On July 17, 2007, Crawford Falconer, president of the agriculture negotiations group of WTO, proposed a new project of "modalities", in reference to the failure of the G4 negotiations (EU, USA, India and Brazil). Based on the last position of the members, M. Falconer outlines what he thinks could be a possible agreement, and gives his opinion about the concessions that the negotiators are ready to make. The document defines lowering formulas on agriculture custom duties and subventions. It follows the two documents about the "challenges", passed out on April 30 and may 25. M. Falconer urges the states to react and make the negotiations progress. The document concerning the agriculture negotiations was passed out together with a revised document on the "modalities" written by M. Don Stephenson, president of the non-agriculture negotiations group.
On 30 April, Crawford Falconer, chairperson of the WTO agriculture negotiation, has circulated a paper where he presents a set of ideas about the on-going negotiations. His goal is to challenge WTO members in order to speed up the negotiations that seem to slow down after the resumption of February 2007. An informal meeting was organized on 7 May for members to make their first comments on the paper. Mr Falconer said the negotiations are likely to intensify towards the end of may afetr he has circulated the second paper on negotiation challenges.
World Trade Organization (WTO) talks resumed in February of this year, after having been suspended in July of 2006. Meetings held on April 11-12 to address the question of agriculture and involving the European Union (EU), the United States (USA), Brazil and India were unable to generate agreement in this area. On the 30th of April Crawford Falconer, the chairman of the WTO Committee on Agriculture, circulated a paper in which he sets out a series of working hypotheses to serve – after discussion among the members – as the basis for a draft agreement. The object of the text is to challenge members to react and to restart their talks at this juncture when progress has slowed considerably. In his paper, Falconer lays out the current state of negotiations in each of the three areas that the Committee is mandated to treat : domestic support, market access, and export competition.
1. Domestic support in developing countries to be reduced by 30%
All mechanisms of domestic support in favor of a country’s farm producers come under WTO regulation. Under Special and Differentiated Treatment (SDT) provisions, developing countries are not required to count investment support, subsidies for agricultural inputs for low-income farmers nor support for substitute crops for narcotic producers in the calculation of domestic support and its reduction. All other forms of domestic support should be reduced by about 30%, a rate which – in conformity with SDT — is much lower than the 70-80% reduction to be required of developed nations. These proposed rates have been accepted by the EU but not by the US. The latter does not consider that the concessions made in terms of market access are sufficient offsets to warrant a reduction of this size in its own domestic support to farmers.
2. No quantified proposals concerning market access or export subsidies but reassurance of special treatment for developing countries on these questions
No hard numbers were proposed for reducing tariff barriers or export subsidies. Discusssion of technical aspects excluded any final conclusions or propositions. The only clear concession obtained by developing nations is that they are to benefit from SDT in these areas. Accordingly, developing countries that are net importers of food will be able to request that certain of their subsidies to export crops be maintained even though such subsidies will have been eliminated overall. This measure is intended to avoid a situation where developing nations would have trouble importing the food they need for lack of export credits to food exporting countries. The SDT framework in addition provides Falconer the leeway to propose a reduction mechanism for import duties in developing countries which is clearer and simpler than the one applied to developed countries. Developing nations would be able to decide freely which means they use to attain the overall reduction imposed by the WTO (coupled with minimum required reductions by product), as developed countries did under the Uruguay Round. Meanwhile developed countries would apply a tiered formula, as set out in the August 2004 agreement which has proved as difficult to implement and to manage as it was to negotiate, but whose complexity may provide some useful flexibility.
3. Difficult discussions on food aid
Within the context of export subsidy reduction, the WTO tackles the problem of food aid since some countries use this type of aid as a way to clear their markets or develop new outlets overseas. Negotiators have sought to ensure that food aid occurs only in emergency situations and that various actors are not allowed to exploit the system for their own trade advantage. The proposal to eliminate aid in kind except in cases of emergency would simplify both talks and regulations, but this proposal has not met with unanimity. In addition, it entails defining the concept of food emergency, which is beyond the mandate of the WTO. For these reasons, negotiations on food aid seem complicated and far from resolution.
4. Little progress on cotton production talks
Following the Sectorial Initiative on Cotton led by four African nations in April of 2003, the WTO decision of August 1, 2004 stipulates specific treatment for cotton. Issues of domestic support, export subsidies, and market access related to cotton are to be treated by an ad hoc sub-committee. Falconer’s paper proposes no specific rate of support reduction concerning cotton. Subsidies should be reduced "more "ambitiously" than the general formula for subsidy reduction. No figure has been cited for any of the three policy areas. There exists a proposal for an overall reduction target for domestic support, but talks on establishing reduction rates per product have stalled, as have those on how to prevent the transfer of subsidies from one "box" to another, and as a result no workable proposals have emerged. The only proposition still on the table, although not agreed upon, is the formula suggested by the African Group, which proposes the elimination of export subsidies as well as domestic support in the case of cotton, combined with increased market access for which it goes so far as to suggest full and free access for LDC countries.
In conclusion, talks have yet to reach quantified proposals on the questions that most preoccupy developing countries. The USA will not accept any reduction in their domestic support levels, the cotton question is stalled, and talks on access to farm product markets are having a tough time with a number of complicated technical details. As the rhythm of meetings among negotiators increases, at the same time that Crawford Falconer issues his second set of "Challenges", there is some hope that talks will progress to the point of reaching some concrete propositions.