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Cancún, Mexico - 2003

CANCÚN WTO MINISTERIAL 2003: BRIEFING NOTES

AGRICULTURE
Where there’s a will, there MUST be a way

After three and a half years, the agriculture negotiations have reached a critical stage: members have missed the 31 March 2003 deadline for agreeing on “modalities” but are committed to intensify work so as to establish the modalities as soon as possible.

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Contents
> Director-General’s letter to journalists
> The Doha Development Agenda
> Agriculture
> Services
> Market access, non-agricultural products
> Intellectual property (TRIPS)
> Trade and investment
> Trade and competition policy
> Transparency in government procurement
> Trade facilitation
> Rules: anti-dumping, subsidies
> Rules: regional agreements
> Dispute settlement
> Trade and environment
> Electronic commerce
> Small economies
> Trade, debt and finance
> Trade and technology transfer
> Technical cooperation
> Least-developed countries
> Special and differential treatment
> Implementation
> Members and accession
> Some facts and figures
> Jargon buster


Since the missed 31 March deadline, negotiators have been busy sorting out a number of important and complex technical issues that are a necessary part of the package.

The modalities would describe how the final agreement — due by 1 January 2005 — would be shaped. They are targets (including numerical targets), and issues related to rules, that members will use to achieve the objectives set out in the Doha Ministerial Declaration: “substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support”. A draft has been on the table since February, with a minor revision in March.

Members will follow the final version of the modalities to produce their offers or “comprehensive draft commitments”. The Doha Ministerial Declaration’s original target for achieving this was the Fifth Ministerial Conference (the Cancún meeting). Clearly this target will also be missed.

The negotiators’ failure to produce the modalities is not for lack of trying. In the three years before the end of March, the commitment to negotiate was unprecedented, not least judging by the number and range of countries involved. But the negotiators lacked their governments’ decisions at a political level, which would start the much-needed move towards a consensus on the main questions.

The negotiations are difficult because of the wide range of views and interests among member governments, and the complexity of many issues. They aim to contribute to further liberalization of agricultural trade. This will benefit those countries which can compete on quality and price rather than on the size of their subsidies. That is particularly the case for many developing countries whose economies depend on an increasingly diverse range of primary and processed agricultural products, exported to an increasing variety of markets, including to other developing countries.

 

Origins back to top

Up to 1995, international trade rules under the former General Agreement on Tariffs and Trade (GATT) were largely ineffective in disciplining agricultural trade. In particular, export subsidies came to dominate many areas of world agricultural trade, while the disciplines on import restrictions were often flouted.

The 1986—1994 Uruguay Round went a long way towards changing all that. Agricultural trade is now firmly within the WTO multilateral trading system. The Agriculture Agreement, together with individual countries’ commitments to reduce export subsidies, domestic support and import barriers on agricultural products were a significant first step towards reforming agricultural trade.

The reform brought all agricultural products (as listed in the agreement) under multilateral disciplines, including “tariff bindings” — WTO members have bound themselves to maximum tariffs on virtually all agricultural products, while a significant number of industrial tariffs remain unbound. The reform also set maximum limits on subsidies, representing reductions from past levels.

 

The negotiations: before Doha — 2000—2001 back to top

The Uruguay Round agreement was only the first phase of the reform. Article 20 of the Agriculture Agreement committed members to start negotiations on continuing the reform at the beginning of 2000. The article clearly sets out the direction of the reform — “substantial progressive reductions in support and protection resulting in fundamental reform”.

The negotiations began in early 2000 under Article 20. (They take place in “Special Sessions” of the Agriculture Committee.) Their first phase ended with a stock-taking meeting on 26—27 March 2001. Altogether, 126 member governments (89% of the then 142 members) submitted 45 proposals and three technical documents. This phase consisted of countries submitting proposals containing their starting positions for the negotiations, on all major areas of the agriculture negotiations and a few new ones. Because the proposals were starting positions, and because so many countries were involved, the positions were diverse and the differences considerable.

In the second phase, the meetings were largely “informal”, with a record of proceedings taking the form of a summary report by the chairperson to formal meetings (i.e formal “Special Sessions”). In this phase, the discussions included more technical details, and were necessary to find a way to allow members to develop specific proposals and ultimately reach a consensus agreement on changes to rules and commitments in agriculture. Despite the greater depth, the positions remained unchanged.

The second phase ended in March 2002. By then the talks were already under the modified mandate of the Doha Development Agenda.

 

The Doha mandate — from 2002 back to top

The 14 November 2001 Doha Ministerial Declaration set a new mandate by making the objectives more precise, building on the work carried out so far, confirming and elaborating the objectives, and setting a timetable with deadlines. Agriculture is now part of the single undertaking in which all the negotiations are to end by 1 January 2005.

The declaration reconfirmed the long-term objective already agreed in Article 20: to establish a fair and market-oriented trading system through a programme of fundamental reform. The programme encompasses strengthened rules, and specific commitments on government support and protection for agriculture. The purpose is to correct and prevent restrictions and distortions in world agricultural markets.

Without prejudging the outcome, member governments committed themselves to comprehensive negotiations aimed at:

  • market access: substantial improvements
  • exports subsidies: reductions of, with a view to phasing out, all forms of these
  • domestic support: substantial reductions for supports that distort trade

The declaration made special and differential treatment for developing countries integral throughout the negotiations, both in countries’ new commitments and in any relevant new or revised rules and disciplines. It said the outcome should be effective in practice and should enable developing countries to meet their needs, in particular in food security and rural development. The ministers also took note of the non-trade concerns (such as environmental protection, food security, rural development, etc.) reflected in the negotiating proposals already submitted, and they confirmed that the negotiations would take non-trade concerns into account, as provided for in the Agriculture Agreement.

 

Since then ... back to top

From March 2002 to March 2003 the negotiations went through a “modalities phase”. Member governments focused their discussions more on technical work — on detailed possibilities for each of the three main areas of the Agriculture Agreement (the “three pillars”): export subsidies/competition; market access; and domestic support. Special treatment for developing countries was an integral part of all of these, and non-trade concerns were taken into account. In December 2002, chairperson Stuart Harbinson circulated an overview paper bringing together all these ideas.

In February, he circulated a first draft of the “modalities”, followed by a revision in March based on negotiators’ comments (official WTO document TN/AG/W/1/Rev.1). The draft focuses on bridging differences — the search for the compromises that are necessary for a final agreement.

In the 31 March negotiations meeting, the day the “modalities” deadline was missed, chairperson Harbinson told delegations that the failure to meet the deadline was “certainly a setback. We must all be disappointed that all our efforts have not come to fruition.”

He added: “I get a strong sense from all sides of a continuing commitment to the Doha mandate. I have also been told by many delegates that they are committed to continue working on the issues before us. We should not gloss over the difficulties, but we must also look to the future.”

He concluded: “The task ahead and our common responsibility is simple and clear — we must continue working together towards completing the job given to us by ministers in Doha as soon as possible.”

Since then, negotiators have worked hard to sort out technical issues such as the domestic support categories (various “boxes”), tariffs, tariff quotas (including their administration), export credits, food aid, various provisions for developing countries, provisions for countries that recently joined the WTO, trade preferences, how to measure domestic consumption (a proposed reference for several provisions), and so on.

For the Cancún Ministerial Conference, members hope that ministers will be able to resolve outstanding key issues at a political level so that modalities can be produced.

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 Other material:
> Agriculture gateway
> Agriculture negotiations
> Negotiations backgrounder
> Doha declaration