'2013' for Ag Subsidies Elimination

Hong Kong The Hong Kong ministerial declaration approved late yesterday by 150 World Trade Organization delegates gathered here for the sixth ministerial meeting set 2013 as the date for eliminating all agricultural export subsidies an agreement that came after hours of wrangling as well as threats of walk-outs from some trade ministers, WTD has learned (see related report this issue).

The Hong Kong declaration suggested new language to achieve "effective" cuts in trade-distorting domestic support measures and overall trade distorting domestic supports.

However, the final text offers only weak provisions on the treatment of sensitive products due to opposition from Canada and members of the Group-of-10 defensive countries, trade ministers said.

From last Thursday to Sunday the European Union refused to compromise despite stiff pressure throughout from the United States and the Group-of-20 members. "Precious time of the so-called chairman's consultative group meetings was spent on deciding the date for the elimination of export subsidies because the European Union was refusing to reveal its cards until Sunday morning," said one South American trade minister.

The United States and Brazil wanted a 2010 end to all farm export subsidies. Brussels maintained its hard line stance on an end-date until there was full parallelism among negotiating modalities for export subsidies, export credits, food aid and state trading enterprises.

Before submitting a second draft revision this week, conference chairman John Tsang and World Trade Organization Director General Pascal Lamy held a marathon "green room" session which focused on the end-date.

Easing Up on the EU

In the first revision, the "green room" chair offered members two options suggesting either an end date of 2010 or five years from commencement of implementation of the final agreement "on the basis of parallel elimination of all forms of export subsidies. Director General Lamy presented the two options to ease pressure on trade commissioner Peter Mandelson from member states, said a source.

The EU commissioner maintained he had no mandate from the EU Council of Ministers who was sitting in Hong Kong to discuss an end-date without first establishing full parallelism between all elements of agricultural export competition, sources said.

Matters came to a boiling point in the "green room" on Sunday morning when Brazilian foreign minister Celso Amorim threatened to walk out of the session finally forcing the EU commissioner to agreed to eliminate export subsidies by 2013. Mr. Amorim demanded a "substantial" front-loading of the elimination in the first year as a down payment a demand apparently supported by Mr. Lamy. Brussels refused to budge.

USTR Portman pleaded that the Brazilian minister return to the "green room".

In the face of the rapidly mounting crisis, the chair opted for the easier option in the second and final revision "that we agree to ensure the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect to be completed by the end of 2013."

The declaration also says that agricultural export credit programs "should be self-financing, reflecting market consistency, and that the period should be sufficiently short duration so as not to effectively circumvent real commercially oriented discipline." The EU had wanted far less than the 180-day repayment period provided for most US loans.

On food aid, the Hong Kong declaration creates a new "safe box" for bona fide food assistance and sets new disciplines for "in-kind" aid, monetization and re-exports so that there can be no loop-hole for continuing export subsidization. It also calls for the elimination of commercial displacement.

The declaration establishes four bands for effecting tariff cuts but does not mention whether they would be linear or non-linear. It says the threshold for developing countries will be higher than those for industrialized countries.