G20 response to US, EU proposals

The Group of 20 (G20) developing countries will be presenting this week its own concrete numbers on all three pillars of the agriculture negotiations (domestic support, export competition and market access), the Foreign Minister of Brazil Celso Amorim said on 12 October.

This announcement by the G20 follows proposals put forward this week by the US and the European Union, the two major players in the agriculture negotiations.

Speaking at a G20 media conference, Amorim said that the discussions had so far been focused on the structures, which have been accepted by the major partners as a good basis for negotiations.

"But now we will move from that stage to present concrete numbers in all three pillars of agriculture (domestic support, export competition and market access)," he said.

Meanwhile, at a press briefing on Wednesday, EC Trade Commissioner Peter Mandelson said that a breakthrough was clearly needed in the overall negotiations and that in the last few days members have crossed some thresholds.

At the G20 press conference, Amorim was joined by Kamal Nath, Commerce and Industry Minister of India, and representatives of South Africa, Pakistan, Argentina and Mexico.

Several of the G20 officials expressed disappointment with the US proposals on agriculture, saying that they would not in fact reduce the US' trade-distorting domestic support.

Amorim, who coordinates the G20 with Kamal Nath, referred to a meeting of the G20 that was held Tuesday, saying that an important conclusion of that meeting has been that if things are moving today, it was largely due to the G20, which after Cancun kept pushing and coming up with proposals and new ideas to move the negotiations forward.

The G20 has an ambitious goal on the three pillars of the agriculture negotiations and it was also very conscious of the importance of special and differential treatment (SDT) specifically in agriculture, he added.

These two aspects have to be seen together - that is, ambition and SDT, taking into account the distortions in trade and the levels of development.

Amorim provided some highlights of what the G20 was looking for in the agriculture negotiations.

On the issue of domestic support, the G20 would be looking for measures that should result in real cuts in applied levels of support.

On market access, the G20 would be looking for real market access opportunities, which would imply higher cuts in tariffs than those that were used in the Uruguay Round. "We will be sticking to a system of bands,"
Amorim said.

Special and Differential Treatment will be of importance as well in recognizing special products and to have different thresholds for developed and developing countries.

"We will be insisting on the date of 2010 as the date for the elimination of all forms of export subsidies," Amorim added.

As regards to the recent US proposal on agriculture, Amorim said that while this was a positive step, it was however an insufficient one, for it does not lead to real cuts in budgetary expenditures in relation to domestic support.

It also does not have clear disciplines in the area of the new Blue Box. The US proposal has to be improved in terms of the numbers for Amber Box support, and especially in the overall trade-distorting support.

"The man or woman in the street will look at these numbers, (and) they want to see whether the overall distorting support actually diminished," Amorim said, adding that this is an essential part of the mandate, but at the moment this is not clear.

He elaborated that on the overall trade-distorting support, the place where the US has more 'water' is on the de mininis support. Thus, if the US were to accept further disciplines in this area, it would partly address the problem.

On the peace clause, which was mentioned in the US proposal, Amorim said that the G20 is not contemplating any kind of peace clause.

Kamal Nath said that the G20 since its formation has been recognized as a credible voice in negotiations. The composition of the G20 is not a composition of single interests but one of diverse interests. These diverse interests have come together with unity of purpose which gives it that credibility.

The G20 proposals have not been extreme proposals and much of the starting point of the agriculture negotiations began with the G20 formulations. The G20 has been a major catalyst in the movement forward, he added.

Nath welcomed the step that the US has taken with its proposal but said that what is needed is not merely a step but a leap that removes the great structural inequities in agriculture.

The G20 was looking for real reductions in US budgetary support, disciplines in the Blue Box and product-specific caps at reasonable levels. That, he said, would be the measurement of real progress.

With respect to the tariff reduction formula, Nath said that the US would need to give full respect to paragraph 28 of the framework that says that the formula will take into consideration the different tariff structures of developing countries.

This is a development round and such a round must address areas that have the most inequities. The most important evaluation of the development round will have to be in agriculture, which has the most structural inequities.

Argentina's senior official, Ambassador Alfredo Chiaradia recalled that the G20 was set up (in July 2003) as a response to the US and EU supporting each other in their respective areas of weakness. The US had supported the EU in market access and the EU supported the US on domestic support.

After two years, he said, the situation in real terms is the same, despite the current proposals.

The recent US proposal implies that overall (trade distorting) US domestic support, which is at $21 billion, will be able to be raised to $23 billion.

He said that it is very confusing for the public to see figures being juggled about in the media, such as a 50% or 70% reduction. The public does not really know what these mean. The real hard fact is that according to the US proposal on domestic support, it is actually proposing to allow for an increase of support to its products.

He said that under the market access proposal of the EU, it would be able to still keep 150 or 200 tariff lines as sensitive products.

He added that the task of the G20 is to move the two major partners (the US and the EU) to go beyond their bottom lines.

Meanwhile, at a press briefing on Wednesday, EC Trade Commissioner Peter Mandelson said that a breakthrough was clearly needed in the overall negotiations and that in the last few days members have crossed some thresholds.

In agriculture, members have moved from the position of a stand-off without yet reaching a trade-off, but some progress has been made.

He welcomed the US proposals on export competition, saying that this pillar of the negotiations is looking better than it did. The US reforms, if implemented, will start to catch up with what the EU began with its CAP reform years ago.

There are now clear proposals on market access, with members beginning to talk numbers, but these would have to go significantly beyond what was achieved during the Uruguay Round. On export competition, Mandelson said that this pillar can only be complete when others move on food aid, export credits and reforming state trading enterprises.

On services, members need to intensify efforts and add to the negotiating methods, as that part of the negotiations is seriously lacking. Members need to move forward on services and there are several proposals on the table at present.

In response to a question as to whether the so-called 'benchmarking' proposals put forward by several developed countries and was opposed by many developing countries was still a viable way forward in the services negotiations, Mandelson said that these proposals alone were not an adequate basis for taking the services negotiations forward.

Targets for the membership as a whole was needed, so that individual countries can know how for they need to intensify their efforts in order to bring forward revised and better offers.

There was a need to look at different sections of services activities in order to provide a better definition and guide to members in order to make those offers and rise to the level of ambition that members think they need to be challenged with.

In that sense, Mandelson wanted the services negotiations to operate on a similar basis with that on agriculture and industrial products.