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Doha update Black box new obstacle for negotiators

U.S. trade officials have added a fourth box to the amber, blue and green boxes the WTO uses to try to keep straight the “aggregate measures of support” its member countries provide to agriculture.

The new “black box” is the one U.S. officials have begun referring to, tongue-in-cheek, to describe the exemptions some countries are trying to carve out in the ongoing debate over increased market access, the issue that has ground the Doha Round to a halt.

“In WTO speak, when we're talking about domestic support and cuts in domestic support, we understand how that's structured,” said U.S. Trade Representative Susan Schwab. “We have the amber box, we have the blue box and we have the green box. It turns out in market access all we have is a black box.”

That box is filled with loopholes, she said. “Unless and until we are able to pin those down and figure out what is behind the curtain, we don't see what is there; we can't evaluate what's on the table.”

Schwab spoke at Washington's National Press Club a few days after trade officials from 50 countries met in Geneva to try once again to find a consensus in the Doha Round. (Other USTR staffers also were making the Washington circuit with Jason Hafemeister, deputy assistant for agricultural affairs, speaking at the National Cotton Council's mid-year board of directors meeting.)

The meeting in Geneva ended a day earlier than scheduled after WTO leaders decided they were not seeing any progress in finding a breakthrough on market access.

“The European Union, for example, claimed it was ready to improve its fall offer in agriculture and market access, but we discovered the offer was both too vague and too full of loopholes to really get a sense of whether it was better or not,” Schwab said.

The United States, the European Union and the Group of 20 developing countries led by Brazil and India have each proposed tariff reductions, ranging from 75 percent to 39 percent. But the EU and G-20 are also seeking exemptions for what's become known as the three Ss — sensitive products, special products and special safeguards for agriculture.

Schwab said an Australian analysis shows that combining the 54 percent average tariff reduction which is a nominal cut for developed countries in the G-20 proposal with the treatment of sensitive products in the EU's proposal from last fall gives the equivalent of a 40 percent tariff cut.

U.S. congressmen and farm organization representatives have said other countries must come closer to doubling that before they will support legislation that would reduce U.S. farm subsidies.

“And you still don't know whether those products, those commodities that you really care about, are on the table at all,” Schwab said.

The ambassador said she never felt a “sense of energy or the buzz that comes with knowing there's an imminent breakthrough or potential breakthrough” during the June 30-July 1 ministerial meeting in Geneva.

“We all showed up, presumably ready to deal, but there was no deal made,” she said. “Perhaps the rest of the world expected the United States to show up to give more in domestic support and agriculture and to get less in terms of market opening. There's no balance in that equation.

“If the United States needs to adjust its offer from last October downward, we risk generating a downward spiral. That's also not the answer.” (Schwab was referring to the U.S. proposal to reduce its farm subsidies by 60 percent as part of another effort to revitalize the Doha negotiations.)

Although the June 30-July 1 meeting ending with no breakthrough, Schwab said U.S. negotiators are not ready to throw in the towel. “The goal we have in the next three weeks is to raise everybody's game, not to define success downward,” she said. “We need to keep our eyes on the prize — the power of open markets to spur development and economic growth.

“And all WTO members need to stretch and all need to focus on eliminating the black box so we can get on with the rest of the negotiations. If that means new proposals, so be it, but they should be real proposals.”

Many members of the ABC-Doha Coalition and Business Roundtable that attended the National Press Club speech are more interested in non-agriculture market access and access for manufactured goods and services. “Those are very much front and center in our thinking, and I don't wish to imply otherwise,” Schwab said. “Fortunately or unfortunately, however, agriculture is still the key to unlock the door to the rest of this equation.”

The average for agricultural tariffs worldwide is 62 percent, she noted. Those barriers to trade range from a low of about 12 percent for U.S. agricultural tariffs to as much as 750 percent for rice entering Japan. The average of the agricultural tariffs in the EU member countries is about 24 percent.

“Clearly, Japan benefits as much as any country in the world from an open global trading system, and Japan needs to make contributions and participate in a manner commensurate with the benefits they gain from the international system. That means making significant contributions in agriculture.”

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