The European Union tabled a new proposal that would reduce tariffs on agricultural products by an average of 46 percent, rekindling hope that a new Doha Round trade agreement could be worked out in time for the WTO Ministerial Conference in Hong Kong Dec. 13-18.
Most of the principal players in the Doha negotiations, including U.S. Trade Representative Rob Portman, had little good to say about the latest EU proposal, but most agreed it was something to work with to keep the Doha talks moving.
“This is the most extensive proposal the EU has ever offered as part of a multilateral trade round,” said Peter Mandelson, the European trade commissioner. “It is within the mandate provided, although it goes to the outer limits of that mandate. This is Europe’s bottom line.”
Mandelson tabled the proposal on Oct. 28, one day after French President Jacques Chirac said the European Union would not go a step further in making concessions on its agricultural programs in the Doha Round. The French have been demanding that any Doha Round proposals be submitted to a panel of EU agricultural experts.
Officials with the European Commission, the organization that runs the European Union, said the proposal is conditional on the Doha negotiators discussing industrial duties and commercial services along with agricultural subsidies and tariffs.
The key points of the EU offer include:
• A 46-percent reduction in the average of EU agricultural tariffs — from 22.8 percent to 12.2 percent, nearly the average of agricultural tariffs in the United States. The highest EU tariffs would be cut by 60 percent and the lower by 35 percent to 60 percent.
• Setting the maximum agricultural tariff at 100 percent of the value of the imported product.
• A reduction in the number of “sensitive” products, which would not be subject to tariffs reductions.
• Reductions in tariffs for sensitive products and broader tariff rate quotas for all sensitive products, which would allow limited quantities of the products to enter EU-member countries duty-free.
• A 70-percent reduction in trade-distorting agricultural subsidies or amber box payments and tighter disciplines in Blue Box spending or less trade-distorting subsidies. The 70 percent would match the amount of reductions in the EU’s 2003 reform of its Common Agricultural Policy.
• Total elimination of all agricultural export subsidies by an agreed date, if other countries make similar concessions.
• Differential treatment for so-called developing countries, including higher tariff bands, lower tariff cuts and a maximum tariff of 150 percent. No tariff reductions would be required for the 50 least developed countries.
For all the rhetoric about it being at the “outer limits” of the EU’s mandate, the proposal actually represents a step back from earlier offerings, a spokesman for U.S. Trade Representative Portman said.
“The proposed tariff reductions are lower than proposals from the G20 developing countries and far lower than the U.S. proposal,” said the USTR’s Christin Baker. “The large number of exceptions for so-called sensitive products apparently has not changed from earlier proposals, and another element — the ‘pivot’ actually walks back from their latest offer.”
She said both would allow broad exemptions to the lower tariff reductions the European Union tabled, thus making the EU proposal less far-reaching than Mandelson claimed in his statements.
Senate Agriculture Committee Chairman Saxby Chambliss, who has been speaking out on the Doha Round negotiations more frequently in recent weeks, said he was disappointed with the EU proposal but was hopeful the offer would improve with time.
“I have concerns with some of the provisions, specifically those concerning counter-cyclical payments and the new blue box,” he said. (The EU plan calls for stricter disciplines on counter-cyclical payments, which are made to growers of program crops during times of low prices.)
“The European Union needs to work with the United States and other countries to make real concessions in market access in order for the Doha Round to succeed. Ambassador Portman continues to ably represent the United States, and I look forward continuing our close working relationship as we enter this critical period.”
The EU proposal came after a nearly two-week lull in the negotiations that had WTO leaders, trade ministers from other countries and U.S. farm organizations clamoring for the European Union to respond to a U.S. proposal that pledged to reduce U.S. farm subsidies by 60 percent and eliminate all export subsidies.
The latter also called on all nations to cap tariffs at 75 percent and limit the number of sensitive products exemptions from tariff reductions.
Members of the AgTrade Coalition, a group of 39 farm and farm-related groups, circulated a statement expressing their disappointment over the lack of progress on market access in the latest round of agricultural meetings at the World Trade Organization in Geneva.
The U.S. proposal tabled by Trade Representative Rob Portman on Oct. 10 would require the United States to cut its domestic price supports by 60 percent and the European Union and Japan by 83 percent (because the latter have much higher agricultural subsidies than the United States).
The U.S. plan also includes a cap on tariffs of 75 percent and progressive cuts with the highest tariffs being reduced by 90 percent. EU negotiators had little to say about the U.S. offer, in part, because EU tariffs are higher on average than the 12 percent average for the United States until Oct. 28.
EU officials claim that Europe took the first step in reducing farm subsidies in its 2003 reform of its Common Agriculture Policy. France and other countries say that proposals already made by Mandelson would force the EU to revise the CAP again.
The chief of the International Monetary Fund and the World Bank also criticized the reluctance of some WTO members to reduce farm subsidies and high tariffs.
Rodrigo de Rato, managing director of the IMF, and Paul Wolfowitz, president of the World Bank, did not criticize the EU directly, but clearly were referring to the latter in their comments about the need for accelerating the pace of the negotiations.
“Some progress has been made in the last few weeks. Success will now require key players to set aside their narrow interests, show flexibility and for the ambitious Doha outcome the world expects and needs,” they said in a joint statement. “The stakes are too great to contemplate failure.”