Chairperson David Walker’s 21 April 2011 report to the Trade Negotiations Committee

TN/AG/26
21 April 1011

Committee on Agriculture
Special Session

Negotiating group on agriculture

Report by the Chairman, H.E. Mr. David Walker,
to the Trade Negotiations Committee

21 April 2011

1. In the period since I assumed the role of Chair in April 2009, the Committee on Agriculture in Special Session (hereinafter referred to as the Negotiating Group) has undertaken the following broad streams of work:

1. I have undertaken consultations on the issues that are bracketed or otherwise annotated in the documentation before the Negotiating Group — the Draft Modalities TN/AG/W/4/Rev.4 together with TN/AG/W/5, TN/AG/W/6 and TN/AG/W/7⁽¹⁾
    
2. The Negotiating Group has worked on the technical development of “Templates” for the presentation of data, both that required for the establishment of Modalities and that required for the eventual scheduling of commitments, based on the Draft Modalities as contained in TN/AG/W/4/Rev.4.
    
3. The Negotiating Group has also separately undertaken some substantive discussion of data requirements associated with TN/AG/W/4/Rev.4, together with progressive submission and verification of data required by the provisions of TN/AG/W/4/Rev.4 to be annexed to the Modalities themselves.
    
4. Over the past year, Members have also been giving some consideration to areas of technical ambiguity that may exist, or technical clarification that may be needed, in the text of TN/AG/W/4/Rev.4.

2. This report covers each of these activities.⁽²⁾

 

I. DRAFT MODALITIES TEXT (TN/AG/W/4/Rev.4)

A. CHAIR’S CONSULTATIONS ON ISSUES BRACKETED OR OTHERWISE ANNOTATED IN DOCUMENTATION BEFORE THE NEGOTIATING GROUP

3. I undertook consultations on ten categories of issues that are bracketed or otherwise annotated in the documentation as identified in (a) above. These are presented below in the order they appear in TN/AG/W/4/Rev.4.

4. The objective of this work was to help Members build consensus towards concluding Modalities in Agriculture.

5. It was recognised at the outset that the issues identified potentially differed in nature and in the state of their preparation in the documentation before the Negotiating Group. It was nevertheless considered useful to, where necessary and as far as possible, advance technical understanding and framing of issues in preparation for when decisions could be taken.

6. In my assessment this judgement has been borne out in practice albeit, to this point, Members have not been in a position to substantively resolve matters nor is there any discernable progress on these issues that can be captured in text.
 

1. Blue Box — Product-specific limits (paragraph 42, TN/AG/W/4/Rev.4)

7. Consultations indicate that no further technical preparation is required for the eventual decision to be taken with respect to the bracketed numbers in this paragraph.
 

2. Cotton (paragraphs 54/55 and Chair's introduction, TN/AG/W/4/Rev.4)

8. I have held a number of consultations on cotton throughout the period covered by this report. There have also been a number of political-level contacts between particular Members.

9. Consultations have confirmed that not all Members are in a position to agree to the text as drafted but no new contributions, technical or substantive, have been forthcoming to date.

10. All Members involved in the consultations have emphasised that they remain committed to finding a solution that addresses the issue of cotton “ambitiously, expeditiously and specifically” consistent with the commitments made at the Hong Kong Ministerial Conference in December 2005.

11. However, in the absence of a dynamic capable of leading to the resolution of outstanding issues in the Agriculture negotiation more broadly, and indeed the Round as a whole, what that solution might be remains unclear.
 

3. Sensitive Products — Designation (paragraph 71, TN/AG/W/4/Rev.4 and TN/AG/W/5)

12. The annotation to paragraph 71 reads “Japan and Canada have declared themselves not to be in a position to agree to this [the right of developed country Members to designate up to 4 per cent of tariff lines as “Sensitive Products”] limitation”.

13. Consultations confirm that Japan and Canada are still seeking flexibility to designate additional tariff lines under the “Sensitive Products” category.

14. It remains to be seen whether Members are prepared to agree any further flexibility in designation of “Sensitive Products” beyond that already provided in paragraph 71 and, if so, what payment would be required for such designation.

15. I expect consultations will continue amongst interested Members on a “without prejudice” basis, including on how any differential tariff quota expansion requirements might be allocated across different tariff lines.
 

4. Tariff Cap (paragraph 76, TN/AG/W/4/Rev.4 and TN/AG/W/5)

16. Views remain sharply divided on whether there should be an exception allowing the maintenance of tariffs in excess of 100 per cent ad valorem on products outside a Member's overall “Sensitive Product” entitlement.

17. Differing views have also been expressed on the appropriateness of the payment options in the bracketed text in paragraph 76, were any such exception to be granted.
 

5. Tariff Quota Creation (paragraph 83, TN/AG/W/4/Rev.4 and TN/AG/W/6)

18. While views remain divided on whether such flexibility should be afforded, consultations indicate a general willingness to continue technical discussion, on a “without prejudice” basis, based on TN/AG/W/6.

19. There is a sense that the operability of criteria contained in TN/AG/W/6 is difficult to conceive in the abstract and that discussion may benefit from further factual clarification — for example in respect of which products amongst those for which consumption data has been submitted pursuant to Annex C of TN/AG/W/4/Rev.4 are not currently subject to tariff quotas.

