Africa: Trade Talks Analysis, 12/16/05

Africa: Trade Talks Analysis, 1

AfricaFocus Bulletin
Dec 16, 2005 (051216)
(Reposted from sources cited below)

Editor's Note

"Any expectations that developing countries or the public might have of Hongkong marking progress to achieving 'development' in the Doha negotiations have been very much dashed. The 'Doha Development Agenda' (DDA) got its nickname when the developed countries pressurised the developing countries to accept a new Work Programme at the Doha Ministerial in November 2001. To cover the fact that the programme was really aimed at opening the markets of the South, the WTO secretariat leadership and the major developed countries dubbed it the DDA." - Third World Network

This AfricaFocus Bulletin contains a summary analysis of the issues being discussed four years after Doha, at the Hongkong WTO Ministerial conference. The analysis is from Third World Network (TWN), an independent group monitoring trade and related issues that is based in Malaysia, with offices in Delhi, Montevideo, Accra, and Geneva.

Another Bulletin sent out today has two additional short articles from TWN, one the summary of a workshop with Tetteh Hormeku, coordinator of the Africa Trade Network, focusing on the latest "development package," and the other an account of the December 13 statement on agriculture by the G20 group of developing countries, which includes, among others, Brazil, Egypt, India, Nigeria, South Africa, and Tanzania.

TWN has much additional information and analysis on its website at http://www.twnside.org.sg

For a full list of earlier AfricaFocus Bulletins on trade issues, see http://www.africafocus.org/tradexp.php

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Some Critical Issues in the Hongkong Ministerial

TWN Briefings for Hongkong, 1

Third World Network

Visit http://www.twnside.org.sg for full series

When the WTO's Sixth Ministerial conference opens in Hongkong on 13 December, there will be lowered expectations of two types. First, it is now a foregone conclusion that the well-publicised ambition that the Ministerial will agree to "full modalities" in agriculture and non-agricultural market access (NAMA) will not be met. The Hongkong meeting will at best move some distance towards that, in the small group discussions of a few major players, or in the bigger Green Room of 30 members or so. The modalities will have to wait for a new deadline, now placed as March or April 2006.

But second, and more importantly, any expectations that developing countries or the public might have of Hongkong marking progress to achieving "development" in the Doha negotiations have also been very much dashed. The "Doha Development Agenda" (DDA) got its nickname when the developed countries pressurised the developing countries to accept a new Work Programme at the Doha Ministerial in November 2001. To cover the fact that the programme was really aimed at opening the markets of the South, the WTO secretariat leadership and the major developed countries dubbed it the DDA.

Even then, trade experts and development analysts had understood that this was WTO "double speak" and that there was very little of development content in the Doha programme. Today, four years later, it has become very clear that the developed countries, in their negotiating positions and stance, have dropped the pretence of having any development goals or even any pro-development sympathy at all in the main negotiations on agriculture, NAMA and services. They have also all but pushed aside the possibility of progress in the developing countries' attempt to re-balance the unbalanced WTO rules through the direct "development issues" of special and differential treatment and implementation issues.

As the development content disappears and the brutal face of greed for market access into the developing world shows itself ever more clearly, the double-speak is coming back to haunt the spin-masters of the WTO. Officials of developing countries and NGOs alike are asking: Where is the development in the Doha Development Agenda?

Last month, the Africa Ministers in their Arusha conference prefaced their Declaration with a section on Reaffirming Development. A few days later, a group of developing countries that included Brazil, India, Argentina and South Africa held a press conference and issued a paper criticising the developed countries for threatening the developing countries' development interests by making excessive market-access demands on them. They also called for the "reaffirming of Development" in the Doha Round.

There will be attempts at Hongkong to put a "development spin" to an otherwise lacklustre event, by announcing a "development package" comprising aid for trade, non-binding duty-free market access for LDCs, and a few other items. This may fool some people unfamiliar with the WTO negotiations. But it will be seen as a cynical "face saving" exercise by others. It will not prevent officials of many developing countries or the NGOs from expressing their frustration that the Doha negotiations have not lived up to its "development" name but have instead taken an anti-development turn.

