Pakistan’s attempt at compromise on Special Products raises ire of fellow G-33 members

In a stated attempt to "narrow the gaps" on one of the most contentious issues in the troubled Doha Round agriculture negotiations, Pakistan on 10 April issued a new paper seeking to split the differences between developing countries eager to shield some 'special products' from the full force of tariff cuts and the agricultural exporters that fear diminished commercial opportunities. Some delegates belonging to the former camp have denounced the new paper as fundamentally flawed, and said that instead of narrowing gaps, it has widened them.

WTO Members have agreed to allow developing countries to slate special products for flexible tariff treatment on the basis of food security, livelihood security, and rural development indicators. Precisely how many special products they should be accorded remains the subject of wide disagreement, as does the extent to which they will be shielded from tariff reduction.

Delegates from several members of the G-33 group, which has been the strongest proponent of substantial special product flexibilities, expressed disappointment with the informal paper.

Pakistan's suggested approach incorporates some aspects of the positions taken by exporting countries such as Thailand, Malaysia, and the US, all of which have opposed the G-33's demands. Notably, Pakistan belongs to both the G-33 and the Cairns Group of agricultural exporters (as do Indonesia and the Philippines).

This is Pakistan's second attempt at compromise. The earlier one, in January, also met an unfavourable response from other members of the G-33 (see BRIDGES Weekly, 31 January 2007).

In the new submission, Pakistan said that indicators used to designate 'special products' should be limited "to those which are essential for achieving the criteria" of food and livelihood security and rural development. It proposed a list of ten indicators, such as products' share in food expenditure, caloric intake, and the income of the poor.

Pakistan would have Members assign a weight to each indicator, and calculate a score for each product based on the indicators. Products scoring above an agreed benchmark would be eligible for designation as special.

This contrasted with the twelve 'illustrative' indicators that the G-33 agreed to in Jakarta last month. For instance, the Pakistani proposal did not include indicators dealing with the share of small farms in producing commodities; the importance of products for employment; and the question of whether other WTO Members have used trade-distorting subsidies to produce the commodity under consideration.

One negotiator from the G-33 questioned how Pakistan could have omitted any reference to the importance of products as a staple food, or part of the basic food basket, since food security concerns were a major objective behind the very notion of special products.

Negative indicators for SP eligibility

While the G-33 wants all farm commodities to be eligible for special product status, Pakistan's paper contains indicators that would be used precisely to exclude products from eligibility.

These new 'negative indicators' would exclude products for which developing countries account for 80 percent of world exports. In addition, a country which imports 80 percent of a particular product from developing countries would be prevented from designating it as special.

The submission proposes two more disqualification criteria: staple food products for which imports account for more than 80 percent of domestic consumption would be ineligible, as would products that were not slated for special treatment in any of a country's bilateral or regional trade agreements.

SPs to face two-thirds of normal tariff cut

Pakistan suggested that all special products should face tariff reduction, with cuts equal to two-thirds of those that would have been required under the regular formula (the 66.67 percent figure is in brackets, suggesting that it would be subject to negotiation). This is starkly distinct from the G-33's November 2005 proposal, which would allow countries to exclude half of their special products from cuts altogether, and reduce tariffs on the remaining ones by no more than 10 percent.

As in its January paper, Pakistan proposed rewarding countries that choose to designate fewer special products with progressively greater deviations from the standard tariff reduction formula. In other words, the lower the number of special products, the higher would be governments' ability to maintain existing tariffs on them.

Pakistan reiterated its call for a tariff cap for special products, suggesting that it should be 50 percent higher than that the maximum level for other farm products. One delegate from another G-33 country questioned how negotiators could begin discussing a tariff cap on special products when the notion of a tariff cap in general remained undetermined.

Developing countries that maintain tariff rate quotas for special products would have to expand them, albeit by half as much as for regular products, the new submission proposes.

In another departure from the agreed G-33 position, Pakistan proposes disqualifying special products from eligibility for the special safeguard mechanism, a new tool intended to help developing countries protect farmers from import surges by temporarily raising tariffs beyond bound ceiling levels.

Pakistan repeated their call for special products to be allowed a longer implementation period for liberalisation, proposing that this should be 50 percent longer than for normal products.

G-33 negotiators express surprise

Delegates from a number of other G-33 member countries argued that Pakistan's paper was flawed because of the primacy it gives to commercial interests. The very existence of 'negative indicators' suggested that products would be ineligible for SP status even if crucial to rural development and food and livelihood security, thus rendering the proposal inconsistent with the mandate, they said.

One trade negotiator from a G-33 country described the paper as "very surprising