Agriculture Chairperson issues list of WTO negotiating issues

A long list of questions has been distributed by the Chairperson of the agriculture negotiations for members to use during the "agriculture week" of negotiations being held at the WTO this week.

In a letter to WTO members dated 9 February, Ambassador Crawford Falconer of New Zealand said there is need to structure the negotiations so that texts could be developed together. The list of questions was intended to focus the discussions, he added.

This week's agriculture negotiations begin on Monday afternoon with an informal plenary meeting of the Special Session of the Committee on Agriculture. On Tuesday to Thursday, Falconer will conduct consultations with various groups and there is also expected to be bilateral meetings. On Friday, the members meet again in plenary, including to inform on the results of the consultations.

The list of questions are categorized mainly according to the three major "pillars" of the agriculture negotiations - domestic support, export subsidies and market access. The following is a summary of the questions.

Domestic Support: This category comprises the following issues - the overall cut in all trade-distorting support; de minimis support; aggregate measure of support (AMS); blue box and green box.

Falconer's document states that the overall cut in base level of all trade-distorting domestic support (as measured by the Final Bound Total AMS plus permitted de minimis level and Blue Box payments) will be reduced according to a tiered formula. The Chairman's report to the TNC (Annex A of WT/MIN(05)/DEC) sets out the possible thresholds for the tiered approach and the cuts in each band.

The questions are: ( i) On the basis of the Hong Kong Ministerial Declaration, would the following thresholds be acceptable? (Band 1: $0-10 billion and developing countries; Band 2: $10-60 billion; Band 3: over $60 billion)? (ii) Can we find a basis for further convergence on what should be the cuts in each band? (Reference is given to the range of reductions of 31-70% for band 1, 53-75% for band 2 and 70-80% for band 3 that had been noted in a previous report of the Agriculture Chair). ( iii) How can we respond to the direction consistent with the Framework?

On the de minimis support, the Chairman's Report to the TNC noted that there is a zone of engagement for cuts between 50% and 80% for developed countries. The questions are: ( i) How do we advance further convergence on the reduction in de minimis for developed countries? ( ii) For developing countries with AMS commitments and not covered by the exclusion in paragraph 11 of the Framework, should there be cuts and if so by how much?

On the final bound total aggregate measurement of support, the questions are: ( i) On the basis of the Hong Kong Ministerial Declaration can we not settle the differences over the $12-15 billion for the thresholds between Bands 1 and 2 with all developing countries in the bottom band? ( ii) How can we further promote convergence on the cuts in each band? ( iii) More concretely, what should be the additional effort in AMS reduction by developed country Members in the lower bands with higher relative levels of Final Bound Total AMS? ( iv) What should be the base period for product-specific AMS caps? Certain proposals are on the table. Can we develop a working hypotheses for advancing this issue?

On the blue box domestic support, the Chairman's Report to the TNC noted that there was significant convergence on moving beyond (i. e. further constraining) Blue Box programme payments envisaged in the July 2004 Framework. However, the technique for achieving this remains to be determined.

One proposal was to shrink the current 5% ceiling to 2.5%. Another proposal rejected this in favour of additional criteria disciplining the so-called "new" Blue Box only. Others favoured a combination of both, including additional disciplines on the "old" Blue Box. The following are the
questions:

( i) Should the Blue Box be constrained by: ( a) shrinking the current ceiling from 5% of the value of production; ( b) by additional criteria disciplining the "new" and/or "old" Blue Box; or ( c) by a combination of both reductions and new disciplines?

( ii) If it were agreed that there should be new criteria in addition to those in paragraph 13 of the Agreed Framework what should they be?

( iii) If it were agreed that the current ceiling should be shrunk, by how much?

( iv) Blue Box support is not to exceed 5% of a Member's average total value of agricultural production during an historical period: ( a) what is the base period; and ( b) can we accept that the "value of production" is the gross value of all agriculture production of basic agriculture products at farm gate prices.

( v) What should be the flexibility provided to Members that have placed an exceptionally large percentage of trade-distorting support in the Blue Box?

On the green box domestic support, the Chairman's report to the TNC noted that some Members firmly rejected anything that departed from the existing disciplines while, on the other side, there was an enduring sense that more could be done to review the Green Box without undermining ongoing reform. Beyond that, there was some tangible openness to finding appropriate ways to ensure that the Green Box was more "development friendly".

The questions are: ( i) Can the relevant sections of the G-20 proposal of 2 June 2005 be used as a starting point for considering programmes of developing country Members that cause not more than minimal trade-distortion? (ii) What, if any, other criteria need to be added and/or amended to ensure that Green Box measures have no, or at most minimal, trade-distorting effects or effects on production?

In the category Export Competition are the following sub-issues: export subsidies, export credits, state trading enterprises and food aid.

On export subsidies, the Hong Kong Declaration agreed to 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. This will be achieved in a progressive and parallel manner so that a substantial part is realized by the end of the first half of the implementation period.

