Oct 27, 1989

U.S. TABLES "COMPREHENSIVE PACKAGE" ON AGRICULTURE.

GENEVA, OCTOBER 25 (BY CHAKRAVARTHI RAGHAVAN) The United States has put forward what it has called "a comprehensive package" of proposals for agricultural trade covering import access, export competition, internal support and sanitary and phyto-sanitary measures.

The proposals submitted to the GATT "contracting parties", and tabled in the Uruguay Round negotiating group on agriculture (which includes CPs and those seeking to accede), is claimed as "designed to guide agricultural production and trade toward a market oriented system".

Apart from the emphasis on using the Uruguay Round of trade negotiations to establish via GATT a world-wide market oriented system of "production", the U.S. paper also claims that if its proposals are accepted it would tackle other "failures of current policies" causing increasing concern. Concerns cited range from sound management and excessive use of fertilisers and pesticides to water quality, food safety, deforestation, and environment.

The U.S. proposals would cover all agricultural and fisheries products (listed in chapters one to 23 of the harmonised system of customs classification); unmanufactured tobacco, colouring of or animal origin; essential oils; casein, albumin and gelatine; hides and skins other than foreskins; undressed and dressed foreskins not made into apparel; wood and selected wood products; wool and animal hair, not creed or combed, waste; and, raw cotton and waste.

Under import access, the U.S. has called for end of all waivers and derogations, protocols of accession and grandfather clauses (as of U.S., Switzerland, Japan and some Europeans) allowing derogation from GATT rules for import access, variable import levies (like that of EEC), voluntary restraint arrangements, minimum import prices other import barriers not explicitly provided for in GATT.

Other parts of its proposal suggest that the restrictions, including its own waiver obtained in the 50's, are only to be gradually phased out over a 10-year period.

All the import restrictions and non-tariff barriers, including total bans, are to be converted into tariff-rate quotas as of January 1, 1991.

Existing tariffs, including tariffication of non-tariff barriers are to be reduced to zero or low levels over a ten year period. Similarly the tariff-line quotas too would be phased out. Over-quota tariffs would be progressively reduced to the final bound rates, and initial quotas should be annually expanded by agreed minimum amounts.

There would be special safeguard mechanisms during transition period to deal with any sudden "surge" in imports. In the area of export competition, GATT CPs should commit themselves not to grant listed types (in annex) of export subsidies. The U.S. list has incorporated the current list in the subsidies code applicable to manufactured exports.

Very few third world countries are members of the code, which permits third world signatories considerable leeway even in respect of these practices, but the U.S. is applying bilateral pressures to force them to give up these rights.

The U.S. proposal would abolish this code right and add to the list, in the annex, other practices that might be agreed upon in the Uruguay Round negotiations. Only bona fide food aid would be exempt, but improved disciplines are to be developed to govern grant of food aid and to ensure that these meet needs of third world countries but without distorting normal commercial sales.

The U.S. would also eliminate article XI: 2 of (GATT, permitting export restrictions to relieve domestic short supply or for enforcement of government measures of domestic supply/management.

The export subsidies are to be phased out over a five-year period.

Export taxes and charges maintained to discourage raw material exports and encourage local processing would also be phased out.

Though the U.S. claims its proposals are aimed at environment protection, several non-governmental groups have noted that the way to arrest deforestation of tropical products is to have measures to encourage exports of value-added processed forest products and discourage raw materials, so that producing countries could earn foreign exchange by conservation and management of forests.

As regards internal support measures, listed in another annex from what the U.S. calls "general policy categories", and adopt a three-tiered approach.

It would phase-out subsidy policies over the transition period of ten years, discipline some others, and permits policies, which in the U.S. view have minimal effects on international trade but meet national policy objectives of resource conservation, environment and development.

Administered price policies, income support policies tied to production or marketing, input subsidies not provided on equal basis to all agricultural producers and processors, marketing programs like transportation subsidies, and investment subsidies not available to all agricultural producers.

Permitted policies would include income-support policies not linked to production or marketing, environmental and conservation programs, bona fide disaster assistance, bona fide domestic food aid, marketing programs (like market information, market promotion, inspection and gradation), general services (research, extension and education), resource retirement programs, and programs for stockpiling food reserves.

All other programmes not specified, including certain input or investment subsidies and other policies not meeting agreed criteria for permitted or "phased-out" policies, are to be disciplined. All policies other than border measures that result in increased domestic prices, income support measures not meeting agreed criteria, and subsidies on inputs or investments and marketing subsidies are to be phased out over a ten year period.

The U.S. proposals also provide for mechanisms for notification, consultation and dispute settlement in respect of national sanitary and phyto-sanitary measures.

These measures would have to be consistent with "sound scientific evidence" and should recognise "principle of equivalence". Measures in accord with standards or guidelines of codex alimentarius commission, international organisation of epizootic, international plant protection convention or who standards on hazards to human health and environment. But even then all such measures would have to considered by a GATT panel to decide whether they provide "acceptable level of protection consistent with sound scientific evidence".

Some of these provisions seem aimed at U.S. disputes with Europe and elsewhere about, for example, use of hormones for beef and dairy cattle, but is so wide as to be capable of covering anything else.

Third world countries are to be provided technical assistance in this area, but with FAO and others called upon to undertake this and presumably fund it. As regards the third world countries and the special and "distinctive" treatment, the U.S. envisages countries with "relatively advanced" economies and/or "well-developed agricultural sectors" complying with the proposed disciplines. Others "with a demonstrated need for exceptional treatment" would have a longer transition period on the basis of their "distinctive needs" to be determined on the basis of criteria relating to level of agricultural and overall development. This would apply to their infrastructural needs as well as some subsidies needed for agricultural development.

Products of "priority export interest" to the third world are to be given improved market access on an accelerated basis (not spelt out in the paper), by reduction of trade barriers and internal support in industrial countries.