Brussels, 10/10/2005 (Agence Europe) - Nine weeks ahead of the Hong Kong WTO Summit, multilateral trade negotiations under the WTO's Doha Trade Round stand poised to take a new direction. In an article in Monday's Financial Times, US Trade Representative Bob Portman took the initiative by talking figures for the first time on the cuts the United States is prepared to make in its farm subsidies to kick-start the Doha trade talks. 'To jump-start our stalled negotiations, the US is prepared to move, and move aggressively, by supporting a 60 percent cut in 'amber box' support' over the next five years. Amber box aid has been slammed by developing countries - it is the US's domestic aid to its farmers, acknowledged to be the aid that creates the most uneven playing field internationally. Bob Portman also offers a 50% cut in domestic aid, 'blue box' support, seen as causing less drastic distortions of competition (cutting aid ceilings for US farm aid from 5% to 2.5%). 'This will require significant reforms to US farm programmes,' explained Portman, who also pledged to support the G20 suggestion (the main G20 countries are South Africa, Brazil, China, India and Mexico) of gradually scrapping all farm export subsidies by 2010 and scrapping all customs duties on farm products. The US Trade Representative said, however: 'The US offer to make difficult domestic support decisions is conditional on other countries reciprocating with meaningful market access commitments and subsidy cuts of their own. The clock is ticking.'
At a press conference before the 10 October meeting in Zurich attended by Bob Portman, EU Trade Commissioner Peter Mandelson, and the trade ministers of fifteen WTO Member States (South Africa, Australia, Brazil, Canada, China, South Korea, Egypt, Hong Kong, India, Japan, Kenya, Malaysia, Mexico, Rwanda and Switzerland), the US Trade Representative Bob Portman put figures on the farm aid cuts he was expecting from his partners. He called for the EU and Japan to cut their domestic farm support by 80%, saying that the United States were taking a risk, but was prepared to make sacrifices to get the Doha Round back on track, but it's a calculated risk. Bob Portman also suggested a plan for scrapping all rich countries' domestic aid to their farmers, along with the customs duties they impose on farm imports by 2023. Starting in 2008 if agreement on the Doha Round comes into force in 2008, the plan has three phases - 1) substantially cutting domestic farm aid and customs duties in rich countries; 2) consolidating and digesting the results of this; 3) totally eliminating all farm aid. This is an ambitious proposal, said Portman, that he thought could be achieved and which would provide enormous benefits for development.
On Monday, Peter Mandelson welcomed his US counterpart's offer, stating in a press release: 'The EU welcomes this constructive step by the US on agricultural domestic support. There are many aspects of the figures that need further assessment, but the US decision to put them on the table is welcome and responds to requests by the EU. This now balances the discussions we have been having on farm tariffs. The EU will match - and indeed go substantially beyond - the 60% cut in the most trade distorting support proposed by the US.' The most recent EU proposal foresaw a 65% cut in the ceiling of farm aid, he said. Mandelson added: 'The US has also indicated readiness to match the EU's willingness to eliminate all export subsidy programs…. Provided there is real balance in their commitment… we now need to move to a serious discussion of timetables for phasing out support. I hope this can be agreed at Hong Kong.'
Last Friday, the EU Trade Commissioner and the Agriculture Commissioner Mariann Fischer Boel, mandated by the Council to negotiate for the EU at the WTO, were warned by 13 EU Member States that the trade negotiators should consult with them before offering farm concessions at the Doha talks. In a letter to Fischer Boel, French farm minister Dominque Bussereau and the farm ministers of Belgium, Austria, Cyprus, Spain, Finland, Greece, Hungary, Ireland, Italy, Lithuania, Luxembourg and Poland, explained the limits for the Commission in the Hong Kong negotiations.
They are calling for the proposals already agreed by the EU in its 2003 reform of the CAP and the EU's conditional pledge to eliminate export subsidies (agreed by former Trade Commissioner Pascal Lamy and former Agriculture Commissioner Franz Fischler) in May 2004 should be recalled to the other Doha Round negotiators, as should the package of trade measures taken by the EU for developing countries. The Member States in question recalled the need to balance out the various pillars of the farm negotiations (access to market, export subsidies and domestic subsidies) and keep the Community preferences. They also want Member States to be involved in all stages of the negotiations, particularly on the lists of European products that could be classified as 'sensitive' and therefore subject to different treatment. They urge the EU negotiators to play an active part in the negotiations to ensure the Council's mandate to the Commission is not overshot when it comes to farming.
On Monday afternoon, the EU negotiators handed the countries present in Zurich the EU's conditional negotiating proposals, 'entirely contingent on satisfactory reciprocal gestures from other parties.'
On domestic support in agriculture, the EU's key proposals are: 'ambitious cuts in trade distorting forms of agricultural support - a 70% cut in the EU's Aggregated Measurement of Support (AMS)' (the orange box), an 'additional 65% reduction - at least - in agreed maximum levels of trade distorting 'de minimus' support' (allowing rich countries to provide unauthorised aid of up to 5% of the value of farm production) 'and possible reductions in maximum agreed levels of partially distorting 'Blue Box' payments,' (such aid must not overshoot 5% of production). The EU says it may go further, and points out that aid cuts have already been agreed in the CAP reforms. On market access, the EU foresees 'four tariff bands, with higher cuts for higher tariffs. Some limited flexibility around a linear cut in some bands. Highest bands: tariffs over 90%, these would be cut by at least 50%.' On sensitive products (like sugar), the EU mentions its 'explicit willingness to provide higher tariff rate quotas for sensitive products whose tariff cuts fall below the average cut of their band.' On export competition in agriculture: 'a reiterated offer to end all export subsidies so long as others do the same, with an end date and 'frontloaded' timetable agreed at Hong Kong', (food aid and Cairns Group (Australia, Canada and New Zealand) on state farms).
On NAMA (non-agricultural industrial products), 'a 10% maximum tariff for developed countries, achieved through harmonised cuts by Swiss Formula. No obligatory cuts for Least Developed Countries.' On services, 'the use of multinational formulae, different for developed and developing countries,' and on development, 'the extension by all developed countries to Least Developed Countries of trading terms equivalent to those offered by the EU's Everything But Arms (EBA) system.'
Peter Mandelson said that if no progress is made in the negotiations this week, there would not be enough time at Hong Kong. In Geneva on Tuesday, Mandelson will be meeting his Club of Five counterparts (the United Stats, Australia, Brazil and India).