The questions are: ( i) What should be the timetable for this so that a substantial part is realized by the end of the first half of the implementation period? ( ii) How will export credits, export credit guarantees or insurance programmes with repayments periods beyond 180 days be eliminated so as to ensure progressive and parallel elimination?

On export credits, export credit guarantees or insurance programmes with repayment periods of 180 days or below, the Chairman's report noted that critical issues remained, including: possible exemptions to the 180 day rule; if pure cover only should be allowed or if direct financing was also allowed; the principle of self-financing; disciplines regarding special circumstances; and special and differential treatment.

The questions are:

( i) What is the period that would satisfy the criteria that export credit programmes will be self-financing, reflect market consistency and not effectively circumvent real commercially-orientated discipline?

( ii) What other disciplines are necessary to cover, inter alia: payment of interest; minimum interest rates; minimum premium requirements; and other elements which can constitute subsidies or otherwise distort trade?

( iii) What appropriate provisions should be provided in favour of least-developed and net food-importing developing countries?

( iv) What, if any, elements of special and differential treatment should be provided for export credits extended by developing countries?

( v) How should disciplines be structured to ensure progressive parallelism with elimination of direct export subsidies?

On exporting state trading enterprises, the Chairman's Report to the TNC noted the convergence on rules to address trade-distorting practices, although noting major differences regarding the scope of practices to be covered by the new disciplines. It noted that the monopoly status of state trading enterprises in developing countries needed more clarity.

The questions are:

( i) How should an exporting state trading enterprise be defined?

( ii) Is the list of practices subject to disciplines and/or elimination to be exhaustive or indicative?

( iii) What are the more concrete disciplines to be applied so as to eliminate trade-distorting practices in exporting STEs where the following are involved: export subsidies provided to or by exporting STEs; government financing; underwriting of losses?

( iv) What concrete disciplines are capable of ensuring also that the future use of monopoly powers cannot circumvent the direct disciplines referred to above? What other disciplines, if any, are to be negotiated in respect of monopoly powers?

( v) What precisely, if any, are other "trade distorting practices" at issue in these negotiations as regards STEs?

( vi) What does "special consideration" for maintaining monopoly status mean when it is to be applied to developing country Members' STEs? How are the criteria of preservation of domestic consumer price stability and ensuring food security to be made operational under this paragraph?

( vii) How should disciplines be phased in to ensure progressive parallelism with the elimination of direct export subsidies?

On food aid, the Chairman's Report to the TNC noted the consensus that commercial displacement is to be eliminated. The Hong Kong Declaration clarified that a "safe box" for bona fide food aid is to be provided for dealing with emergency situations but there is not yet common understanding where emergency food aid ends and other food aid begins. What type of food aid is to be permitted in non emergency situations is also still unclear.

( i) The World Food Programme defines an emergency situation and the series of events that dislocates communities on an exceptional scale (which the document quotes). Is its definition either an acceptable bases for elaborating operational disciplines or, at least, a starting point for further elaboration? If the latter, how is it to be elaborated?

( ii) What does the concept of the "safe box" amount to operationally, once a definition of "emergency situation" has been arrived at and how is it to operate functionally?

( iii) To ensure elimination of commercial displacement, what effective disciplines are needed on: in-kind food aid; monetization; re-exports?

( iv) Is this an exhaustive or indicative list of practices on which disciplines are needed so that there can be no loop-hole for continuing export subsidization?

( v) How should disciplines be phased to ensure progressive parallelism with elimination of direct export subsidies?

( vi) What other separate and concrete measures are to be required to meet the Hong Kong Ministerial Declaration as regards least-developed and net food-importing developing countries.

In the market access category, the questions are subdivided according to the tiered formula; sensitive products; other issues; special products and special safeguard mechanism; tropical products; preferences, cotton and others.

On the tiered formula, the Chairman's report to the TNC noted that there was considerable convergence on a linear-based approach for cuts within bands. Major gaps were yet to be bridged on the size of tariff cuts. Also to be agreed was the application of a tariff cap and, if it were to be agreed, its size.

( i) How can we further converge on what the thresholds for the four tariff bands are to be? (ii) How can we further converge on what the reductions in each band are to be? ( iii) How can we further converge on what the thresholds and reductions for developing countries are to be? ( iv) How can we advance to resolve the question of whether there is to be a tariff cap and, if so, what should it be for developed and developing countries?

On sensitive products, the Chairman's report to the TNC noted that proposals extended from as little as 1% to as much as 15% of tariff lines and the fundamental divergence over the basic approach to treatment needed to be resolved.

( i) How can we get further convergence over what the appropriate number of tariff lines to be treated as sensitive should be?

( ii) 'Substantial improvement' in market access is to be achieved through combinations of tariff quota commitments and tariff reductions. Is there a relationship, and if there is what is it, between: ( a) The tariff reduction that would normally be applied through the formula and the reduction in tariffs required for sensitive products? ( b) The increase in the tariff quota and the difference between the tariff reduction required by the formula and that applied to a particular sensitive product?

