Oct 24, 1987


GENEVA OCTOBER 22 (IFDA/CHAKRAVARTHI RAGHAVAN) – The Cairnes Group of Agricultural Exporting Countries put forward Thursday what they termed a "three-phase" approach to negotiations on agriculture in the Uruguay Round of multilateral trade negotiations.

The proposals envisage a "reform programme" to be implemented over a the-year period or less, and to be settled before end of 1990. At the end of the reform programme, a long-term framework to govern world trade in agriculture would be made effective.

The Cairnes proposals also call for "early relief measures", requiring an immediate commitment to freeze trade distorting measures relating to access to markets, a freeze on all export and production subsidies affecting world agricultural trade, no new sanitary or phytosanitary regulations operating as disguised barriers to trade, and commitment for "responsible management" of accumulated stocks.

The relief programme is to start as soon as agreement could be reached on the parameters for the reform programme, and provisional agreement on a long-term framework. End of 1988 is envisaged as target date for start of relief measures.

The Cairnes Group’s proposals were unveiled in GATT by the Australian Prime Minister, R.J.L. Hawke, when he addressed the Contracting Parties to GATT.

The proposals are formally to be tabled at the meeting of the Uruguay round Negotiating Group on Agriculture next week.

The Cairnes Group of so-called non-subsidising agricultural exporters consist of Argentina, Australia, Brazil, Canada, Chile, Colombia, Hungary, Indonesia, Malaysia, New Zealand, Philippines, Thailand and Uruguay.

In presenting his proposals, Hawke also briefly touched on the issue of services negotiations and on manufactures.

In services, Hawke said the Uruguay Round must develop a multilateral framework to provide for steady liberalisation and expansion of access to markets, effective transparency of national regulations on services, and workable procedures for settlement of disputes.

Hawke’s formulation appeared to run counter to the objective and mandate in this area set out in the Punta del Este declaration, which specifies the objective as "promoting economic growth of all trading partners and development of developing countries".

This objective is to be achieved through a multilateral framework of principles and rules "with a view to expansion of such trade under conditions of transparency and progressive liberalisation". The mandate also demands that the policy framework "shall respect" the policy objectives of national laws and regulations.

In the group on services, the interpretation of this mandate has seen the U.S. lined up against third world countries like Brazil and India, with latter receiving some support from the EEC. Hawke’s speech puts Australia behind the U.S.

On manufacture trade, Hawke said that in addition to the proposal to negotiate tariff bindings in all sectors, Australia was willing to negotiate a broad package of measures to reduce assistance to industry, and eliminate over a period all quantitative import measures. Other trading partners employing a panoply of industrial assistance measures should reciprocate and effectively reduce industry assistance, not only in tariffs but also in non-tariff measures and subsidies.

On agriculture, Hawke welcomed the U.S. proposals for liberalised trade, but complained they did not provide a necessary basis for reform.

The U.S. proposal envisaged no early relief from distortions of existing arrangements, and did not also recognise that the greatest responsibility for reform lay with those whose policies were causing the greatest damage to world markets.

Efficient agricultural producers like Australia were caught up in a crossfire of competitive subsidisation by U.S. and the EEC, and "we are also fed up with being denied access to legitimate markets", Hawke said.

Hawke said the Cairnes Group would aim at achieving agreement on the parameters for the reform programme by end of next year, so that early relief measures could be implemented immediately thereafter.

The Cairnes Group also aimed at reaching agreement on details of the reform programme and start of its implementation from end of 1990, with a maximum phase-in period of ten years.

The Cairnes Group proposals to apply to all agricultural trade agree that differential and more favourable treatment to third world countries would apply to all elements of the proposals.

There would be longer time frame for implementation of measures by the third world countries.

Also, they would be entitled to certain support measures in relation to domestic economic programmes to promote economic and social development, but which are not explicitly linked to export purposes.

Under the long-term framework envisaged by the Cairnes Group, GATT rules and disciplines are to be agreed to remove restrictions to the free flow of trade in agricultural products.

These rules would include:

--Prohibition on introduction or continued use of all measures not explicitly provided in GATT, including prohibition of non-tariff barriers and measures such as variable levies and minimum import prices,

--Elimination of all provisions for exceptional treatment whether maintained under waivers (like the U.S.), protocols of accession (like Switzerland), or other derogations and exceptions, and

--A binding of all tariffs on agricultural products at low levels or zero.

Also, use of all subsidies and government support measures, including consumer transfers, having an effect on agricultural trade would be prohibited, with strictly defined exceptions to the general prohibition.

These exceptions would cover: structural adjustment measures not impacting negatively on trade, assistance measures for domestic consumption of food, non-commodity specific aid for infrastructure development (research, extension, market information, inspection, grading, pest and disease control, etc.), measures for specific disaster relief and for humanitarian purposes which respect FAO surplus disposal regulations, and direct income support measures decoupled from producting and marketing.

The longer-term framework, the Cairnes proposals say, should also provide for consultation, surveillance and dispute settlement.

The ten-year reform proposals in effect call for rollback of levels of aggregate support for agriculture, and suggest development in the GATT context of the OECD idea of PSE (Production Support Equivalents) measures.

Under the reform programme,

--Countries would undertake commitments to reduce and eliminate trade distorting policies in the form of country schedules of reductions, to be implemented on a non-discriminatory unconditional MFN basis.

Priority should be given in this schedule to phase-out of direct export subsidies and others that operate directly or indirectly to increase exports or reduce imports, and for systematic enlargement of market access through tariff reductions, phase-out of non-tariff barriers or enlargement of minimum access arrangements.

Countries should determine the most effective mechanism for translating the overall objectives of negotiations into clear, specific and easily monitored commitments.

The terms and conditions to apply to countries developing their schedules of reduction would include:

--Reaching targets of reduced levels of overall support,

--Priority targeting of support and policy measures that heavily distort trade, and

--As a comprehensive a coverage of range of agricultural products as possible.

The only exceptions to the coverage of programme of reductions of overall support levels would be those with humanitarian objectives, including consumption subsidies and those for promotion of structural adjustment, and as in the case of the long-term framework, precise terms and conditions for such exceptions are to be developed in the negotiations.

As early relief measures, to be implemented immediately after provisional agreement on long-term framework or end of 1988, whichever is sooner, the Cairnes proposals call for a freeze on access regulatory measures.

There is to be no reduction in existing levels of access through new QRS or reduction of existing levels in QRS, no extension of variably levy coverage to new commodities or reduction of existing levy-free or reduced levy commitments, or extension of minimum import prices to new commodities, or the application to new commodities of measures not explicitly provided for in GATT.

Also, all export and production subsidies affecting directly or indirectly world agricultural trade is to be frozen, and there should be no introduction of new sanitary or phytosanitary regulations that operate as a disguised barrier to trade and inconsistent with long-term objectives of negotiations.

As for surplus stocks built up through government support policies, there should be a political commitment to responsive management and non-disruptive disposal of stocks.

Consideration should be given, in this regarded, to alternative methods of stock disposal including increased domestic consumption and food programmes managed in strict accord with FAO principles of surplus disposal.

On the basis of such a freeze, there would also be relief provided through an across the board reduction by an agreed percent of all export and production subsidies, and a commitment to increase access opportunity.

Such a relief should take effect, the Cairnes proposals suggest, from en of 1988.