Revised texts for Agriculture and NAMA would intensify the negotiating process to reach final agreement

Geneva - 11th February 2008

The revised documents for agriculture and non-agricultural market access (NAMA) modalities were issued by the Chairs of the two negotiating groups on 8 February 2008. These texts are perceived to intensify the six years old Doha negotiations. The Director General WTO, Mr Lamy while welcoming the texts said that with the release of these revised texts we are a step closer to looking across both these issues as we try to find the final balance for an ambitious and development-oriented round. The texts generally reflect the views of the Members as expressed since July 2007. These documents are being examined intensively by the Missions as well as negotiating alliances such as G20, Cairns Group, G33 etc who have scheduled as series of meetings this week.

Issuance of these much-anticipated documents means that the negotiations have entered their final phase. After one week's intensive examination at the capitals as well as by the negotiating alliances, it is envisaged that initial open-ended meeting will be held on Friday, 15 February 2008 for a general exchange of views. Thereafter, negotiating groups will be reconvened possibly during the week of 18 February 2008 to discuss them further. Such discussions are likely to last for one or two weeks based upon the level of engagement. Depending upon the progress achieved, the Chairs of the two Groups may issue revised versions in early March and negotiations will then move on to a horizontal process. This implies that the negotiating process would then be chaired by Mr. Pascal Lamy, Director General WTO who is also the Chairman of the Trade Negotiating Committee (TNC). Keeping in view the progress made in the horizontal process, a Ministerial Conference is likely to be called in mid-March or a little bit later to finalize the modalities in these two areas. A preliminary analysis of the two papers is given below:

Agriculture :

In his revised document, the Chair of the Committee on Agriculture (Special Session) Ambassador Crawford Falconer of New Zealand has proposed no major changes to the earlier draft modalities texts circulated in July 2007. Major headline numbers such as ranges of cuts in tariff rates, overall trade distorting support (OTDS), AMS, Blue Box cuts, etc have not been revised or narrowed further. This means that the ranges proposed in his July text have now stabilized and members are agreeing to negotiate within these ranges. The only change perhaps is that it has now been clarified that in the market access area, the minimum average cuts which the developed members would have to undertake is 54% and for developing countries the maximum average cuts would be 36%. Any final resolution of these numbers would be discussed at the senior official level or political level (Ministerial) meetings in March or latest by April 2008.

While there are no changes to the headline numbers, gaps have been narrowed in a number of areas. Whereas the July text had over 700 bracketed texts, now the number has been reduced to about 150. However, in most of these issues are linked and if a solution is found in one area, it would result in resolution of other issues. It is felt that the number of outstanding issues is about 25-30. There are new texts and proposals for a number of areas such as Special Safeguard Mechanism (SSM), Special Products (SPs), Tariff Rate Quota (TRQ) expansion, etc. Furthermore, new Annexes have been introduced to give more clarity to potential lists of products for treatment as tropical products, tariff escalation, preference erosion, etc.

Pakistan's main interest for Market Access is that in addition to formula cuts, products of our export interest should be included in the lists of tropical products and tariff escalation products. Being included in these lists would mean that there would be more market access for such products as compared to any general cuts in tariffs. For example, it is proposed that for products accepted as tropical, the current tariff of less than 25 per cent shall be reduced to zero. Where the current tariff is more than 25 per cent, then it shall be cut by 85 per cent. Furthermore, such products cannot be treated as sensitive products, which are eligible for lesser cuts. Agricultural products of our export interest such as mangoes, citrus fruits and rice in various forms (paddy, husked, semi-milled or milled and broken) are at present included in the list of tropical products (see Annex J of DocTN/AG/W/Rev.1). If this list is finally accepted, it would imply that tariffs on these products would either be reduced to zero or cut by at least 85% in markets of developed countries.

In case of Domestic Support, the only significant change from the earlier text is the inclusion of a new mechanism for monitoring and surveillance proposed by Australia and Brazil. Steep cuts for cotton subsidies are still maintained.

There are no major changes in Export Competition pillar except finalizing and refining the details in export credits, international food aid and exporting state trading enterprises. A notable point in this pillar is that the extension in article 9.4 subsidies to developing countries until 2021. However this is according to the mandate of Hong Kong Ministerial declaration.

Overall the revised modalities paper is considered as a good basis of further negotiations. Most of the issues where we had any offensive and defensive interest have been taken aboard. There is a general appreciation that this text is a result of genuine bottom-up multilateral process and should be able to make progress.

Non-Agriculture market Access (NAMA) :

The Chair of the Negotiating Group on Market Access Ambassador Don Stephenson of Canada has followed a different format for his text. This format consists of two columns. In the left column, he has given the revised draft modalities while in the right hand column; he has given his comments to explain the differences, which exist in the negotiating positions. The key interest of countries applying the formula lies in three areas: coefficients, flexibilities and treatment of preference erosion.

In case of formula cuts, the Chair has not suggested any changes to the coefficients proposed in his July text. However, through his comments in the second column he has made it clear that there has been no convergence on this issue. He has then listed the three main proposals. These include proposal by developed countries for two-coefficients of 10 for developed and 15 for developing countries; proposal by a middle group for a coefficient of little less than 8-9 for developed countries and "high teens to low twenties" for developing countries and a proposal by NAMA 11 countries for a differential of at least 25 points between the two coefficients.

For flexibilities, he has re opened the issue by deleting the numbers (of tariff lines as well as the trade volumes) given in paragraph 7 of his July paper. This implies a closer linkage and trade off between coefficient and flexibilities. In his comments, he has stated that some members seek increased flexibilities in order for them to consider the ranges of coefficients proposed in the July text. He has listed specific problems raised by SACU (South Africa Customs Union), Mercusor (Argentina, Brazil, etc) and Venezuela. He has also mentioned that except for South Africa, which had made large contribution to the Uruguay Round, there is no support for giving additional flexibilities to other countries that have to apply the formula cuts.

In case of non-reciprocal preferences, the Chair has made some slight adjustments but overall he has maintained the July text. This implies allowing a longer time frame of (additional three years -one year grace period to start the tariff reductions late and then implementing the tariff cuts in 7 years instead of 5) for certain products listed in the annexes 2 and 3 of his revised document where preference-receiving countries fear losing market access and are seeking a longer time frame for adjustment. At the same time, he has recognized that market access opportunity for Pakistan and Sri Lanka would be adversely affected through any longer time frame. He has suggested that for Pakistan and Sri Lanka normal time frame without any grace period i.e., reductions of tariffs in 5 equal installments instead of 7 should be applied. However, he has limited such adjustment only for the US market. In case of Pakistan, he has specified 5 tariff lines covering shirts, T-Shirts, sweaters, trousers of cotton where this treatment should be applied.

Generally the texts are perceived to reflects members' views and thus can be termed as negotiating text. It is beginning of the intense process and a lot needs to be done by members to reach to the final agreement.