GENEVA--Members of the World Trade Organization are unlikely to engage in any substantial negotiations on the further liberalization of agriculture trade during 2000, according to farm trade officials contacted by BNA.
The inaugural negotiating session for agriculture is set to take place on or around March 23-24, when the WTO's standing Committee on Agriculture holds its first meeting of the year. WTO members agreed at a Feb. 7 General Council meeting on the formalities for starting new negotiations on agriculture and services, which were mandated to begin by 2000 under the Uruguay Round agreements (17 ITR 226, 2/10/00).
But agriculture officials say that little progress is likely to occur in the near term, particularly if members fail to initiate a wider round of global trade talks, as originally envisioned at their Seattle ministerial late last year. WTO Director-General Mike Moore said Feb. 16 that a new round was unlikely to be launched anytime soon because members were still too far apart on a wide range of issues.
"Our expectation here in Geneva is that we're not looking for much to happen during the first year," said a Latin American official who declined to be named. "We understand that it's going to be more internal work, preparing proposals within regional groupings or like-minded groups."
"We will have a good idea toward the end of the year of what the scope of the agriculture negotiations will be and perhaps have some proposals on modalities," the official added. "Lots of papers will be presented, but they won't be negotiated."
Talks Will Be 'Very Difficult.'
A trade diplomat with one of the Cairns Group of agricultural exporting nations admitted that substantial talks on agriculture "will be very difficult" outside the context of a broader round, given that more reluctant participants such as the European Union, Japan, and South Korea will not be able to trade off agricultural concessions for benefits in other sectors.
"But certainly things are going to proceed, and we'd hope to have some proposals on the table by the end of 2000 and get the talks going," the diplomat added.
Informal consultations have already begun in Geneva for the first negotiating session in late March. Agriculture officials said they expect that session will set out a calendar of meetings for future negotiating sessions and perhaps address the need for benchmarks or timetables for carrying out certain steps of the negotiating process. They also hope to have selected the committee chair responsible for heading the negotiations by the time the first meeting takes place.
Developing countries favor selecting a chair from one of the members' trade missions in Geneva on the grounds that they will have better access to a locally based official. Countries that are keen to get the agricultural talks going such as the United States and Cairns Group reportedly prefer someone from outside the diplomatic corps in Geneva who would likely remain as chair for the duration of the negotiations.
As for benchmarks, trade officials said the March meeting was expected to discuss and perhaps agree on a year-end deadline for members to submit proposals on objectives for the agriculture talks.
Inclusion of Non-Trade Issues
Cairns Group members are likely to renew their demand for the elimination of export subsidies under the new agreement while the EU and Japan are likely to flesh out their ideas on how the talks should address non-trade concerns such as the positive role played by agriculture subsidies in protecting the environment, ensuring national food security, and promoting rural development
The setback in Seattle has made the launch of the negotiations much more problematic. WTO members were close to reaching an agreement in Seattle that would have set out general goals for the negotiations. These included comprehensive market access "leading to the broadest possible liberalization, particularly with regard to products of export interest to developing country members"; substantial reductions in all forms of export subsidies and equivalent action on the subsidy component of other forms of export assistance "in the direction of progressive elimination of export subsidies"; substantial reduction in domestic support (government subsidies for farmers); and improved rules and disciplines consistent with the objective of fundamental reform.
In Seattle, WTO members were also set to agree on benchmarks for the negotiations. These included an agreement on modalities (formulas used for meeting reduction targets) by July 1, 2001; submission of comprehensive offer lists by Jan. 31, 2002; and completion of the negotiations by Dec. 15, 2002.
Script Out the Window
The setback in Seattle has thrown this carefully scripted plan out the window. The EU has declared that the Seattle agriculture text was only to be agreed as part of a decision to launch a wider trade round. "We have to start from the beginning," European Agriculture Commissioner Franz Fischler declared immediately after the ministerial meeting collapsed.
The Office of the U.S. Trade Representative's special trade negotiator for agriculture, Peter L. Scher, admitted last month that the Seattle text was unlikely to be used as the basis for the new agriculture negotiations and that members would probably have to rely on Article 20 of the WTO's Agriculture Agreement for guidance. Article 20 states that WTO members shall initiate new negotiations on reducing agricultural support and protection and take into account factors such as the experience of members in implementing existing reduction commitments, the effects of reduction commitments on world trade in agriculture, and non-trade concerns.
Unlike the Seattle text however, Article 20 does not set out a deadline for concluding the negotiations. The EU and Japan are not expected to endorse a deadline date until members agree to launch a wider round. "There is no formal linkage between the two, but it will be very difficult to ensure a balanced result in the end without a broad round," said a Japanese official.
Shadow of Peace Clause Over Talks
Hovering over the negotiations is the so-called "peace clause" of the Agriculture Agreement, which prevents governments from challenging another country's domestic support measures as WTO-incompatible subsidies through dispute settlement proceedings. Export subsidies that conform to the agreement can only be challenged in the WTO if they exceed agreed limits.
The peace clause is scheduled to expire in 2003. The EU wants the peace clause extended, but Scher has said the United States will find it difficult to endorse an extension without a new agriculture agreement.
Trade officials agree that expiration will undoubtedly put some pressure on the EU and its allies to negotiate but are undecided whether a threatened barrage of dispute settlement complaints will be enough to force them into a deal within the next three years. The EU, for its part, says it is prepared to negotiate on farm trade in good faith.
The United States is taking comfort in a WTO decision adopted last year that ruled a Canadian dairy export support program violated Canada's commitment to reduce export subsidies under the Agriculture Agreement. U.S. officials say the ruling, the first by the WTO focusing on agricultural export subsidies, closes a loophole in the Agriculture Agreement by clarifying what constitutes an export subsidy and prevents other members such as the EU from considering similar arrangements in order to skirt their WTO subsidy commitments.
"By reinforcing the disciplines on agricultural export subsidies which bind all WTO members, this ruling provides a strong basis for entering a new round of trade negotiations on agriculture," U.S. Trade Representative Charlene Barshefsky said after the decision was issued.
But others note that the WTO's lengthy dispute settlement process could allow the talks to drag on for several more years before panel rulings on farm subsidy complaints are completed and deadlines fixed for implementation. "It could take up to three years from the time a panel is initiated until a dispute reaches its final conclusion," noted the Latin American official. "So what you're really talking about is a 2006 deadline for wrapping up the negotiations."
By Daniel Pruzin
Copyright c 2000 by The Bureau of National Affairs, Inc., Washington D.C.:
