Jul 18, 1988

JAMAICA PRESENTS THIRD WORLD IMPORTERSí VIEW.

GENEVA, JULY 14 (IFDA/CHAKRAVARTHI RAGHAVAN) -- Jamaica has presented to the Uruguay Round Negotiating Group on Agriculture a communication outlining the elements that should constitute the so-called framework approach to trade in agriculture.

In presenting the communications, the Jamaican delegate, Anthony Hill reportedly told the negotiating group that it was based on a "draft common paper" developed in consultation with a number of third world participants.

Discussions within the group, and in the media so far, have largely been focussed on three main tendencies Ė those of the U.S., the Cairns group, and of the EEC.

A number of third world countries, who are either net importers of food and agricultural products or importers of some of the temperate zone products, have voiced their opinion within the group individually to underscore their view that there was a forth dimension to the discussion, namely that of third world countries and the development dimension.

The Jamaican communication is in a similar vein, putting down on paper a number of concepts and ideas that have been thrown up by these countries in informal consultations and discussions.

In presenting his own paper, and in commenting on proposals of the EEC and the Cairns Group for short-term measures, Jamaicaís Anthony Hill reportedly noted that the EEC and Cairns Group proposals all appeared aimed at supporting the market, and would have the result of pushing up the prices of the temperate zone products which were even now increasing.

However, at the same time, the prices of tropical products were stagnant or falling, and there were growing restrictions on market access.

This placed countries like his in a difficult: their export earnings were going down, while the import prices were going up.

Any measures to bolster the market would have hence to be accompanied by short-term measures to improve market access for tropical zone agricultural products too. Neither the EECís nor the Cairns Group proposals had any such commitment.

India, Mexico and Egypt were among those who spoke in the group expressing interest in the Jamaican communication.

In other comments in the group, Australia found a number of elements in the EECís proposals for short-term measures attractive and running on the same lines as those in the Cairns Group approach.

The Nordics felt that the Cairns proposals needed more clarity on some points. Even though it was "too ambitious", the Cairns proposals deserved serious consideration.

For Japan, the priority was on short-term measures for freeze on subsidies on agriculture production. There should also be some transition in removal of existing Quantitative Restrictions (QRS).

However, the Cairns Group approach implied "full liberalisation" of agricultural trade as the objective. This was contrary to the Punta del Este mandate which had only called "greater liberalisation" of trade in agriculture.

The U.S. complimented the Cairns Groupís proposals, and the efforts behind it, despite the diversity of interests of Cairns Group members. But while there was some specificity about the short-term measures, there were not many details and specifics about the long-term. The Cairns proposals envisaged commitment to negotiate long-term changes but without specific objectives.

The U.S. wanted complete re-writing of the rules for trade in agriculture and not "mere massaging".

The Community promised to study the Cairns proposals seriously, and welcomed the gradual approach and the emphasis on short-term measures. Contrary to the U.S. view, the Community found too much of specificity on the long-term in the Cairns proposals, and felt that these specifics went beyond the EECís understanding of the Punta del Este mandate.

The EEC also welcomed the idea of flexibility on short-term freeze. On the possible reduction of support measures in 1989 and 1990, the Community saw the need for some "loud thinking".

However the Community had difficulty with the Cairns Group approach (over the first steps to long-term), on the level of contributions to reducing support from various groups of countries.

And while the Community could endorse the principle in the Cairns proposals for special and differential treatment to third world countries, it could not agree that all third world countries should be treated alike. There were some third world countries whose agriculture was well developed, and this could not be ignored.

Switzerland complained that the Cairns proposals did not tackle the question of food security, or the need for "minimum production" of food within a country.

South Korea supported the idea of special and differential treatment, and a longer time frame for third world countries to comply. However it could not accept the idea of differentiation among third world countries.

Mexico supported the idea of special and differential treatment in the Cairns proposals, but argued that it was not just a question of longer transition. There were other benefits and elements for agricultural development in the third world that have to be part of the special and differential concept.

In its communication, Jamaica identified a number of issues on which actions were needed if the negotiating objective set out on the Punta del Este declaration was to be achieved.

These included recognition of importance of agriculture for overall development of third world economies, including output, employment and export opportunities, and linkages between agricultural policies and other economic policies in meeting social, regional and political objectives, including food security.

Other issues that had to be taken into account and tackled included:

--The low level of investment in the agricultural sector in the third world, the impact of environment and vulnerability of these countries to weather conditions (drought, floods, natural disasters),

--Need for government to provide subsidies and incentives to increase productivity and output, and ameliorate the skewed income distribution affecting rural farm population and food consumption of urban poor,

--Factor like external debt servicing and trade protectionism that inhibit capacity of third world countries to maintain food imports and reduced their export earnings from agricultural exports, and

--Safeguarding of incomes of farmers and poorest sections.

The terms of trade of net food importing countries should not be made worse through increased prices for imports.

Hence any increases in prices of products exported by the industrialised countries should be offset by appropriate compensatory measures including food aid and IMF compensatory financing.

There were problems in international markets caused by surpluses and deficits due to fluctuating production cycles, particularly in the industrial countries caused by a complex set of factors Ė weather, technological innovation, macro-economic and sectoral policies, trade policies and others affecting supply and demand.

In periods of surplus, world market prices for food and other agricultural imports of the third world tended to be low, thus discouraging domestic production of competitive third world producers, while within the industrialised countries, consumers continued to pay high prices due to subsidies and transfers to farmers and protection of domestic markets.

But during periods of deficits, supplies on the world markets became scarce and importers, primarily consumers in the third world, were faced with higher world prices. These high prices were not offset by corresponding increases in prices for their own exports of agricultural products (including tropical products), which were traded in international markets.

If GATT rules were to be made more effective by strengthened disciplines (as called for in the Punta del Este mandate), joint action in the GATT by Contracting Parties were required to integrate agriculture within the framework of rules and disciplines of the general agreement.

While third world countries needed an appropriate mix of policies (macro-, micro- and structural) to ensure balanced contribution of agriculture and other sectors to their development, the GATT could contribute to this through effective rules and disciplines to govern trade in agriculture.

Industrialised countries who resorted to significant distortions and restrictions in agricultural markets should refrain from such measures as administered prices and government mandated supply controls.

There should be flexibility for third world countries in applying GATT rules, and discriminatory treatment to third world exports should be ended.

Concessions negotiated among third world countries should be notified and be considered as contributions to the Uruguay round in view of their trade creating effects.

Similarly autonomous liberalisation efforts of third world countries should receive "credit".

There was also need to agree in 1988 on urgent measures, Jamaica suggested.

Towards this end, all trade measures relevant to agricultural trade should be included in the negotiations, and subject to GATT rules and disciplines, including those under the protocol of provisional application, protocols of accession by industrialised Contracting Parties, waivers and derogations.

Concessions should be exchanged among all participants, and extend to the widest range of agricultural products, including in their semi-processed and processed forms.

All agreements having an impact on agricultural trade should be taken into account and brought under GATT rules. These agreements would include bilateral arrangements among industrial countries, the so-called "usual marketing arrangements", food security, food aid and disaster relief, and sanitary and phytosanitary measures.

There should also be actions to fulfil the commitments under part IV of GATT and the 1979 enabling clause for special, differential and more favourable treatment to third world countries.

Outlining a number of transition arrangements on which also agreement should be reached in 1988, Jamaica said these should include a timetable for removal of import restrictions by industrialised countries based on protocols of accession to GATT, waivers, derogations and the like.

There should also be improvements in or phasing out of arrangements on dairy products and bovine meat.