Nov 20, 1984

MOVING TOWARDS NEGOTIATIONS ON AGRICULTURE?

GENEVA, NOVEMBER 16 (IFDA/CHAKRAVARTHI RAGHAVAN) In what a spokesman described as "substantial outcome", the Committee on Trade in Agriculture in GATT reached agreement Thursday night on a framework and approach to negotiations for liberalising trade in agriculture.-

The 1982 GATT Ministerial declaration had agreed on need to achieve greater liberalisation of trade in agricultural products, and had called for the setting up of a Committee on Trade in Agriculture to study this and make recommendations.-

After two years of study and detailed examination of the agricultural sector policies in various countries and its impact on international trade, the Committee has now come up with a set of recommendations on the general objective of negotiations in agriculture, on what is to be negotiated and on further work to be done to develop the various possible approaches.-

The recommendations of the Committee are expected to be endorsed by the GATT Council next week and forwarded to the meeting of the Contracting Parties (CPs) on November 27-29.-

However, the European Community has entered reservations that its agreement on agriculture, and future movement towards negotiations, could depend on satisfactory progress on other aspects of the GATT work programme.-

Claude Villain, the EEC Director-General for agriculture, told a press conference Friday that the Community was not creating "a linkage" to block further work on agriculture.-

But work in GATT had to be on the basis of confidence, and this required progress on other aspects of the work programme - like safeguards, Quantitative Restrictions (QRs), tropical products, exchange rate fluctuations, counterfeit trade, services, etc.-

"We hope progress in agriculture will give impetus to progress on other issues", villain added.-

Third World sources said that the EEC had sought to create such a "linkage" in the Committee, but this had met with the opposition of the Third World as well as Australia and New Zealand.-

While all participants welcomed the agreement in the Committee, they said much would depend on how further work is done next year.-

The GATT secretariat over the next few months is expected to prepare the necessary data, and the Committee itself meets perhaps in May-June 1985.-

Agriculture is a sector where the principles and rules of the General Agreement largely do not apply.-

In its labours, the Committee on Agriculture has had to face the conflicting interests and viewpoints in this sector among the industrial economies themselves, and between them and the Third World.-

In effect the agreement in the Committee envisages further work of study and developing approaches to actual negotiations on all aspects of agricultural policies of countries, insofar as they affect international trade.-

The major conflict in the Committee was among the Industrial countries - the EEC, the U.S.A., and Australia and New Zealand - all of them with major stakes in international trade in agricultural products.-

The EEC operates behind its Common Agricultural Policy (CAP) with guaranteed prices to its farmers, variable import levies to protect its domestic market, and subsidies for the exports of its agricultural surpluses.-

The United States domestic market is completely protected through a permanent waiver from GATT rules that the U.S. obtained in 1953, and there has been increasing dissatisfaction in GATT at the continuance of this waiver after 30 years.-

The U.S. has said that in any future negotiations its waiver would be on the table for negotiations, but the EEC, and Australia and New Zealand have said they were not "willing to pay a price" for the U.S. giving up its waiver and abiding by the limited GATT obligations, in this sector like others.-

And while the U.S. has been vociferous over the EEC export subsidy policies, the EEC has been countering this by pointing to the U.S. agricultural support to its farmers, as well as its exports through P. L. 480 and export credits.-

Villain underlined Friday in this connection that while the EEC subsidies in 1983 amounted to 14 billion dollars, the value of U.S. assistance to the agriculture sector amounted to 43 billions.-

Australia and New Zealand, major agricultural exporters, have been seeking liberalisation of the trade in this sector, by bringing it under the same GATT disciplines as for manufactures, and seek reduction of barriers both by the EEC and the U.S.A., the latter by giving up its waiver rights.-

The Third World countries, with are seeking to develop their own agriculture sector, and change it from a marginalised economy to a modern one, and to ensure self-sufficiency particularly of food, are seeking greater market access for their exports, while preserving their GATT rights for differential and more favourable treatment.-

While the food-deficit Third World countries benefit in the short-term from subsidised exports of agricultural surpluses of the industrial economies, there is increasing awareness among them that in the long-term such exports affect their own agricultural development through denial of remunerative prices to their farmers-.

Japan and smaller European countries, especially the Nordics, who also have a highly protected agricultural sector, in effect seek to preserve their domestic production, arguing about the "specific characteristics and problems in agriculture".-

It is this tangled web of conflicting interests that the Committee on Agriculture has been tackling for the last two years, and has now come up with a framework of approach to negotiations.-

In its recommendations adopted Thursday night, the Committee has set out the conditions that should be elaborated under which substantially all measures affecting trade in agriculture would be brought under operationally effective GATT rules and disciplines.-

This is to be with particular reference to improving the terms of access to markets, to bringing export competition under greater discipline, and to reinforcing the linkages, under the provisions of GATT relating to QRs and subsidies on exports, between national policies and trade measures.-

The aim is to clearly define the limits to the impact of domestic agricultural policies on international trade, and to more effectively implement the GATT provisions for differential and more favourable treatment to the Third World.-

Towards this end, the committee has called for elaboration of approaches in specific areas, as a basis for possible future negotiations to liberalise the trade in agriculture.-

The approaches the committee has set out are to be without prejudice to any other approaches.-

Firstly, all QRs and other related measures affecting imports and exports should be brought within the purview of strengthened and operationally more effective GATT rules and disciplines.-

All restrictions, including those maintained under waivers (like those of the U.S. and Switzerland) and other derogations or exceptions, as well as the import and export activities of state trading and other related enterprises are to be covered.-

Also to be elaborated and covered under this approach would be appropriate rules and disciplines relating to voluntary restraint agreements, variable levies and charges (such as those of the EEC), tariffs not bound by GATT agreements, and minimum import price arrangements.-

The second area to be covered relates to subsides affecting trade in agriculture, whether they are export subsidies or other forms of export assistance including export credits, so as to bring them under strengthened and more operational effective GATT rules and disciplines.-

Two parallel approaches are to be explored in this area.-

One approach, favoured by the EEC, is for improvements in the existing framework of rules and disciplines. It would thus not rule out subsidies per se but merely set limits and conditions.-

The other approach, pushed by the U.S. as well as Australia and, New Zealand would be for a general prohibition of subsidies and assistance for exports, but subject to "carefully defined exceptions".-

Villain said that the latter "radical approach" would depend very much on the "list of exceptions".-

The third area to be covered is in improving the procedures relating to sanitary and phytosanitary regulations and other technical barriers to trade, so as to minimise their adverse effects on the trade.-

In most industrial countries such regulations are often used to protect domestic markets, especially against imports from Third World sources.-

In the elaboration of the various elements of these approaches, full account is to be taken of the need for a balance of payments and obligations under GATT, of the special needs of the Third World countries in the light of the GATT provisions for their differential and more favourable treatment, and of the special characteristics and problems in agriculture.-

The Committee also agreed that policies and measures of all CPs of GATT should be subject to regular review and examination to ensure "fuller transparency". Towards this end, all of them should notify all their policies and measures affecting trade in agriculture.-

Villain suggested Friday that the basic advance in agriculture, since the 1982 Ministerial declaration, was agreement among all CPs that there was a direct connection between their internal agricultural policies and their effects on international trade.-

It was difficult for any CP to accept interference through international decisions on their internal policies.-

But at the same time they have now agreed on the need to look at the rules of international trade by safeguarding the authority of the CPs to determine their own domestic policies while taking account of effects on international trade.-

"Basically we now know what each CP is doing in agriculture, and we are ready to make progress", villain added.-