Not only is there a disappointment that the promised benefits (especially in agriculture) of the Doha negotiations have not emerged. There is a deep-seated resentment mixed with fear that the Round is now mainly about the aggressive opening up of the markets of the developing countries, which will damage them economically and socially, and perhaps disastrously. The fear is that if negotiations proceed the way the developed countries are strongly pushing, the outcome will be counter to development goals, with millions of small farmers dislocated and thousands of local industries losing their business or disappearing. The resentment is that this will be done, cynically, in the name of a Development Agenda and now of a Development Round.

Development Issues: All but Disappeared

When the Doha talks were launched in 2001, the Trade Ministers in their Declaration proclaimed that the needs and interests of developing countries would be at the centre of the work programme.At the top of the agenda were two items directly involving development concerns - strengthening special and differential treatment for developing countries, and resolving the problems from implementation of the WTO agreements.

The proposals covered a wide range of issues relating to all the major WTO treaties. They were meant to begin the process of re-balancing the unbalanced rules arising from the Uruguay Round. Among the rules perceived to be unfair were those in agriculture, which allowed developed countries to maintain or increase their huge subsidies, whilst developing countries were obliged to reduce their tariffs, thus subjecting their farmers to unfair competition from artificially cheapened subsidised imports. There were more than a hundred proposals for each item, and the deadline for dealing with them was to precede the deadline for achieving negotiating modalities for liberalising agriculture and non-agricultural market access (NAMA) or industrial tariffs. Four years later, hardly any development-related proposal of significance from these two items have been resolved. Several deadlines have passed without success, and Hongkong is expected merely to set yet another deadline in 2006, which nobody believes will be met.

Then there was supposed to be a strong development dimension in the market access areas of agriculture, NAMA and services. Respect for this dimension would cover two things: increasing export opportunities for developing countries in markets of developed countries; and enabling developing countries to maintain policy space (through special and differential treatment) so that their firms and farms do not come under undue pressure to compete with cheaper imports and large foreign firms, when they are not yet ready to do so.

Unfortunately, as the Indian Commerce Minister Kamal Nath has recently implied, the WTO negotiations are now in danger of becoming not a Development Round but a Market Access Round. Developing countries are being pressed to open up all sectors of their economy.At the same time, the rich economies are still very reluctant to liberalise in the areas that the developing countries are able to benefit from, especially agriculture and the movement of labour (Mode 4 of the services agreement)..

This then is the tension at the heart of the deadlock in the talks that will be taken over to Hongkong. The developing countries want the rich countries to give up their subsidies and open up in agriculture, as they promised to do in the last Round, but in practice did not. But the developed countries, caught on the defensive, are instead aggressively pushing the developing countries to drastically open up their agriculture, industrial products and services.

Due to the impasse, expectations that the Hongkong Ministerial will produce full "modalities" (the formulae and numbers for reduction of subsidies and tariffs) have been lowered. But many developing country trade officials are worried that in the pressure cooker atmosphere of WTO Ministerials, the developed countries' Ministers and officials (and possibly aided by the WTO Secretariat leadership, if past record is any guide) will try to extract commitments from developing countries by putting pressure on their Ministers (or asking them to accept deals which sound nice but have negative content), while giving very little away themselves.

Agriculture

Agriculture should be at the centre of this Round, for it remains the sector containing most trade distortions, and the Uruguay Round's promise of liberalisation in the rich countries has yet to be fulfilled. The proposals by the US, EU and other developed countries have so far been inadequate. Independent experts in NGOs and many developing countries have found that there would be little if any real cuts in domestic support and little gain in market access, unless these offers are much improved.

