G20 proposals on market access, domestic support

The Group of 20 developing countries has presented new proposals on market access and domestic support as part of the WTO agriculture negotiations.

The proposals, dated 12 October, were presented to the WTO's Trade Negotiations Committee (TNC) on 13 October by Brazil. They had also been given out at a press briefing given by Brazilian Foreign Minister Celso Amorim and Indian Commerce and Industry Minister Kamal Nath on Wednesday night.

In its paper on market access, the G-20 proposed that developed countries will undertake a formula cut of at least 54%, on average, while developing countries will be subject to a maximum tariff cut of 36%, on average.

In order to accomplish that, the G-20 proposed a formula with two different set of bands as well as two sets of tariff reduction rates for developed and developing countries.

Developed countries would have four bands, with thresholds of 0-20%, 20-50%, 50-75% and above 75%. Tariffs within the bands would be subjected to linear cuts of 45%, 55%, 65% and 75% respectively. There would be a cap of 100% on tariffs.

Developing countries would also have four bands, with thresholds of 0-30%, 30-80%, 80- 130% and above 130%. Tariffs within the bands would be subjected to linear cuts of 25%, 30%, 35% and 40% respectively. There would be a cap of 150% on tariffs.

On other market access elements, the G-20 emphasised that the Special Products (SP) and Special Safeguard Mechanism (SSM) concepts are integral elements of special and differential treatment (SDT) for developing countries. It will work with the G-33 and other groups to render effective and operationalize these instruments.

On tariff escalation, tropical products, and recently acceded members, the G-20 will submit new papers in a few days, while it will also continue technical work on long-standing preferences.

On LDCs, the G-20 reaffirmed its principles: LDCs shall be exempt from reduction commitments; developed countries should provide duty- and quota-free access to all products originating from LDCs; and steps should be taken to promote their export capacities, including addressing their supply constraints.

The G-20 paper reaffirmed its 7 July document "Elements for discussion on market access." It said the tariff reduction formula, being the main component in market access, should be negotiated before addressing flexibilities for developed countries.

It maintained that overall proportionality of commitments between developed and developing countries should be achieved through lower tariff reductions and higher thresholds for the bands. Developing countries will cut less than two-thirds of the cut made by developed countries.

The G-20 said compliance of the Doha Mandate on substantial reduction in domestic support and elimination of all forms of export subsidies by developed countries is a necessary condition for its market access proposal.

It recognized the need to safeguard developing countries' farmers against imports from developed countries benefiting from trade-distorting subsidies.

Developing countries will have the right to have recourse to remedial action against such imports. The G-20 will submit a proposal to ensure that right.

These disciplines shall be negotiated.

It portrayed its proposal of the linear cut within the bands as constituting the "real middle ground" around which Members would converge.

It reiterated that SDT constitutes an integral part of all elements of the negotiation and that it is determined to make operational the SDT provisions in the Framework, in particular SPs and SSM, so as to preserve the food security, rural development and livelihood concerns of millions of people.

In its paper on domestic support, the G-20 proposed figures for reductions in overall trade- distorting support, de minimis and the Amber Box support.

On overall trade-distorting domestic support, the G-20 said the July Framework indicates that the overall cut constitutes the central element of the pillar to which all other elements of domestic support - AMS, Blue Box and de minimis - should adjust to.

With that, the Framework provides for an overall restriction to the level of subsidies independent from how it is classified under the different boxes and allows for the fulfilment of the objective of bringing down levels of applied trade-distorting domestic support.

The G-20 proposed that for developed countries there should be three bands for overall trade- distorting support. Countries that provide support totalling over $60 billion would have to cut by 80%, those with support of $10-60 billion would cut by 75% and those with $0-10 billion would cut by 70%.

Developing countries should be in a separate band for overall cuts, said the G-20. This would be part of SDT treatment, and also given the difference in de minimis entitlements between developed and developing countries (5% and 10% of total value of production, respectively).

Furthermore, developing countries without AMS entitlements shall be exempt from making an overall reduction to their trade-distorting domestic support, since they will be exempt from making reductions to their de minimis.

On de minimis support, the G-20 said reductions shall be made to both product and non-product specific de minimis. The level of such reductions will be such to adjust to the rate of cut for the overall trade-distorting support.

Developing-country members with no AMS entitlements shall be exempt from reductions. The level of reduction of de minimis for those developing-country members with AMS entitlements will be determined in relation to overall reductions of trade-distorting domestic support, bearing in mind that those developing countries that allocate almost all de minimis support for subsistence and resource-poor farmers will be exempt.

On the AMS (Amber Box), the G-20 proposed that the final bound AMS will be reduced substantially, using a tiered approach. There would be three bands.

Countries with AMS totalling over $25 billion would have to cut by 80%, those with AMS level of $15-25 billion would cut by 70% and those with AMS level of $0-15 billion would cut by 60%.

The G-20 paper also said that work in the Sub-Committee on Cotton needs to be expedited so that early agreement can be reached on effective measures.

It stressed the urgency to address this question not later than the Sixth Ministerial Conference in the light of the current crisis affecting African cotton producers.

Explaining the background to its proposal, the G-20 paper reaffirmed its 5 July document "Draft elements for discussion on Domestic Support".

It stressed that to deliver the Doha mandate of "substantial reductions in trade-distorting domestic support", it is necessary to count with a combination of cuts, disciplines and monitoring.

Regarding disciplines, the G-20 has circulated its proposals "Review and Clarification of Green Box Criteria" and "G20 Elements for discussion: Blue box" and has just endorsed a document on product-specific capping. With that, said the G-20, it will be covering all elements concerning disciplines provided for in the Framework that are essential tools to complement the cuts.

Further, the G-20 is also tabling a proposal on monitoring and surveillance that will further enhance the mechanisms to ensure transparency and compliance with members' commitments.

On its proposals on cuts of overall trade-distorting support and AMS, the G-20 said that as part of SDT, developing countries required to do so will undertake a cut less than two thirds of the cut to be undertaken by developed Members in the same band.