An LDC 'Smokescreen' in Geneva

Geneva - Brazil's external relations minister and chief trade negotiator Celso Amorim yesterday warned against creating a "smokescreen" in the Doha Development Agenda trade negotiations by some key members that are insisting on commensurate movement on industrial products trade and services without first resolving difficult issues in agriculture (see related report this issue).

Mr. Amorim told reporters prior to the special "Five Interested Parties" meeting yesterday that the talks now are all about agriculture, "which has not made progress to date." He said the Doha negotiations are meant to accomplish developmental goals in agriculture, particularly substantial reduction of trade-distorting domestic subsidies and increased market access. FIPs members are the United States, the European Union, India, Brazil and Australia.

The minister told reporters that it is wrong to call on developing countries as did the EU to move on nonagricultural market access and services when the main developmental goals of the Doha negotiations are stalled. It would be unfortunate for members to discuss other issues at this juncture, he stated.

But one authoritative trade envoy from an industrialized country said the FIPs members are anxious to resolve the divide between the EU and the Group of 10 defensive countries and the United States and the Cairns Group on sensitive products.

The G 20 yesterday unveiled its final set of proposals in all three pillars of the farm negotiations. It called on the EU to deliver on market access and set not more than one percent of total tariff lines for sensitive products in industrialized countries. It said the more products allowed under the "sensitive" category, the higher should be the compensation.

Similarly, the greater the deviation from the tariff determined by the formula, the greater the tariff rate quota should be in the same tariff line. The maximum deviation from the tariff reduction formula shall be 30 percent of the cut, it stated.

'Sensitive' Products

The developing country coalition argued that sensitive products also be subject to tariff capping with no TRQs allowed. The G 20 plan also demanded a surveillance and monitoring mechanism for TRQ products. At least 6 percent of the annual domestic consumption resulting from the simple average in the base period should constitute the minimum access level, the proposal continued. Developing countries, however, will have to undertake less than two thirds of developed countries' commitments.

In trade-distorting domestic support, the G-20 called for product-specific caps both in the overall aggregate measurement of support and the "blue box."

US Trade Representative Rob Portman said the joint Cairns Group/G 20 proposal "demonstrated forward movement in the area of market access. ... The US welcomes their contribution to limit the number of sensitive products that would be treated separately from the formula reductions. The G-20 suggested that the percent should be no more than 1 percent. This is very welcome indeed, and echoes the US proposal," he stated.

Earlier in the day, EU trade commissioner Peter Mandelson declared that he is not in a position to move "further on agriculture" without knowing "the shape of the package for Hong Kong in NAMA, services, antidumping."

In a two-page letter to WTO chief Pascal Lamy dated October 19, the EU trade commissioner said while agriculture "can 'unlock' the rest of the negotiations," it is "equally true that a combination of inactivity in nonagricultural sectors and unreasonable demands on agriculture market access, can also keep the negotiations completely 'locked'."

"The time has come for all partners to reveal more of their cards in all the key parameters of the 2004 Framework," the EU commissioner pointed out, arguing that "in the course of today and tomorrow, we need to break after a first round of discussions on agriculture, to talk about the shape of the package for Hong Kong in NAMA, services, antidumping, before moving back to the agriculture."

"In sum," Mr. Mandelson continued, "I believe the position pre-Hong Kong is critical but not impossible to handle." The minister wrote of his disappointment about "uneven progress across the board in the negotiations'" maintaining that the "EU member states, politically, are discouraged from making full or final moves because they see nothing and I mean nothing coming back in progress on industrial goods and services."

If this situation continues, "it will make it impossible for the EU to move further on agriculture because it will be impossible to persuade a sufficient number of states to do so," Mr. Mandelson stated.

"So, we are at cross-roads, in respect of agriculture but also in respect of other issues to be negotiated."

Commissioner Mandelson said the EU will not accept any "departure from either including balance in the economic opportunities to be negotiated in each area, the delivery of clear benefits to developing countries including the most needy ones and proportionate differentiation in the flexibilities and obligations of developed countries."

'Some Serious Question' on US Proposal

Regarding last week's submission by the United States on domestic supports, Mr. Mandelson said Brussels has some "serious questions about what the US proposal means in terms of real reform." On market access, the EU commissioner said questions remain about what developing countries should contribute. He argued that some of the market access demands from the G 20 and the United States are unrealistic.

To make progress in market access, more clarity is needed on the treatment of "sensitive" products, the Mandelson letter continued.

In the export competition pillar, the EU wants "parallelism" before agreeing on an end date for the elimination of export subsidies.

Serious engagement on the future of food aid should be discussed before turning to export credits and state trading enterprises, the commissioner stated.

"NAMA has not really progressed since Cancun" two years ago and "services have done even worse," Mr. Mandelson noted. Similarly, there is no political clarity on what members want to seek on rules at Hong Kong, he added.

"It is, in the EU's view, essential that we move, as from today, into a more integrated negotiating mode allowing these subjects to start catching up with agriculture," Mr. Mandelson concluded.

An industrial country envoy suggested the EU commissioner rightly placed the ball in the Brazilian and Indian court over the need to know how they intend to move in NAMA and services. The envoy warned against lowering the level of ambition by locking in the EU's Common Agricultural Policy reform and spending levels in a new US farm bill.

But an Asian trade envoy said Mr. Mandelson's letter vindicated Brussels' resolve to secure a price for NAMA and services before giving anything in agriculture. "In a way, the EU commissioner turned adversity into opportunity by asking Brazil and India to agree to a host of things such as NAMA, services and even differentiation," he said.