At the same time, most of the proposals on the table would oblige the developing countries to cut their own agricultural tariffs at higher rates than during the last Round, especially since the tariff-reduction formula is likely to apply to all products, instead of the more flexible Uruguay Round approach of cutting by an overall average rate (so that there can be different reduction rates for different products).

The NGOs and farmers' organisations (and quite a few governments' officials) are furious that instead of being eliminated, the existing injustices of the WTO agriculture regime would actually worsen under this Round, since the rich countries can continue to "dump" their products below cost in developing countries, which are even less able to defend themselves from the artificially cheapened farm imports because they have to cut their tariffs even more sharply.

The European Union, picked on by most for not doing enough in agriculture, has led the charge of developed countries to have the developing countries open their markets also to industrial goods and services. Its expressed rationale is that there must be "balance", and the EU must get something in return to make it worthwhile for it to make "sacrifices" in agriculture.

Non Agricultural Market Access (NAMA)

And so the push is on to have the "Swiss formula" accepted without reservation in NAMA, and have it apply on industrial tariffs. It works in a way that cuts tariffs more deeply the higher they are, which suits the developed countries since their industrial tariffs are generally low. But developing countries, which have relatively high bound tariffs to protect their emerging industries, will be caught.

There is a coefficient in this formula, which determines how steep the tariff cuts will be. The lower the coefficient, the larger the cuts. The EU has proposed a coefficient of 10 to apply to all countries. The implications are very dramatic. All tariffs will have to go below 10 per cent. For example, an existing 50% tariff on a product will drop to 8.3% and an existing 20% tariff will fall to 6.7%. Even if a coefficient of 30 is selected (and this is rejected by the developed countries), the cuts will still be severe. An existing 50% tariff would have to be cut by 63% to 19%. Many domestic industrial firms in developing countries will not be able to survive the brutal competition from imports resulting from kind of drastic tariff cut.

In previous Rounds, neither developed nor developing countries were subjected to such a formula cut. The flexibility for developing countries to choose at which rates to liberalise their imports of industrial goods will be lost in this Round. Many government officials, as well as trade unions and NGOs are very concerned that should the proposals go through, industrial development will be foreclosed in most developing countries, with the loss of local firms and industrial jobs.

Services

In services, there are already modalities for the negotiations, agreed to in 2001, known as the services guidelines and procedures. These preserve and extend the flexibilities in the WTO's services agreement that allow developing countries to commit to liberalise in only the sectors they choose, and to the extent they consider appropriate.Though other members may make requests to a country to open up, it is up to the country whether to make an offer to open up in the requested sectors, or not, or to what extent. The negotiations take place under the bilateral offer-request system.

In the past few months, several developed countries, led by the EU, have proposed to introduce many new negotiating methods that would undermine and potentially displace the bilateral system, the services guidelines and the structure and flexibilities in the services agreement itself.

The proposal is that a multilateral system of "benchmarking"be introduced, in which developing countries would have to commit to liberalise in a certain number of sectors (in the EU proposal, it is 57% of the services sub-sectors). Another proposal is that countries that are requested by others compulsorily take part in plurilateral and sectoral negotiations. For example, a group of countries that want others to open up their financial services can request countries whose markets they are targeting to join in negotiations for a plurilateral deal, and these requested countries have to participate.

These new methods are designed to make it easier to pry open the services markets of developing countries, by removing their present freedom to decide for themselves what commitments to make at the WTO. If these proposals go through, the developing countries will lose control of their services sectors, which include finance, distribution, telecommunications, energy, business and professional services, as well as social services.

Several developing countries have been fighting against the proposals which they see as an encroachment of their rights in the present WTO services regime, and a threat to their domestic services firms. But the developed countries are adamant to see their demands are met. So a big battle looms on this front at the Hongkong meeting.

