Brussels, 06/07/2006 (Agence Europe) - Despite the failure of the ministerial meeting held in Geneva from 29 June to 1st July (see related article and EUROPE 9224), the figures for a compromise on the modalities in agriculture, to which a compromise on the reduction of customs duties in manufactured goods (NAMA) is directly linked, were, nonetheless, relatively clear. The EU clearly indicated that, subject to conditions, it could show greater flexibility in its offer on access to the agriculture market to come closer to the demands of the G20 group of emerging countries. The EU and G20 are also pressing the United States to make more concessions on domestic subsidies. Here EUROPE sets out the key figures for a possible compromise in agriculture.
Agricultural Market Access - Applied to the EU tariff lines as a whole (last October, the EU proposed an average reduction of 39% in its agriculture customs duties), the G20 proposal for an average reduction of 54% in agriculture customs duties would, in fact, mean an average fall of 51.6%, a figure to which Commissioner Peter Mandelson's conditional offer comes close, without actually reaching it (see also EUROPE 9212). At the meeting of the 133 Committee (on which sit the Member States' trade experts) in Geneva on 1st July, the Commission said that a European concession towards the G20 would only refer to this precise point. Thus, the Commission, which, in its October offer, proposed a maximum reduction of 60% on the highest duties (duties above 90%), rejected the G20 demands on tariff bands (75% reduction on customs duties above 75%), or the number of sensitive products (1% of the total of tariff lines, compared with the Community offer of 8%, with Mr Mandelson willing perhaps to go down to 4 or 5%), or the internal consumption criterion to calculate the increase in the level of tariff rate quotas for sensitive products. The United States maintains its proposal for a 66% average reduction in customs duty (reduction of 85-90% for duties over 60%) with 1% of sensitive products. According to the Commission, at Geneva, Mr Mandelson did not state the average level of reduction in agriculture customs duties that he could include in his new offer, and he is fully aware of the room for negotiation available to him within his mandate. Some experts, however, suggest a figure around 48% which could be achieved through greater reductions than envisaged in October for the lowest three tariff bands (for 0-30%, 30-60% and 60-90% according to the EU offer) while maintaining the 60% reduction for duties of over 90%.
Internal subsidies - According to figures given by Peter Mandelson on 1 July during a press conference before he left Geneva, the United States suggests that its internal subsidies rise to around $22 billion annually compared to the $19 billion that the US Administration currently spends under its Farm Bill (i.e. a ceiling of over $3billion). The Americans suggest that their “orange box” subsidies (aid which distorts trade the most) should be reduced to $7.6 billion (i.e. 60% reduction). To this amount would be added “blue box” aid (linked to production limits) by way of 2.5% of the value of productions concerned, i.e. $4.85 billion, and de minimis aid of $9.7 billion. The $22 billion in domestic subsidies that Washington reserves for itself must be compared with the ceiling of $20 billion that WTO Director General Pascal Lamy unsuccessfully suggested in his “20-20-20” formula (EUROPE 9222 and 9223), with the 15 billion wanted by the European Union and the 12billion that the G20 is calling for.