Mr. Falconer and the Farm Negotiations

Geneva - As 2007 starts off as a make-or-break year for the languishing Doha Development Agenda trade negotiations, the chair of the current agriculture negotiations - New Zealands Crawford Falconer - feels strongly that a deal is do-able despite many unresolved issues (see related report this issue).

The most fundamental part in the [domestic support pillar] is the base period for product-specific AMS [Aggregate Measurement Support] caps and the overall trade-distorting domestic support number," Mr. Falconer told WTD in a wide-ranging interview. Clearly, the United States will have to deliver much on these two issues, he suggested.

Treatment of sensitive products is the most important element in market access, added the ambassador. A final deal in market access will be determined when the European Union and the United States settle their differences. He maintains the center of gravity in market access will be well inside what Washington has proposed and more than what Brussels has offered until now.

The tenacious negotiating chair says important lessons were learned last July when a ministerial-driven process led down the wrong roads.

The Interview

Following are excepts of the interview -

WTD - What is the state of the play as you kick off another round of fire-side chat meetings this month?

Mr. Falconer - I would say we are in the kind of twilight zone at this moment. We have done the so-called soft restart. Quiet conversations are going on in various places. My process here on agriculture is reasonably constructive; people are listening to ideas, talking about what-if scenarios. All of that is reasonably positive in a situation where we are technically suspended and still there is no significant political breakthrough.

It is clear that political-level people are talking to each other and I dont know what is the subject and the content of those conversations. But Im told they are taking place. I think we are all, as a consequence, trying to come to terms with the fact that everybody says they still want this to conclude successfully. But to realize that there has to be more than demonstration and there has to be more than statements. People must be flexible for it to materialize.

I dont think so far, there is political readiness to consider seriously how that might be done - but I dont completely despair. And I think they need to take a bit more time. But I dont think time is on our side if we want to get this done in 2007. There has to be a very, very serious re-think - presumably at a political level - sometime in the next few weeks and months.

WTD - You have been very active over the last two months, convening six fire-side chat meetings with over a score of trade envoys and two transparency sessions. You also have held bilateral consultations. How far have things moved?

Mr. Falconer - Yes, you are right. Its a case of getting people to focus and try to do less posturing and more of the kind of questioning of peoples positions in order to try and get them to accept that there are certain centers of gravity that people cant officially say their position because they will have their formal positions. But this is to accustom people to a possibility that at the end of this process they are going to have to abandon their formal positions - and we are running out of time. The way in which we can only proceed is for people to have some greater degree of realism about what is possible.

They prepared to start talking about it. If you put people on a position where they just want to reiterate their official positions you will never get anywhere. As chair - and within the limits of what is diplomatically possible - Im trying to suggest that I understand what positions are, but am not going to give you that position.

That is the kind of tenor I am having in the fire-side chats - and Im making myself publicly irritating to everybody - but thats what I have to do.

WTD - Can we start with the domestic supports - which is the focus of your first few fire-side chat meetings. Is the Australian proposal of reducing the US farm subsidy to $17 billion still on the table?

Mr. Falconer - Well you have to ask the Australians where they are on that exactly because they never professed to have a precise formulation on what they put forward. But what they proposed is 5 +5' - and as chair I have said this earlier - that the 5 + 5' is not going to work because it is opposed by at least one of the major players.

But as I said, people who are prepared to entertain variants of their positions have to start talking like that on precise formulation. And I dont know which numbers will eventually work for people. They will have to try various combinations and maybe sooner or later you will get something better. But there is no question that if we are going to get a satisfactory deal, the United States will have to do more on domestic supports than its current $22 billion offer and there has to be a similar movement in the market access. That is the nature of the negotiations and it will have to happen.

Trade-Distorting Spending

WTD - Aside from the Australian proposal, many key members have also argued during the fire-side chat meetings that the United States will have to go below $15 billion or $14 billion - which amounts to a 70-percent cut in the overall trade-distorting domestic support. Is this a reasonable landing zone figure?

Mr. Falconer - I dont know, I dont know. I think it depends on what comes other way in the market access. I think reality is that you have to start somewhere procedurally. You cant give a complete answer to that question - just as you cant get a complete answer on market access unless you will have them linked together.

I have long said myself that it is clear to me that the US in expenditure terms has room to go down - whether it is $5 billion, $7 billion down or even more. You can see what their expenditure levels have been and you can see where the zone could be. ... The US said it can have flexibility on domestic support, and I don't think there is any secret about that. And you can also see technically that it looks like they could move to something $17 billion to $15 billion. In that zone you can see technically what looks like something they should be able to accommodate.

The political deal on their needs on market access is both in agriculture and whatever else they have in other areas of the negotiations. In my processes, I dont think there is any particular secret. It is to test those kind of questions. Youve got A, B, C and D - and does that translate into $17 billion, $16 billion, $15 billion and etcetera? I have to tell you that Im not getting any straight answers about that.

WTD - Apparently, the US may go down to$15 billion or more if there are no disciplines at all in the product-specific AMS or counter-cyclical payments. Do you agree with such a position. Would it undermine the balance in terms of different elements of domestic support?

Mr. Falconer - I don't know. Its hard to discuss that in the abstract. It seems to me - and I look at it simply - that if we are just talking about domestic support there will have to be three fundamental elements to what is done on reduction commitments.

Up until recently, some people had a too-simple minded view that what is at issue in domestic support is just the overall number. It is not just the overall number. People have forgotten that within the overall number there is fundamental difference between AMS and the blue box, for one. AMS is more trade-distorting than blue - accepted. Thats always been the understanding - and within that figure there has to be a calibration of what the commitments are on AMS vis-