Although the worst of the proposals - multilateral quantitative benchmarking, also known as quantitative targets - has been removed from the draft Ministerial text, the EU and other proponents are expected to re-introduce it in Hongkong, perhaps using yet another term to describe the same thing. And the rest of the proposed new methods - qualitative benchmarking of commitments in the services modes of delivery; the sectoral initiatives through "Friends" (in reality the main demandeurs) of the various sectors; and the plurilateral approach (where participation by the targetteed countries is made mandatory in the text) - all remain in the contested and controversial Annex C on services in the draft Ministerial text.

Conclusion

To sum up, many developing countries and social movements are frustrated that the WTO rules have perpetuated an unfair trading system which is in favour of the rich countries and their corporations, while laying developing countries open to ever more pressures to liberalise when their farmers and firms are not in a position to compete in the global economy, whether because the rules are unfair (thus allowing the rich to have high subsidies), or whether because the firms are too weak to face the onslaught of giant foreign firms.

The results of the unfair trading system include the loss of livelihoods and incomes of small farmers, loss of jobs due to de-industrialisation in many countries, continued obstacles to access to markets in rich countries and continuous decline in commodity prices and the poverty that is linked to that.

The Hongkong Ministerial meeting, coming at a strategically important moment in the Doha negotiations, might have had the potential to correct some of the imbalances and turn the corner towards development. But it looks as if the potential for doing something positive has faded or disappeared.

Instead, the Ministerial will most likely become a battle between the developed countries who want to use Hongkong to push their market-opening agenda further versus the efforts of developing countries to limit the damage to their economies from making such market-opening commitments.

It will also be a battle between the major developed countries that are on the defensive in agriculture trying to preserve their high protectionism of the sector versus the push by agricultural exporting countries to get the former to make some real market access offers.

Hongkong will also see an attempt by the WTO establishment to offset the embarrassment of not achieving progress in modalities, by putting on a "spin" that the developing countries, or at least the LDCs, are getting some benefits in advance through a "development package."

The Ministerial will thus be a mixed brew of unfulfilled expectations arising from slow progress in the negotiations, an attempt to offset this through a spin on development, a hard push by developed countries to "lock in" market opening commitments by the developing countries; and a lot of frustration from developing countries that fear they will be made the sacrificial lambs that have to open up their markets so that the major developed countries have a bargaining chip to get themselves off the hook. Not at all a bright prospect for a WTO Ministerial conference.

Africa: Trade Talks Analysis, 2

AfricaFocus Bulletin
Dec 16, 2005 (051216)
(Reposted from sources cited below)

Editor's Note

Having failed to come up with a joint proposal on agriculture that begins to satisfy the demands of developing countries, Europe and the United States have proposed a "development package" that they hope will preserve some image of success in the World Trade Organization ministerial conference in Hong Kong. But critics say whatever the face-saving agreements reached by the weekend, the results will clearly show no progress at all for poor countries in what was supposed to have been a "development round."

This AfricaFocus Bulletin contains two short articles from Third World Network, one the summary of a workshop with Tetteh Hormeku, coordinator of the Africa Trade Network, focusing on the latest "development package," and the other an account of the December 13 statement on agriculture by the G20 group of developing countries, which includes, among others, Brazil, Egypt, India, Nigeria, South Africa, and Tanzania.

Another Bulletin sent out today has a summary analysis of the issues being discussed at the WTO Ministerial conference, also from Third World Network (TWN).

TWN has much additional information and analysis on its website at http://www.twnside.org.sg

For a full list of earlier AfricaFocus Bulletins on trade issues, see http://www.africafocus.org/tradexp.php

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The "Development Package" That Isn't.

By Tetteh Hormeku, Coordinator, Africa Trade Network

TWN Info Service on WTO and Trade Issues

16 Dec 2005

Third World Network

http://www.twnside.org.sg

The "development package" touted by the European Union and the United States is dangerous and will prevent real development for Africa. This was the conclusion by Tetteh Hormeku of the Africa Trade Network in a presentation made at a TWN panel discussion on "Services, NAMA and Agriculture: What is at Stake?" Below is a summary of his presentation.

