It is history repeating itself as farce. Negotiators
meeting in London, Geneva and elsewhere await an acceptable
agreement between the US and the EC on agriculture,
before working out a deal that would help salvage the
next major step in the Doha Round of trade negotiations:
the Hong Kong Ministerial starting December 13. The
US seeks to appear reasonable by putting out an offer
that sounds path-breaking. The offer includes the following:
First, in US Trade Representative Rob Portman's words
(Financial Times, October 10, 2005), the deal should
involve ''steep tariff cuts over the next five years,
starting from 55 per cent up to 90 per cent in the highest
tariffs in rich countries''. This is to be followed by
a second stage in which tariffs would be brought down
to zero. Further, there should be very limited scope
for alternative treatment of sensitive products, and
the creation of this list should not be used to undermine
market access.
Second, ''a 60 per cent cut in "amber box"
support - the most distorting type of subsidies - over
the next five years'' and a fifty per cent reduction
in the cap on the less trade-distorting support under
the "blue box", which needs to be further
defined. Here too, there is to be a second stage in
which all trade distorting support is to be eliminated.
And, third, setting a deadline of 2010 for the agreed
elimination of export subsidies, combined with a tightening
of ''rules on the donation of food aid to guard against
possible commercial displacement but not at the risk
of further reducing already inadequate food aid for
those who need it most.''
Based on this offer, the US wants the EU to make matching
concessions in agriculture and developing countries
to offer substantial concessions in non-agricultural
areas. In fact, the US seeks to achieve two goals: occupy
the moral high ground in talks on trade liberalisation;
and use this position to get developing countries to
be more reasonable with regard to liberalisation of
trade in non-agricultural goods and services unlike
the EU on agriculture. It appears that with regard to
agriculture, the US is expecting an EU offer that would
involve a 54 per cent minimum average tariff cut and
a reduction in the list of sensitive products to from
10 per cent to 1 per cent of the total.
What is missed, however, is the US offer does not go
even part of the way in meeting expectations that were
generated during the Uruguay Round negotiations. The
Blue Box which was expected to have disappeared at the
end of the Uruguay Round implementation period would
still remain (even if trimmed) and the huge support
which the US provides its farmers in the form of ostensibly
''non-trade distorting'' Green Box payments would not
be questioned. The net result is that, as in the wake
of the Uruguay Round, neither would developing countries'
share in global agricultural trade increase nor would
they obtain any benefits in terms of better prices for
their products.
These issues have however disappeared from the debate,
and the US offer becomes the upper bound for the liberalisation
that the talks on agriculture can realise. Needless
to say, upper bounds are not realised ever. Negotiations
involve compromise. And in this instance the compromise
must be with a reluctant EU, held back by a recalcitrant
France.
Over the last few months, Peter Mandelson, the EU Trade
Commissioner, has been portrayed as a hardworking negotiator
cajoling his membership to accept more liberalisation
in order to prevent the Doha ‘Development' Round negotiations
from collapsing, ostensibly with disturbing implications
for the ‘poor' developing countries. In a first step
in this charade, in early October, the EU made an ''amended''
agricultural market access offer that envisaged a maximum
reduction of 50 per cent for very high tariffs compared
with the 90 per cent proposed by the US. The percentage
of so-called sensitive products, subject to smaller
tariff reductions, was to be cut from 10 to 8 per cent
of tariff lines, against the US proposal of 1 per cent.
This would leave 180 EU products in the "sensitive"
category. When recently question as to which products
would be covered by what the US has described as "the
large number of exceptions for so-called sensitive products'',
the EU's agriculture commissioner, Mariann Fischer Boel,
replied: "It is obvious that beef, poultry, sugar
and some fruit and vegetables might be in groups that
need a sensitive treatment.''
Mr Portman had responded that the EU proposal "doesn't
come close to meeting the expectations all of us have
on market access", since according to US calculations,
it implied only an average reduction of 24.5 per cent
in EU farm tariffs, which was even less than the 36
per cent average agreed in the 1986-93 Uruguay round.
And clearly the number of exceptions under the category
of sensitive products was seen as too large.
Since developing countries could not but reject this
non-offer, the scare of a collapse of the Hong Kong
Ministerial and of the Doha Round began to be raised.
EU, everybody had to agree, must go much further. But
then, given the distance between what was expected of
the EU and what it had placed on the table, some reduction
in ''ambition'' appeared necessary.
In step-two of this drama, at the end of October, Peter
Mandelson put out a revised offer to ''revive'' the Doha
Round. The offer promises to reduce the highest tariffs
by 60 per cent, against the 50 per cent cut tabled earlier,
which with other reductions, the EU claimed, would cut
European farm tariffs by an average of 46 per cent.
