DEVELOPING COUNTRIES EXCHANGE VIEWS ON AGRICULTURE ISSUES IN WTO NEGOTIATIONS

EMPHASIS ON SPECIAL PRODUCTS AND SPECIAL SAFEGUARD MECHANISMS TO PROTECT
FARMERS INTERESTS

MEETING OF DEVELOPING COUNTRIES ON AGRICULTURE HELD

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Developing countries have exchanged views on issues of great importance to them in the ongoing negotiations on agriculture in the World Trade Organisation (WTO) and deliberated on how best to ensure that the negotiations result in the modalities for future agricultural
liberalisation that would benefit all developing countries, regardless of their diverse conditions, needs and concerns. Participants at a Meeting of the Developing Countries on Agriculture held recently at Nyon, near Geneva, under the aegis of the Government of India-UNCTAD-DFID project on "Strategies and Preparedness for Trade and Globalisation in India", underlined that agriculture was a vital part of the development strategies of all developing countries and for many of them, concerns such as food security and rural livelihood were of paramount importance. For a number of developing countries the issue of export competitiveness of their agriculture was equally important as also the issue of the elimination of subsidies in order to provide a level-playing field to the farmers since the high level of subsidies in some countries affected the viability of their domestic markets.

In this context, the Meeting emphasised the importance of converging views among developing countries on three issues of particular importance in the area of agriculture, namely, special products (SP), special safeguard measures or mechanisms (SSM) for developing countries and the issue of subsidies. The Meeting was attended by: Brazil, Columbia, Cuba, Dominican Republic, Honduras, India, Indonesia, Mexico, Nigeria, Pakistan, the Philippines, Peru, Republic of Korea, Turkey, South Africa, Sri Lanka, Thailand and Venezuela.

The participants agreed that the SP and the SSM could provide developing countries with the much needed flexibility to address their development concerns, particularly because the majority of them would have no recourse to measures apart from border measures or tariffs to support their farmers. "Agriculture is the make-or-break issue for the successful conclusion of the Doha round of (multilateral) trade negotiations. However, the time is running out without a major breakthrough on the 'modalities' of future trade liberalisation that the WTO members have to agree on at the fifth WTO ministerial at Cancun in September this year", the Meeting noted.

Special products and special safeguard measures are the two new special and differential provisions for the developing countries introduced in the first draft of the modalities for agricultural negotiations which was presented sometime ago by the chairman of the WTO committee on agriculture negotiations, Mr. Stuart Harbinson. SP meant those that were "special" to development and were to be subject to the lowest level of tariff reductions. The SSM for developing countries was to provide them with a tool to safeguard their vulnerable farmers against import surge or import price fall. While noting that the concepts were good, but the problem of Harbinson's draft was that it left the actual design of SP and SSM modalities open to later technical consultations, the Meeting has underlined the need for developing countries to together lead these consultations so as to arrive at draft modalities that would suit their interests.

Agricultural subsidies provided by developed countries undermine potential gains from agricultural trade to developing countries and their economic and social goals including food security, rural development and poverty alleviation. Achieving a structural change in subsidy dependent agriculture in developed countries is a common negotiating objective of many developing countries, the participants noted, adding that developing countries as demandeurs in this area of negotiations should put forward a concrete proposal on the modalities in order to eliminate trade distortions caused by heavy subsidies of the developed countries.

The participants discussed at length issues relating to the possible product-selecting modality for special products and defining the technical modalities of the special safeguard mechanism such as product eligibility, trigger conditions, actual action etc.

Two broad types of the SP selection modality had been discussed in the negotiations in the past months. One was a fixed common selection criteria approach, where eligibility of products as a SP would be determined by product criteria and associated indicators and/or thresholds. Another was a self-selection approach, which allows individual developing country to select eligible products according to their specific needs and circumstances. The majority of participants were of the view that a self-selection would be the only realistic and operationally effective approach, but it should be on the basis of objective criteria which would take into account concerns of rural
livelihood, food security and poverty alleviation. Given the versatility in terms of the size, the economic structure and agricultural production conditions among developing countries, no single criteria nor a threshold could adequately represent the interests and concerns of all developing
countries.

On SSM, all agreed that the modality needed to be simpler to operate than the special safeguard (SSG) measure which is available only to the developed countries under the current WTO Agreement on Agriculture (AoA).

With regard to new rules on agricultural subsidies, participants addressed the following issues: reclassification of the Green Box; converting aggregate measure of support (AMS) reduction into product-specific commitments; elimination of the Blue Box; early elimination of export subsidies; and flexibility to be given to the developing countries. With regard to policy flexibility for developing countries, some countries suggested that it would be better to expand the scope of the Green Box for developing countries, in order to ensure that only non-trade-distorting
subsidies be allowed in the future. (NB: Green Box refers to domestic support policies that are not subject to reduction commitment under the WTO Agreement on Agriculture and these affect trade minimally including supports such as for research, extension, food security stocks etc. Blue
Box policies refer to provisions in the Agriculture Agreement that exempt from reduction commitments those payments or subsidies that are meant to limit production).

During general discussions on the Road to Cancun, the participants exchanged views on how they saw the progress and how they could push towards a substantial result at Cancun. It was also suggested that developing countries needed to analyse how the agricultural negotiations were positioned vis-à-vis other areas of the negotiations, including the Singapore issues and pointed out that in any case, decision making with respect to the Singapore issues should be in the hands of the developing countries.