Divisions emerge as WTO members begin sensitive farm product talks

Significant differences emerged this week between the U.S. and other agricultural exporters and the EU and other importers of farm commodities as World Trade Organization members for the first time discussed how to treat so-called sensitive products in developed countries and special agricultural products in developing countries that would be subject to favorable treatment.

The chief differences between the U.S. and EU on sensitive products include how these products will be selected, and how they will then be treated. They also differ over whether new tariff-rate quotas could be created for sensitive products. Differences also emerged among developing countries on what limitations should be placed on selecting products, and on how these products should be treated.

The EU and G10 of net food importers, including Japan and Switzerland, argued that negotiations on the number and treatment of sensitive products should be handled in parallel to talks on a formula for reducing tariffs. The G10 also argued that each country should be free to select the products it designates as sensitive and that the number of sensitive products should be determined on a country-by-country basis, meaning some countries could designate more sensitive products than others.

The EU and G10 also said sensitive products should not be restricted to those products that are currently under tariff-rate quotas and proposed it should be possible to create new TRQs for sensitive products. India also indicated support for this possibility.

Finally, the EU and G10 said sensitive products should be subject to some combination of tariff liberalization and an expansion of TRQs.

However, it said TRQs should be expanded based on current TRQ sizes, and not based on domestic consumption, which would lead to more substantial expansions.

The U.S., backed by several Cairns and G20 members, took the opposite view on many of these points. For example, these countries said there should be a trade-off between the deviation from the tariff reduction formula and the number of sensitive products, meaning importing countries could designate fewer products as sensitive if those products were going to be subject to much less dramatic tariff reduction.

They also argued that TRQs should not be established for additional products labeled as sensitive and that quotas should be expanded based on domestic consumption.

On special products for developing countries, China said the number of special products should be limited to a set percentage of tariff lines.

It received support on this point by several other developing countries including Malaysia, Thailand, Nicaragua and Cuba.

However, this was countered by the chief proponents of special treatment for some commodities, the G33 developing country group that includes a number of net food importers. Kenya, speaking for the group, said it was working on a paper on how to designate special products, and circulated a document that suggested broad definitions could be used that would allow many products to potentially be designated as special.

For example, Kenya said countries should be able to designate as special products those commodities that are important for subsistence or livelihood in a region or country, that are significant in consumption, or that contribute to national income or a wider development role.

The G33 said special products should not be subject to tariff cuts or TRQ expansions, and should all be eligible for a special safeguard mechanism that developing countries would be able to access.

In response, Chile urged the G33 to be moderate and said there would have to be a trade-off between the number of special products that are allowed and how they will be treated, according to a Geneva source.

The U.S. and other developed countries expressed opposition to a total exemption from tariff reductions or quota expansions for special products, a Geneva source said. It also proposed that members consider a list similar to the one presented by the G33, but that this also consider whether a country is a net exporter or importer of a product.

Separately, Colombia said if a certain percentage of a product is exported, then that product should not be considered as a special product.