Jul 12, 2008

WTO Texts: Any Changes?

Reuters has kindly prepared this summary of the changes that have been made in the new WTO agriculture and non-agriculture market access texts that were released yesterday. We remain worried that too much is being left for Miinisters to decide. Not all Ministers are as capable as our Phil Goff.......

The new texts contain no surprises, and did not change existing proposals for cuts in tariffs and subsidies that will be left to ministers to decide.The following are the main changes:

Tariff cap. The new text proposes that developed countries can keep tariffs of more than 100 percent only if the products concerned are included in that member's allowance for "sensitive products" -- a mechanism that allows countries to shield products from the full force of tariff cuts in return for letting in a quota of those goods at a lower tariff. In this case the quota would have to be bigger than usual.*
Special products. The new text simplifies the proposal for special products -- products that developing countries can shield from the full impact of tariff cuts for reasons of food or livelihood security or rural development. Developing countries would be able to designate 10-18 percent of tariff lines as special products. Under this arrangement either up to six percent of products would escape all tariff cuts, or no products would be entirely exempt from cuts.* Special safeguard mechanism. The new text simplifies the proposal for the special safeguard, a mechanism allowing developing countries to raise tariffs to counter a surge in imports or collapse in prices. The text makes it clear that tariffs cannot rise above the level they had before any Doha agreement, except for the poorest least developed countries, and possibly for some small and vulnerable economies.*
"Green box" support. The new text revises proposals for farm subsidies that does not distort trade or encourage production, known as "green box", by allowing changes in the base period on which such support is based provided it does not change farmers' expectations.*
Export credits. The new text allows developing countries four years to phase in the proposed maximum repayment period of 180 days on export credits.

Sectorals. Besides overall tariff cuts, countries are also negotiating agreements to eliminate tariffs entirely in certain sectors, such as chemicals or healthcare products. Currently 14 such sectoral deals are under negotiation. The new text drops the proposal for a mechanical link that would reward developing countries for participating in sectorals by allowing them a smaller cut in overall tariffs, in favour of a political link. This makes it clear that some developed countries will consider sectoral participation when negotiating tariff levels and special treatment for developing countries.*
Anti-concentration. The new text reaffirms that waivers to developing country tariff cuts should not allow them to exempt entire sectors from market opening. It adds a proposal that ministers should negotiate a minimum number of tariff lines or percentage of import volume in each sector that would be subject to full tariff cuts.*
Customs unions. The new text proposes that the members of the Latin American trade bloc Mercosur (Brazil, Argentina, Uruguay, Paraguay) should agree a common list of products shielded from the full impact of tariff cuts, and base these "flexibilities" on the trade volume of their biggest member, Brazil.*
New members. The new text drops the proposed grace period for the implementation of tariff cuts for recent members such as China, and changes the extra time proposed for implementation of new members to 3-4 years from 2-5 years. Thus China would have up to 14 years to implement tariff cuts, compared with 10 for other developing countries and 5 for developed members. The text retains a footnote that such new members may be able to seek further favourable treatment than that available to other developing countries.