending levels during the negotiations. The proposal reflected G-20 concerns regarding the EU's recent decision to recommence export subsidies for wheat.

The G-20 emerged as a powerful alliance for developing countries prior to the WTO's 2003 ministerial conference in Cancun, Mexico. The alliance was forged under the leadership of Brazil in response to what the group's members viewed as the sidelining of developing country interests by the United States and the European Union in the farm trade negotiations.

In addition to Brazil, G-20 members are Argentina, Bolivia, Chile, China, Cuba, Egypt, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, the Philippines, South Africa, Thailand, Venezuela, and Zimbabwe.

WTO members agreed as part of their Aug. 1 'framework' package for advancing the Doha negotiations to eliminate export subsidies and other trade-distorting forms of export support by an end date to be agreed later in the negotiations.

According to a notification submitted to the WTO on Feb. 16, the European Union spent 3.13 billion euros (about $419 billion) on export subsidies during the 2002-2003 marketing year, by far the largest of any WTO member. More than half of the total was used to subsidize exports of butter, cheese, skimmed milk powder, and other dairy products.

Cuts Must Lead to Spending Reductions

In addition to the initiative on export subsidies, the draft G-20 ministerial statement called for a combination of spending cuts and additional disciplines leading to substantial reductions in the domestic support of major subsidizers such as the United States and the EU. The G-20 statement stressed that the cuts must lead to real reductions in spending rather than just lowering the 'bound' maximum spending caps which both the United States and the EU are under.

On market access, the draft G-20 statement noted that the formula for reducing tariffs on farm imports is the major component of an agreement in this sector and that the formula should be negotiated and finalized before addressing the flexible terms to be granted to developing countries.

Those flexibilities must take into account the sensitivities of developing country members in certain products without undermining the overall objective of substantial improvements in market access. The statement stressed that the right of developing countries to designate an appropriate number of products as Special Products (to be granted additional flexibilities) and to utilize a Special Safeguard Mechanism are integral elements of the special and differential treatment guaranteed to poorer countries under the Aug. 1 framework package.

The draft text contained one bracketed paragraph (indicating no agreement) relating to the conversion of specific tariffs and other non-ad valorem tariffs into ad valorem equivalents (AVEs) for use in the tariff-cutting formula. The text stressed the importance of preventing the conversion from becoming a means to circumvent market access commitments and the need to subject the AVEs to WTO tariff bindings.

Agriculture negotiators meeting in Geneva March 14-18 have expressed growing confidence that an agreement on the technicalities for carrying out the conversions can be reached by the end of the week of March 14 so that WTO members can submit their tariff conversions in April.