Annex A of the draft agreement, dealing with agriculture,
makes clear how much the EU has got in return, creating
an extremely imbalanced framework for establishing
modalities in agriculture and damaging in the process
the interests of developing countries and agricultural
exporters. The draft declares that the Annex details
the elements that ''offer the additional precision
required at this stage of the negotiations'' in pursuit
of the objective of establishing ''a fair and market-oriented
trading system through a process of fundamental reform''.
But it is quick to correct itself and states that
''the final balance will be found only at the conclusion
of these subsequent negotiations and within the Single
Undertaking.''
This formulation clearly uses the Single Undertaking
notion to provide for the possibility of a compromise.
In the language of the draft, too much precision is
not possible in the current stage, especially given
the need for a quick consensus. Since the single undertaking
idea requires countries to take all or nothing, they
are expected to make compromises, accepting less in
some areas and gaining more in others. Countries are
expected to give and take in the agricultural area,
for example, in lieu of offers and demands in other
spheres, so that the final balance remains tentative.
The underlying assumption is that special interests
of individual countries vary enough to allow for a
consensus to emerge through the Single Undertaking
route.
It should be obvious that a framework of this kind
should be relatively flexible in all areas, and equally
so, in order to provide space for compromise. This,
however, is not the case. In agriculture the minimum
bounds of a possible compromise in terms of reduced
support by the developed countries has been fixed
at a relatively high level, reducing the space for
negotiation. In other areas, however, the floor to
which countries can be expected to proceed has either
been made flexible (as in the case of non-agricultural
market access or special and differential treatment
for developing countries) or rendered non-existent.
This bias becomes clear in the discussions on the
‘three pillars’ of domestic support, export competition
and market access. The massive domestic support for
agriculture in the US, EU and Japan that adversely
affects global prices of agricultural commodities
as well as the access of developing country exporters
to developed country markets is now well known. According
to the OECD Secretariat, the level of support provided
to agricultural producers expressed as the monetary
value of transfers from consumers and budgetary payments
to producers (the Producer Support Estimate or PSE)
amounted to $230 billion in 2002 and $257 billion
in 2003. This was equal to a third of the current
OECD gross farm receipts. Reacting to these (or even
higher) levels of support, countries have been demanding
substantial reductions overall domestic support.
What the draft framework does is to divert attention
from the need to do adopt such policies as part of
the effort to move towards a fair trading system and
focus on the quantum of support which is being provided
under heads other than the Green Box. The issue in
focus is not the principle or the nature but the quantum
of support. As a result there are three different
measures of support that are recognised as acceptable
and discussed. These are the aggregate measure of
support (AMS), which covers only those payments made
through means that are expressly considered trade-distorting;
the de minimis level of support, which permits all
countries to retain some degree of support through
trade-distorting measures independent of their level
of AMS in the benchmark year; and third the total
trade-distorting support, which includes support being
provided through these means as well as through the
adoption of Blue Box measures.
This leads up to a set of recommendations. The first
is the need for substantial and effective reduction
in the overall level of trade distorting support,
defined as the sum total of these three.
The second is the adoption of a tiered formula for
reduction in domestic support: countries with higher
levels of allowed support will be expected to make
deeper cuts. This tiered reduction approach will also
be followed for reduction of the final bound level
of aggregate support or total possible AMS, and product
specific caps would be specified at their average
levels during an agreed historical period, to prevent
transfer of unchanged domestic support between categories.
The third is the reduction of the permissible de minimis
level.
The fourth is a cap on the level of Blue Box support
as a percentage of the average value of agricultural
production. This implies the retention of the Blue
Box which was to be phased out by 2004, as a viable
means of agricultural reform. There is no talk of
phasing out these measures even by the end of the
Doha Round, if such a Round were to begin. What is
more, the draft calls for some flexibility to ensure
that members providing a high share of trade distorting
support through Blue Box measures would not have to
make disproportionate cuts.
Finally, even though there is mention of the need
to review Green Box measures to ensure that they have
no, ''or at most minimal'', trade distorting effects,
it has been made clear that the basic concepts, principles
and effectiveness of the Green Box should remain.
