News Release
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Pascal Lamy
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No. 04/03
January 27, 2003
WTO & AGRICULTURE:
EU TAKES STEPS TO MOVE NEGOTIATIONS FORWARD
Today, the European Commission's ambitious proposals for the
WTO negotiations on agriculture were unanimously supported by European Union Member
States in the General Affairs Council.
The EU proposal reflects the strong commitment of the Union
to further reform of the agricultural trading system while at the same time recognizing
the need for special treatment for developing countries, especially the most fragile
economies, and ensuring that concerns such as the environment, rural development
and animal welfare are taken into account. By avoiding extremist positions and
taking a realistic approach, the proposals will contribute to advancing the negotiations,
offering a bridge between the polarized positions of those who seek total free
trade tomorrow and those who fear any further trade liberalisation in the agricultural
sector. With just two-and-a-half months before the deadline for setting key elements
of the negotiations, the EU proposal offers a constructive way forward. The key
elements of the EU’s proposals are that import tariffs should be cut by 36%, that
export subsidies should be slashed by 45% and that trade distorting domestic farm
support should be reduced by more than half (55%) – provided that the burden is
shared equally, amongst developed countries in particular. The proposal includes
specific actions to give developing countries a better deal, as well as emphasising
the importance of addressing non-trade concerns such as the environment, rural
development and animal welfare.
EU
Farm Commissioner
Franz Fischler welcomed this advance and said, “The EU is determined to
move the Doha process forward, and has put on the table a proposal which
offers equitable burden-sharing as well very concrete actions to give developing
countries real opportunities. This proposal is consistent with our steadfast commitment
to substantial and progressive liberalization on a fair and balanced basis. Greater
market access for all, a significant decrease in trade-distorting subsidies, clear
discipline for all forms of export aid, consideration of non-trade issues and
preferential, problem-oriented treatment for developing countries - these are
the key elements of our negotiation proposal."
EU
Trade Commissioner
Pascal Lamy added: “With today’s move we respond loud and clear to those
who doubt the EU’s real commitment to negotiate on agriculture within the
Doha Development Agenda. The EU promised and now the EU has delivered. I hope
that constructive discussions take place in Geneva so that we can meet the deadline
of 31 March, and go on to take decisive steps towards a successful conclusion
of the DDA by end 2004….”
The EU WTO Agriculture Proposal in Detail
Opening markets for farm imports by slashing tariffs by
36%
In order to increase market access for agriculture products,
the Commission defends a formula of tariff reduction, which does not shield any
one developed country member from making a comparable contribution. This formula
should be an overall average tariff reduction of 36% and a minimum reduction
per tariff line of 15% as was the case in the Uruguay Round. Contrary to the so-called
"Swiss Formula" the US and Cairns group suggest, the Commission approach
would achieve the objective of "burden sharing" among developed countries
and would also provide flexibility for developing countries.
The EU is already the world's largest importer of farm products
($60 billion in 2001), the world's largest food importer from developing countries
($38 billion in 2001) and the largest importer from poorest countries. But the
sharp reductions in tariffs proposed will give third countries an even better
access to the already very open EU market.
Scaling back all forms of export subsidies by 45%
The
Commission proposes an average substantial cut in the volume of export
subsidies and an average 45% cut in the level of budgetary outlays,
on the condition that all forms of export subsidisation are treated on an
equal footing. Furthermore, the EU is ready to phase out export subsidies
for certain products, provided that no other form of export subsidisation,
including export credits and deficiency payments, is given for the
products in question by other WTO members. Such products should include
products of particular significance for developing countries.
Further
cutting trade distorting domestic farm support by 55%
The EU is
committed to further substantial reductions in trade-distorting domestic
support. The Commission therefore proposes a 55% reduction in the
Aggregate Measurement of Support (AMS) starting from the level of
commitments made in the last round of negotiations. To allow for rapid
progress within the agreed deadlines, the current definition of domestic
support and the Uruguay Round reduction method should be maintained as
this guarantees that all members will be subject to effective disciplines.
A
special treatment for developing countries to give them a better deal
The EU
recognises the need to ensure that developing countries fully benefit from
the expansion of world trade. The key is to create opportunities for
increased market access for developing countries, while recognizing the
importance of food security and accepting the need for the most fragile
developing countries to maintain protection in order to have adequate time
for adaptation.
To this
end, the Commission proposes the following:
For
market access:
· A “food security box.” In order to facilitate the implementation of further
tariff reductions and to meet the developing countries' concerns on sensitive
agricultural crops, a Special Safeguard instrument should be extended to developing
countries in order to ensure food security. Substantially lower commitments should
be agreed if this is necessary for developing countries to attain their legitimate
objectives regarding food security and other multifunctional concerns;
· No less than 50% of developed countries farm imports from developing
countries at zero duty;
· Duty-free and quota-free access for all imports from Least-Developed Countries
(LDCs) into developed and advanced developing countries;
· A significant reduction of tariff escalation on products of particular
interest to developing countries by reducing the level of tariff protection (both
ad valorem and specific).
For
domestic support:
· The possibility to support their agricultural sector for developmental
reasons. This would imply that such support would not count as trade-distorting
support.
Special
treatment:
Closing
loopholes to create a level playing field for all developed countries
Under the
so-called "de minimis" clause, farm subsides of developed countries
below 5% of the value of production are not considered as trade distorting
and are not included in the calculation of the total amount of support
allowed by WTO rules (Current Total Average Measure of Support—AMS),
Experience has shown that this has been abused by some WTO members and it
is now an important loophole. For example, a WTO member can spend 20
billion EUR in farm trade distorting farm subsidies under the "de minimis"
provision and these will not subject to reduction commitments. The
Commission proposes to abolish the “de minimis” clause for developed
countries.
The
trade-distorting elements of export credits for agricultural
products used by other WTO members should be identified and subjected to
strict discipline.
Food
aid in kind should
be provided only for well-defined vulnerable groups or in response to
well-recognized emergencies and humanitarian crisis and not, as is often
the case today by some members, as a surplus disposal mechanism. WTO
members should provide whenever possible direct cash contribution for the
purchase of food within the recipient country, or from other developing
countries.
The EU
does not at all question the granting of genuine food aid. It questions
the use of food aid donations used as surplus disposal measures. Some WTO
members have used food aid donations more as a production and commercial
tool to dispose of surpluses and promote sales in foreign markets than as
a development tool tailored to the needs of the recipient countries. It is
ironic that the amount of food aid given by some countries tends to
increase significantly when prices are low whereas levels are much lower
when prices are high—and food aid is most needed.
In respect
of the operation of State Trading Enterprises (STEs are
governmental and non-governmental enterprises, including marketing boards,
which have been granted exclusive or special rights or privileges in the
exercise of which they influence imports/exports through their purchases
or sales), the EU proposes that cross-subsidisation, price-pooling and
other unfair trade practices in exports be disciplined.
Bringing consumer concerns to the fore
An
essential part of the value of many agricultural products is the
well-established link to the territories where they are produced. This is
expressed in
Geographical Indications. Examples of GIs include
Italian Parma Ham, French Roquefort cheese, Indian Basmati rice or
Darjeeling tea. If not protected, the value of such products is seriously
eroded. The Commission suggests specific commitments be negotiated in
order to guarantee fair market access opportunities for those wines,
spirits and other agricultural and foodstuff products. To this end, a list
of names currently used by producers other than the right-holders in the
country of origin should be established so as to prohibit misleading and
unfair use by other producers.
Achieving
certain societal goals such as the protection of the environment,
traditional landscapes and bio-diversity, rural development and animal
welfare should be permitted without obstacles created by the WTO. Support
granted for the achievement of such goals should therefore not be
considered as trade distorting (it means support included in the green
box) on the condition that such measures are well targeted, transparent,
and implemented in no more than minimally trade-distorting ways.