( iii) How can we get further convergence over the basis on which quotas are to be increased: pro rata based on current quotas with a benchmark based on domestic consumption; based only on domestic consumption; or based on current levels of imports? How is the requirement to take "into account deviations from the tariff formula" to be operationalised?

( iv) In cases where a tariff line is designated as sensitive and is not currently subject to tariff quota commitments in a Member's Schedule, would it be a practical way to proceed for the moment to focus on whether the needs of Members can be met via the working hypotheses of greater flexibility to be applied through lower tariff reductions, longer implementation periods or a combination of the two?

On other elements in market access, the questions are: ( i) How are we to reach convergence on the reduction or elimination of in-quota tariff rates? ( ii) Can Attachment 1 of TN/AG/W/1/Rev. 1 be used as a working basis for negotiating detailed rules on tariff quota administration? ( iii) What should be the formula to address tariff escalation? ( iv) What more specifically needs to be addressed in respect of "tariff simplification"? ( v) Should the current special agricultural safeguard be continued? If not, how and when will this be effected? If so, what should be its scope and application?

On Special Products, the Hong Kong Declaration stated that Members will have the flexibility to self-designate an appropriate number of tariff lines as Special Products guided by indicators based on the criteria of food security, livelihood security and rural development.

The questions are: ( i) What is the "appropriate number of tariff lines" that a developing country can self-designate as Special Products guided by indicators based on the criteria of food-security, livelihood security and rural development? ( ii) What is the "more flexible treatment" which these products will be eligible for? ( iii) Will Special Products also have automatic access to the Special Safeguard Mechanism?

On special safeguard mechanism, the Chairman's report to the TNC noted that the SSM should be tailored to the particular circumstances and needs of developing countries. The Hong Kong Declaration clarified that the SSM will be based on import quantity and price triggers. The Chairman's report also noted there was some openness to consider coverage of products that are likely to undergo significant liberalization effects and/or are already bound at low levels and/or are Special Products. However, there remains a fundamental divergence between those considering all products should be eligible and those opposing such a blanket approach.

The questions are: ( i) What is the coverage of tariff lines eligible for SSM and should this be based on self-selection, guided by criteria or based on specific criteria and, if so, what are these criteria? ( ii) For the import quantity triggers, what should be the methodology for calculating the trigger including factors such as base period(s), trigger quantities, cases where no or minimal quantities were imported in the base period, etc? (iii) On what basis should the quantity-based SSM be calculated? ( iv) For the import price triggers, what should be the methodology for calculating the trigger, including base period(s), the degree, if any, of the price fall permitted before the SSM can be triggered, etc? ( v) On what basis should the price-based SSM be calculated?

On tropical and diversification products: ( i) How are we going to practically define "tropical agricultural products and products of particular importance to the diversification of production from the growing of illicit narcotic crops"? ( ii) How can we reach an operational understanding of what "fullest liberalisation of trade" means and how should this be implemented?

On preferences, the Chairman's report to the TNC noted that the importance of long-standing preferences was fully recognised and proposals had been made regarding preference erosion. While there seems not to be inherent difficulty with a role for capacity building there was no convergence of other aspects.

Paragraph 16 of TN/AG/W/1/Rev. 1 (the revised Harbinson draft of 18 March 2003), has a proposal on preference erosion, which the Crawford document quotes. To what extent can the long-standing preferences and preference erosion be addressed based on this paragraph and, without prejudice to delegations' positions, can we use this as a technical starting point for further negotiations?

On recently acceded members, the following questions are listed: ( i) Who are the "recently-acceded Members"? ( ii) What specific flexibility provisions are needed to effectively address their particular concerns? (iii) What, if any, additional flexibility might be provided for sub-groups within the recently acceded Members, such as the small low-income countries with economies in transition.

On cotton, the following are the questions: ( i) What concretely would a "more ambitious" reduction in trade-distorting domestic subsidies for cotton production be in order to satisfy the criteria that the reduction be more ambitious than the general formula?

( ii) How, as a practical matter, can we meet the Hong Kong direction to give priority to reaching this outcome and, as regards implementation, achieve it over a shorter period of time?

( iii) How will this relate precisely to the general approaches under consideration in relation to AMS, de minimis and Blue Box.

On monitoring and surveillance, can the G-20 proposal of 19 October 2005 be used as a basis for further negotiations on enhancing monitoring?

On issues of interest but not agreed (sectoral initiatives, differential export taxes, geographical indications), the question is: Are we in a position to materially advance from the present situation where the issues have the status of "interest" only?

On export prohibitions and restrictions, the question is: How should, concretely, Article 12.1 of the Agreement on Agriculture be strengthened?

On small and vulnerable economies and commodity dependent developing and least-developed countries, the question is: How, in concrete and practical terms, are their concerns to be specifically addressed in modalities?