But there was no movement on the inclusion of 8 per
cent of products in the sensitive list. Once again the
US response showed disappointment. In its view, the
average tariff cut would actually amount to 39 per cent,
and this level of concession would mean that agreement
in other areas would be short of potential as well.
But there was no shortage of people to welcome the revised
EU offer, especially since Peter Mandelson appeared
to have placed his job on the line by exceeding his
brief to save the Round. A day before the revised offer
was made, Jacques Chirac, the French president, was
reported to have told a meeting of EU leaders that it
was "out of the question for us to make another
step", beyond the reform of the EU's common agricultural
policy agreed in 2003. A French diplomat is reported
to have said that Mandelson's negotiating tactics would
prove fruitless, since: "A negotiator can only
offer what he can deliver." Above all, the controversial
French interior minister, Nicolas Sarkozy, who seen
as an advocate of freer markets, wrote in the newspaper
Les Echos that Mandelson had accepted a "fool's
bargain" and assured French and European farmers
that they can count on his commitment ''to save what
is left of one of the first and principal common policies."
Mandelson on his part argued that " the ticking
of the clock is a very hard constraint'', that it was
necessary to ''unblock the round'', and that he looks
forward to being able ''to demonstrate convincingly to
France that what we're doing is negotiating in Europe's,
and that includes France's, best interests."
To read the meaning in this unnecessary last minute
drama in negotiations which have been under way for
years now, and which should be informed by the failures
at Seattle and Cancun, we need to return to the events
that preceded the conclusion of the Uruguay Round negotiations.
Then too, agriculture, which like many other areas was
being subjected to the discipline of a multilateral
agreement, was the principal bone of contention. Then
too, it was presented as an area in which agreement
was first needed between the US and EU. Then too, a
deal was struck between the two in the infamous Blair
House accord of November 1992, in which a range of EU
demands were accommodated. Among other things, it legalized
the EC's Common Agricultural Policy with a "peace
clause" that ruled out any attack on the policy
in an international forum for a period of six years.
But then too, France opposed the agreement on a wide
range of counts. It threatened to veto the Uruguay Round
negotiations unless Washington agrees to soften the
terms of the accord. E.C. Trade Commissioner Leon Brittan
and U.S. Trade Representative Mickey Kantor eventually
took on the task of seeking a way out of a French-U.S.
deadlock over agricultural subsidies in order to meet
a December deadline. Their brief was to work out a compromise
somewhere between the demands of France and the US on
the subsidy issue in order to salvage a GATT agreement.
Yet, as late as December 1993, French Foreign Minister
Alain Juppe declared that GATT negotiators should aim
to reach an interim and partial trade accord that year,
leaving out difficult issues such as agriculture and
audiovisual broadcasting.
Finally, the Americans did ''blink first'', in the words
of one contemporary observer. Among other things, they
agreed to spread out a 21 percent cut in subsidized
exports over a six-year period, and postpone the year
the cuts are to begin, allowing the EC to export an
estimated additional 8.1 million tons of grain. They
also extended the six-year "peace clause"
in the Blair House accord by a further three years.
To pretend that the US had not compromised fully, some
adjustments were made in its favour.
The point of this exercise was, however, not in the
detail. It ensured two things: first, that US-EU agreement
was central to a deal in agriculture needed to save
a round that was seen as collapsing; and second, once
this agreement was arrived at, it put pressure on the
negotiators from developing countries to give more than
they needed to in areas outside agriculture in order
to be seen as reasonable and in tune with the global
ethos of liberalisation.
It is precisely this act which is being replayed again.
Expectations are high that the EU would move a little
further from its second offer, but would not just ensure
that its agricultural interests would be well looked
after, but also demand that developing countries make
major concessions in non-agricultural market access
(NAMA) and services. If they resist the latter demand,
the burden of wrecking the Round would at the last minute
be shifted onto the shoulders of the developing countries.
And the danger is that in the scramble to get as much
as they can without being forced to shoulder that responsibility,
countries like India and Brazil would make large concessions
that hurt not just their producers but those in Africa
and elsewhere.
The issue is not to declare that France does not need
its protection or that the US is wrong to use barriers
of all kinds in international trade, as for example
its recent initiatives against textiles and clothing
imports from China. The issue is to call the bluff on
the myth that trade negotiations are about free trade,
and not about using political and economic power to
ensure reasonable protection at home and substantial
market access abroad. It is also to make clear that
a process in which the US and EU take months and years
to work out an agreement on agriculture, declare at
the last minute that they have saved the round and then
require developing to negotiate on areas outside agriculture
in a few days, is an unacceptable farce. It is to say
that there is nothing lost if Hong Kong fails.
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