WTO Director General Pascal Lamy and European Trade Commissioner Peter Mandelson are pushing for early agreement on the development package to demonstrate their "good faith". The failure of the Doha Round so far to deal head on with development has led to this flurry of activity. What is this package and what is it not?

There are two central features of the development package in the Ministerial text. First, the supposed "special and differential treatment" (SDT), as it applies to LDCs. Secondly the aid for trade promise.

Before the Seattle Ministerial Conference, developing countries began to complain that after conclusion of Uruguay Round, the process of implementing the agreements resulted in difficulties to their economies which can only be addressed if WTO rules are corrected and rebalanced.

SDT was supposed to be part of the integral rules of GATT as well as the new Uruguay Round rules which allowed developing countries to adopt less onerous obligations than developed countries because they have different levels of development and different capacities.

The history of SDT predates the Uruguay Round. Countries at different stages of growth and development should not assume the same level of responsibilities in international agreements as these are unequal partners. But by end of the Uruguay Round the spirit of SDT was reduced to a narrower concept: developing countries had to essentially accept the same obligations as developed countries, and may be exempted from implementing some measures, as well as allowed different time scales. But almost all obligations would be adopted by them.

SDT provisions in the final agreements are mostly "best endeavour" clauses and developing countries cannot hold developed countries to them or enforce them. Thus in Doha, developing countries asked for effective SDT implementation, to move away from simply longer timeframes for implementing obligations, to fully integrating SDT into the architecture of the WTO.

Over 200 proposals were made relating first to strengthening SDT and second to resolving implementation issues. Since the Round has been launched, all discussions on SDT and implementation issues have made no progress except on 22 issues which are widely described as of having little or no commercial value.

In an attempt to attain a more balanced package in time for the July approximation this year, 5 proposals specific to LDCs were selected for inclusion into the package. Out of these, the two most valuable -- duty free and quota free access for LDC products, and exemption from TRIMS obligations -- are subject to interminable controversy.

On the issue of duty free and quota free market access, the demand by LDCs for these to be made legally binding and enforceable in the WTO continue to be resisted by both the EU and US. These developed countries prefer the continuation of the current situation where duty free and quota free status exists as unilateral offers which they can change any time they wish.

The most farcical saga is being played out. For example, the US and EU argue that there will be MFN problems if this status is bound in the WTO. In the Geneva negotiations the EU offered cold comfort by saying that although they won't be bound they are sincere and will honour their offer. An LDC can resort to the European Court of Justice to enforce any non-compliance. At one point the US and EU even argued over what "binding" means.

As the moment the US is insisting on two things: first, not extending duty free and quota free access to all products, which makes the concession useless since this allows for market access for products that LDCs don't produce. For instance, giving duty free access for computers to an LDC is meaningless. Secondly, they want to reserve the right to exclude countries, an insistence which led to some of the most heated moments in the negotiations in HK so far. A strong letter of protest has been submitted by Zambian Minister of Trade and Industry, Mr. Deepak Patel, who is the Chair of the LDCs Group.

On the issue of the TRIMS (trade related investment measures)Agreement, which prohibits the use of some performance requirements such as the use of local content policies, LDCs want to be able to obtain exemptions for existing and future TRIMS. LDCs did not notify enough in the Uruguay Round because most of them had not been aware and did not have the capacity to safeguard their rights.

The increasingly marginalized issue of cotton also makes a mockery of any development package. The US has offered to eliminate duties but only when there is full agreement on full modalities for agriculture. In the interim, money will come from the Millennium Challenge Account (MCA) to address supply side constraints. Again this promise rings hollow as most of the funds (if they materialize) will be likely used to pay for services from the US to "assist" African producers.

The other central piece of the development package is "aid for trade" which is meant for developing countries (and not just LDCs) to help improve production and other supply capacities. As it stands now in the text, there is only a promise to hold a meeting to discuss this at the WTO before the mid-2006.