The concessions offered in return for the right to
protect are in the area of export subsidies for agriculture
that are to be phased out. Since this affects the
EU disproportionately, given the its current use of
such measures, an effort is made to elicit parallel
commitments form other countries. There is to be a
parallel elimination of trade distorting elements
of export credits and export credit guarantees (that
are to be on commercial terms), of practices adopted
by State Trading Enterprises in export sales, and
of food aid that can used as a mechanism of surplus
disposal. But even here, the schedule for implementing
new obligations, commitments and disciplines ''will
take into account the need for coherence with internal
reform steps of Members''. While concerns of the developed
are consistently thus addressed, the only special
concession being provided to developing countries
in this area is a longer implementation period.
Even in the area of market access there is to be single
approach for developed and developing countries, with
differentiation based only on the current level of
tariffs using a tiered tariff reduction formula in
which there would be deeper cuts in the case of higher
tariffs. While LDCs are to be exempted from a contribution,
special and differential treatment for developing
countries is recognised as ''an integral part of all
elements'' but left unspecified.
Finally, a reference to ''flexibilities'' for sensitive
products, which has pleased Japan, have been made,
but concessions to developing countries for Special
Products impinging on issues of rural development,
livelihood security and food security is mentioned
but left undefined and their accommodation left to
the ''post-Framework stage''
In sum, the concern in the agricultural area during
the framework stage has been to take on board the
sensitivities of the developed countries, particularly
the European Union, while postponing any special specification
relating to the developing countries. But even this
does not seem to ensure full support from within the
developed country camp. French President Jacques Chirac
has declared that the draft framework is "unacceptable",
and Prime Minister Jean-Pierre Raffarin has warned
the European Commission that "France cannot give
its agreement to a negotiation concluded on this basis."
Resentment about the role played by French Commissioner
Lamy runs high, and he is unlikely to get official
backing either for continuing in the Commission or
finding a slot in other international institutions.
But the European Union as a group has implicitly endorsed
the draft, which is being pushed because France does
not have a veto.
Having partially cleared the developed-country stumbling
block, the effort of the developed countries seems
to be to split the developing country camp so as to
prevent any attempt by them to unite and stall the
Doha round. Interestingly, on July 13, before the
release of the draft framework, trade officials from
the US, the European Union, Brazil and India, issued
a statement urging ministers of the Group of 90 (G90)
developing countries meeting in Mauritius, to back
the effort to arrive at a framework agreement by the
end of July. The ability to win support from India
and Brazil can be attributed to efforts by these countries
to use a new round to win concessions in areas relevant
to them, such as cross-border supply of services in
the case of India. This combined plea of two leading
developing countries, in collaboration with the developed
countries, put pressure on the G90 to dilute some
of its demands including the demand to separately
negotiate, independent of the overall negotiations
on agriculture, American subsidies on cotton that
affect the livelihoods of their peasantry extremely
adversely. The draft framework states that the cotton
question ''will be addressed ambitiously and expeditiously
as an integral part of the negotiations''. It deserves
a mention, in the WTO’s view, but not special treatment.
Earlier in May, Pascal Lamy made a controversial effort
to drive a wedge into the developing country camp,
by proposing that weak and vulnerable countries, which
are part of G90, should be offered the benefits of
a new round ''for free'', by exempting them from making
any liberalisation commitments. A similar proposal
has come from the EU, which calls for channelling
the benefits of its preferential trade scheme more
to the poorest countries, giving them advantages relative
to larger developing countries like China and India
that are now the major beneficiaries of the preferential
trading scheme. The intention is clearly to divide
sections of developing countries and weaken their
opposition to the specific form in which the developed
country camp wants to push ahead with the Doha Round.
Whether such tactics would work and we would see a
replay of the Uruguay Round drama remains to be seen.
But as of now the only hope that remains is that the
patently unequal and biased framework draft makes
it impossible for developing countries to succumb
to a strategy that relies on power rather than reason
to realise imperial ambitions dressed in the rhetoric
of economic rationality.
