Falling Short on Agriculture in Paris

Paris Trade chiefs of the new "quad" grouping of nations the United States, the European Union, Brazil and India failed to make headway in reconciling their positions in agriculture, although they achieved some success in the long-stalled services negotiations, WTD has learned (WTD, 9/23/05).

The four agreed to form a "core" group to accelerate negotiations in services (see related report this issue).

Though all four agreed that agriculture is the "engine" of the four-year-old Doha negotiations, they were unable to resolve sticky differences in market access and trade-distorting domestic support. The four did not spend much time on export competition and barely discussed food aid, WTD was told

The "quad" session on agriculture repeated differences of views, WTD was told. In the trade distorting-domestic subsidies, the US found it difficult to defend its proposal in the face of opposition from Brazil, the EU and India.

In the market access pillar, the EU had suggested four different bands zero to 33 percent ad valorem, 33 percent to 66 percent, 66 percent to 99 percent and above 99 percent along with the number of sensitive products depending on the final reduction rates. Brussels also presented tariff reduction rates ranging from 60 percent for the highest band and 50 percent, 40 percent and 30 percent for the remaining bands. The EU also agreed with the G-20 on capping high tariffs at 100 percent for industrialized countries and 150 for developing countries.

EU Links Sensitive Products to Tariff Cuts

EU Agriculture Commissioner Mariann Fischer Boel made it clear that the number of sensitive products will ultimately depend on the final tariff cuts indicating that she could agree to up to 5 percent of tariff lines as sensitive products, which would number some 100. The farm commissioner said the proposal ensures that there would be greater market access all around with "two-thirds" of the benefits going to developing countries.

Brazil severely criticized the EU's proposal saying it cannot accept the offer because it adds to complexity and increases uncertainty. India said all ideas need to be further examined.

On Thursday, EU trade commissioner Peter Mandelson said Brussels would seek only a limited number of tariff lines for softer treatment.

The G-20 stuck to its original proposal of five bands with linear cuts and treatment of sensitive products outside the bands.

US Trade Representative Rob Portman floated some US ideas for the first time. He suggested common thresholds for both industrialized and developing countries, but with different reduction rates. He also proposed four tiers zero to 20 percent, 20 percent to 40 percent, 40 percent to 60 percent and 60 percent and above with progressive tariffs cuts ranging between 85 percent and 90 percent in the top tier; 75 percent to 80 percent in the second; 65 percent to 70 percent in the third, and 55 percent to 60 percent in the fourth.

Ambassador Portman told journalists that the United States has very low tariffs already averaging around 12 percent and would insist on real tangible market access from all countries. He said the framework agreement lacked clarity in the market access pillar.

The US proposal was met with silence, WTD was told.

Australia supported the US market access proposal at the "Five Interested Parties" session which added Australia to the "quad" group held immediately after the "quad." The EU opposed both Australia and the United States on their insistence for such high tariff reduction commitments in market access.

Brazil stuck to the G-20 proposal, according to sources.

In an extended "FIPS" meeting on Saturday which also included Argentina, Canada, China, Malaysia and Switzerland there was stiff opposition to the US proposal.

At the "quad" meeting, the United States remained isolated in its insistence not to touch the new "blue-box" particularly involving its inclusion of the US counter-cyclical farm payments program. The United States suggested that the framework agreement did not actually call for any further disciplines to be imposed on the counter-cyclical payments program. Although the United States referred to broad parameters in trade-distorting domestic support reduction commitments, it did not spell out how it would apply the program in the "blue box," quad sources said.

The EU farm commissioner, speaking at the "quad" meeting, said candidly that Brussels would continue to seek disciplines in the US payments program if included in the "blue box."