The terms of this "aid for trade" are also not clear as to whether it will come from new money or old money, whether it will be concessional grants or loans. African countries say that there must be clear criteria: the funds must be predictable, adequate and unconditional with the countries themselves deciding what those resources shall be used for. There are estimates that 80% of the MCA funds has gone back to the US.

liberalisation. For instance it has been proposed that as part of aid for trade, a fund be set up to compensate developing countries for revenue losses arising from tariff reduction. Apart from the absurdity of taking money from developing countries and returning a part of it as a grant later, this ignores the problem of removing the right of those countries to use tariff as a policy to support and nurture local industry.

There are also serious concerns that the aid for trade package will be used as a trade-off ploy. At this stage of the negotiations, the entire development package looks more like a ploy to soften the developing countries so that they will accept the extraction of concessions from them. They are offered the promise of some funds which may not be from new and additional resources (but may simply be shifted from another aid box), so that they will agree to new onerous obligations (such as huge tariff cuts in industrial products, significant tariff cuts in agriculture, and a basic change in the rules of negotiations in services) that would jeopardize their development prospects. That is an unfair and imbalanced bargain, and it is cynical to ask developing countries to accept it.

Peter Mandelson has even told developing countries that he is working hard for them, and in return they must give him services. He has openly stated that he is not happy with the highly contentious Annex C on services and wants it "strengthened." The developed countries should drop this charade. They should not impose new and onerous liberalization obligations on developing countries that will cripple their economies. They should agree to strengthened SDT measures and to resolving the implementation issues. They should offer genuine assistance to developing countries to help them build their capacity to produce, first for the local market, and for exports. Unfortunately, this is not what the "development package" is about.

G20 Ministers reaffirm "agriculture central to Doha Round,"

India and Brazil state positions

TWN Info Service on WTO and Trade Issues

December 13, 2005

Hong Kong 13 December (Martin Khor and Hira Jhamtani) -- The Group of 20 developing countries held a Ministerial meeting Tuesday morning and issued a G20 Ministerial Declaration reaffirming its position that agriculture is the central issue of the Doha Round .

"As agriculture is the engine of the negotiations, the G20 expects that Ministers in Hong Kong will provide a sound basis for making progress in the negotiations, putting the process firmly on track," said the Declaration. "They should agree to a clear and specific work programme in agriculture for 2006 so as to conclude the Round by the end of the year. For this purpose, modalities will need to be agreed no later than early April and draft schedules based on these submitted no later than 3 months thereafter."

In reasserting the central place of agriculture in the Doha negotiations, the G20 Ministers were countering the increasingly strident position taken by the EU Trade Commissioner Peter Mandelson who is canvassing that negotiations should focus equally on other issues such as NAMA and services. He has been saying that it was a mistake for the negotiations to have focused mainly on agriculture in the past few years. Placed on the defensive and being widely blamed for the EU not giving a good enough offer in agriculture, Mandelson has tried to shift the blame to India and Brazil for not offering enough in NAMA and services.

The G20 held a press conference, attended by the Trade Ministers of Brazil, Egypt, Argentina, India and South Africa. "A development round requires the removal of distortions in international agricultural trade rules," said the Declaration. "The largest structural distortion in international trade occurs in agriculture through the combination of high tariffs, domestic support and export subsidies that protect inefficient farmers in developed countries. Removing these anti-development measures is a core objective of the Doha Round as it will help in reclaiming the development dimension of the DDA. It is for this reason that agriculture is the central issue of the Doha Round."

The Ministers added that the G20 had presented balanced and middle ground positions in all areas of the negotiations, and these proposals remain on the table as an appropriate basis for completing the Round. "The G20 is prepared to negotiate agriculture here in Hong Kong. We hope that others are prepared to do so likewise."