In
particular:
· The Commission proposes that measures that are aimed at protecting the environment,
an issue relevant to both developed and developing countries, should be accommodated
in the Agreement on Agriculture.
· As regards rural development, the Commission believes that both developed
and developing countries have the right to choose to preserve or develop the economic
and social environment necessary to maintain rural population. The provision of
these environmental services cannot be assured by market forces alone. Measures
designed to foster rural development should therefore find appropriate coverage
in the Agreement on Agriculture.
· On animal welfare, the Commission proposes to exempt additional
costs required to meet animal welfare standards from the consideration of trade
distorting. These costs should be excluded from reduction commitments where it
can be clearly shown that these costs stem directly from the adoption of higher
standards and thus are not, or at most minimally, trade distorting.
Implementation Period
The
Commission proposes that the new commitments be implemented over six years
for developed countries and ten years for developing countries commencing
in the year 2006.
Background
The WTO
negotiations in agriculture started in early 2000 under Article 20 of the
Agreement on Agriculture and received clear guidelines under the Doha
Ministerial Declaration in November 2001. Since then, members have
submitted a large number of negotiating proposals, which has enabled a
much better understanding of the various positions regarding the
multilateral reform process. The EU has actively participated in this
process by putting forward a comprehensive negotiating proposal in
December 2000 as well as several specific papers on the key issues.
The
current phase is designed to meet 31 March 2003 deadline foreseen in Doha
for establishing the methodology to be followed during the negotiation
(so-called modalities). A draft paper is to be prepared by the Chairman of
the Special Session of the Committee on Agriculture and to be
circulated in advance of the Special Session meeting of 25-31 March. This
paper is expected to include proposals concerning the parts of the
Agreement on Agriculture (AoA) that should be modified as well as the
guidelines that are to lead to the new commitments.
Doha Declaration on agriculture
We
recognize the work already undertaken in the negotiations initiated in
early 2000 under Article 20 of the Agreement on Agriculture, including the
large number of negotiating proposals submitted on behalf of a total of
121 members. We recall the long-term objective referred to in the
Agreement to establish a fair and market-oriented trading system through a
programme of fundamental reform encompassing strengthened rules and
specific commitments on support and protection in order to correct and
prevent restrictions and distortions in world agricultural markets. We
reconfirm our commitment to this programme. Building on the work carried
out to date and without prejudging the outcome of the negotiations we
commit ourselves to comprehensive negotiations aimed at: substantial
improvements in market access; reductions of, with a view to phasing out,
all forms of export subsidies; and substantial reductions in
trade-distorting domestic support. We agree that special and differential
treatment for developing countries shall be an integral part of all
elements of the negotiations and shall be embodied in the schedules of
concessions and commitments and as appropriate in the rules and
disciplines to be negotiated, so as to be operationally effective and to
enable developing countries to effectively take account of their
development needs, including food security and rural development. We take
note of the non-trade concerns reflected in the negotiating proposals
submitted by members and confirm that non-trade concerns will be taken
into account in the negotiations as provided for in the Agreement on
Agriculture.
Modalities
for the further commitments, including provisions for special and
differential treatment, shall be established no later than 31 March 2003.
Participants shall submit their comprehensive draft Schedules based on
these modalities no later than the date of the Fifth Session of the
Ministerial Conference. The negotiations, including with respect to rules
and disciplines and related legal texts, shall be concluded as part and at
the date of conclusion of the negotiating agenda as a whole.
For more information go to:
http://europa.eu.int/comm/agriculture/external/wto/index_en.htm
http://europa.eu.int/comm/trade/goods/agri/index_en.htm
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Press Contacts:
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Wilfried Schneider
202-862-9523
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Maeve O'Beirne
202-862-9549
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