Brussels, 18/07/2007 (Agence Europe) - In Geneva on Tuesday, a month after the failure of the G4 (EU, United States, Brazil and India) meeting in Potsdam, the Chairmen of the agricultural negotiations and manufactured goods (NAMA) negotiations committees, Crawford Falconer and Don Stephenson, put ambitious compromise texts on the modalities for liberalisation of trade in agriculture and on industrial products on the table (see EUROPE 9470). These texts are “a fair and reasonable basis for reaching ambitious, balanced and development-oriented agreements,” WTO Director General Pascal Lamy said immediately, hoping that the 150 member countries could reach the compromise expected by the end of this year or early next. “Members will not be fully satisfied with the texts. But what separates them today is smaller than what unites them,” he added. Speaking to press, Mr Falconer spoke proudly of wanting to “move countries out of their comfort zone”. EUROPE will now look at the key figures of the compromise texts which will be examined closely by the 150 member countries next week in Geneva where discussions will resume at the start of September after the August break.
AGRICULTURE: 1) Domestic support. Mr Falconer's text proposes, over the period 2009-2013, to cut overall trade distorting domestic support (Amber box + de minimis + Blue box) by 75% or 85% in the EU (an annual budget of somewhere between 16 and 27 billion US dollars - USD), by 66% or 73% in the US (an annual budget somewhere between 12.8 and 16.4 billion USD for Washington, which has, thus far, only offered to bring it down to 22 billion USD, but is prepared to go down to 17 billion USD) and Japan, and by 50% or 60% in all other developed countries. 2) Market access. Agricultural tariffs would mainly be cut according to a four tariff band formula which prescribes steeper cuts on higher tariffs (those over 75%) and lesser cuts for lower tariffs (those below 20%). For developed countries, the cuts range from 48-52%, for products with the lowest tariffs, to 66-73% for products with the highest tariffs. For developing countries, the range is from 32-34% and 44-48% respectively. For the EU, the average reduction in agricultural tariffs would be between 52 and 53.5%, a level which Trade Commissioner Peter Mandelson has already said he is ready to accept. Mr Falconer's text proposes that developed countries should have the right to designate 4-6% of dutiable tariff lines as “sensitive products” (where these countries have over 30% of their products in the highest tariff lines, 6-8% of products may be so designated), and for developing countries, it is 5.3-8%. Special products, which affect only developing countries, are a “fundamental element of the modalities”, but one which is “simply not yet developed” at this point for a precise details to be set out, the text says. Each developing member country will have the right to designate an appropriate number of tariff lines for its special products, and this designation will be guided by (still to be developed) indicators based on the criteria of food security, livelihood security and rural development. Discussions on this issue will resume in September. On contingencies, the text leaves open whether the old “special safeguard” should continue or end, and says that the details of the new “special safeguard mechanism” for developing countries still need to be negotiated. The text notes that, according to the development package negotiated at the Hong Kong ministerial meeting, the least developed countries will be exempt from tariff reductions and will benefit from duty-free quota-free access to the markets of developed and developing countries for at least 97% of their products and cotton products. 3) Export competition. The text notes that export subsidies are to be eliminated by 2013 (half by 2010), as was decided in Hong Kong, and proposes new provisions on export credit and insurance, food aid and exporting state trading farms.
INDUSTRIAL PRODUCTS (or non-agricultural market access, NAMA): the agreement is based on the “Swiss formula”, which has two separate tariff reduction coefficients, applicable to developed countries and developing countries respectively. Mr Stephenson's text proposes tariff reduction coefficients of between 8 and 9 for developed countries and between 19 and 23 for developing countries. These coefficients for developing countries are much more demanding than what Brazil and India called for. In Potsdam, they refused to go below a coefficient of 30. The Falconer/Stephenson compromise texts are a “useful step forward” but there are “points on which we have important concerns,” said the European Commission on Tuesday. The texts will be discussed in the 133 Committee this Friday, then by Trade Ministers over dinner, to be attended by Mr Mandelson, in Brussels on Sunday. The first reaction from the EU will be sent to the WTO on Monday. (eh)