At the G20 press conference, Indian Commerce Minister Kamal Nath said that special products (SP) and special safeguard mechanism (SSM) are integral parts of the agricultural package. They lie in the livelihood needs and rights of developing countries and cannot be negotiated in exchange of anything, and the only defensive mechanism that developing countries have is tariff. He added that export subsidy was the most trade distortive measure, "yet we have difficulty in defining the end date. Let the US and EU say that export subsidies will be eliminated in a certain number of years. We have not come to Hong Kong to perpetuate the inequalities. We need to correct this."

At a separate meeting with NGOs, Kamal Nath said it is not the completion of the Round but its content which is important. The content to be deliberated in the Doha round must not perpetuate inequalities in world trade. " We cannot be hassled into an agreement" he said. While the Ministerial will discuss problems of LDCs and small states, the issue of "aid for trade" should not put developing countries more in debt so that they have to increase trade.

To correct world trade imbalance, he said, export subsidies must be eliminated. On domestic support, it must be clear how "much less will developed countries spend on subsidy instead of shifting around the boxes". On NAMA, Kamal Nath said the issue is not just market access but a reform of the dumping laws. " I do not care what formula is used, whether Swiss or German, I want to see how much the tariffs will be cut. If the EU cuts its tariff by only 24% while India has to cut by 77%, then where is the development content?"

He stressed that there is enough already of statements about good intentions. "But let us now see specifics". Developed countries cannot keep pocketing whatever they can get, but reducing to statements whatever they have to give. In NAMA, for instance, the negotiation content must take into account the need to protect small, infant and large- employment industries in developing countries. He added that the days are over when countries are held to ransom in negotiations. And this is thanks to the input and statements of civil society group. Indeed in the beginning of his briefing he said there is a great difference between the Uruguay round and the Doha round, in that this time civil society is more aware of the issues and raising their voices as well as providing inputs to negotiators.

Brazil's WTO Ambassador, Clodoaldo Hugueney, told a separate meeting with NGOs that the G20 position is the same. "We haven't seen movement in agriculture, so it is not justified for the G20 to move." The US proposal on domestic support (in October) was important as a first move, but insufficient to allow for real reform in the US. He said the G20 stands for two things. Firstly, there must be real and effective overall cuts in total trade-distorting domestic support, and not just a cut in "water" (i.e. the difference between the bound and applied levels).

Secondly, there must be disciplines, especially rules on the blue box domestic subsidies, especially since the US wants a change in the way the blue box is used. He stressed that if there is no agreement on new disciplines, there would be no new box created. There is need for product specific caps and specific price disciplines, to control counter-cyclical payments. The G20 also wanted a review of the Green Box subsidies, (i) to clarify that their use in developed countries is really minimally trade distorting, and (ii) to make it more user friendly for developing countries.

On market access, Hugueney said the EU proposal is widely considered as insufficient. The cuts for developed countries are very small. In addition, the EU wants 8% of tariff lines designated as sensitive products, or 300 of its 2200 tariff lines. This is too excessive and unacceptable, as even if only 2% of tariff lines is accepted it would already involve a very part of the EU's agricultural production.

On export competition, Hugueney said that the G20 wants a standstill on export subsidies to prevent an increase in the meanwhile (which has tremendous dumping effects), and an early end-date (2010). This should apply to all forms of export support, including food aid and export credits.

He also stressed the importance of S&D for the G20. Developing countries that don't have AMS domestic support should be exempted from an overall cut and de minimis cut. There should be longer implementation periods for all three pillars for developing countries; proportionality in commitments; and the role of SP and SSM is very important.

At the meeting, French economist Jacques Berthelot argued that domestic subsidies that are given to inputs for exports (such as feed for animals) should also be considered export subsidies. A large part of the EU subsidy to cereals goes to animal feed. The EU's exports for example of chicken and pork, contain high export subsidy in the form of domestic subsidy of inputs into these exports.

Hugueney said the G20 was aware of this linkage and had raised the issue of disciplines on this. However there was "total resistance" from the developed countries when this issue was raised.

Africa: Trade Talks Analysis, 1/2

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