20. Transparency more generally remains a key element in Members' consideration of this issue.
 

6. Tariff Simplification (paragraph 104, TN/AG/W/4/Rev.4)

21. In TN/AG/25 I reported that consultations had involved an initial technical discussion on how the “or” option in paragraph 104 of TN/AG/W/4/Rev.4 would be operationalised through the other provisions of paragraphs 103 — 108 of TN/AG/W/4/Rev.4 together with the associated Annex N.

22. Questions were raised, in this context, concerning some apparent differences in terminology between the text of paragraphs 104 — 108 and Annex N and about the interrelationship of envisaged procedures between the text and the Annex.

23. Members were also interested in how proposed simplification would work in practice. The European Union provided an overview presentation, in an open-ended setting, on its proposed simplifications to the Meursing table.

24. Since April 2010 I understand Members have continued discussions amongst themselves to better understand how proposed simplifications would work in concrete terms.

25. The Negotiating Group has also been advised that a number of Members have been working on developing a possible alternative to the options contained in TN/AG/W/4/Rev.4. I understand those Members have been making good progress in their work but have not yet reached the stage of having a defined product which can be shared with the Negotiating Group for the purpose of attempting to reach a multilateral solution to this issue.
 

7. Special Products (paragraph 129, TN/AG/W/4/Rev.4)

26. The annotation to paragraph 129 reads “A number of developing country Members have expressed reservations concerning the numbers specified in this paragraph, noting also that this may be affected by what is decided in other areas of the text”.

27. Consultations indicate that this annotation remains factually correct.

28. Some Members expressed concerns about the potential export impacts of the treatment provided in paragraph 129. Other Members considered that the paragraph should be regarded as “stabilised”.
 

8. Special Safeguard Mechanism SSM (paragraphs 144/145, TN/AG/W/4/Rev.4 and TN/AG/W/7)

29. In TN/AG/25 I reported that consultations had benefitted from analytical contributions on various elements of a possible SSM architecture from a range of Members, including a number of contributions that had been circulated to all Members as JOB documents.

30. Those contributions covered issues such as price and volume cross-check, seasonality, price-based SSM, flexibilities for Small, Vulnerable Economies (SVEs), and pro-rating.

31. Initial technical exchanges were undertaken on the issues of seasonality, price and volume cross-check, and price-based SSM. A number of questions were raised on the circulated analytical papers with indications of further analytical contributions to come from others on these issues.

32. Other papers on flexibilities for SVEs and pro-rating, which had only been recently circulated at that point, had been introduced with Members indicating they would need some time to study the papers before being in a position to enter into technical discussion on those issues.

33. At the time of TN/AG/25 the importance of further focussed analysis and discussion was highlighted to contribute to the development of shared understanding to underpin the compromises necessary for the establishment of a “fit for purpose” mechanism.

34. Since April 2010, further discussion was undertaken based on the analytical contributions submitted to that point and additional contributions submitted by Members in July and September 2010.

35. I advised the Negotiating Group in October that the stage of useful analytical discussion appeared to have been exhausted. What was needed “beyond that was problem solving” engagement among Members to design a mechanism capable of being used to address cases of disruptive import surges while not disrupting demand-induced trade.

36. That remains the case, at least to the extent that no such compromise options have yet been presented for consideration by the Negotiating Group.

37. Several further proposals have been presented concerning Member-specific flexibilities in this area. These issues will also need to be considered in any process of reaching agreement on an SSM.
 

9. Tropical and Diversification Products (paragraph 148 and Annex G, TN/AG/W/4/Rev.4); Long-standing Preferences and Preference Erosion (paragraph 149 and Annex H, TN/AG/W/4/Rev.4)

38. There have been significant developments in these areas.

39. In December 2009, WTO Director General Pascal Lamy and I received the following communications:

1. A letter, dated 15 December 2009, from the European Union, the ACP countries, Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru, and Venezuela conveying the text of a proposed DDA modality applicable to tariff reductions by the EU on bananas;
    
2. A letter, dated 15 December 2009, from the European Union, the ACP countries, Bolivia, Colombia, Costa Rica, Ecuador, Guatemala, Nicaragua, Panama, and Peru conveying the text of a proposed DDA modality for the treatment of Tropical Products and for Preference Erosion.

40. I conveyed these communications to the Members of the Negotiating Group on 18 December 2009 and subsequently held further consultations on these two issues identified in TN/AG/W/4/Rev.4.

41. In TN/AG/25 I reported that consultations had afforded an opportunity for initial discussion of the proposed modalities contained in the communications. Clarification was provided in the course of those consultations that the treatment contained in sub-paragraph (ii) of the proposed replacement for paragraph 149 of TN/AG/W/4/Rev.4 is intended to relate only to the tariff lines for sugar contained in the attached Annex H.

42. Some Members who are not party to the above referenced communications expressed concern to understand how the proposals may affect their interests.

43. Since April 2010 I understand consultations have continued with relevant Members on how these proposals may affect their interests. In the absence of multilateral agreement, the 15 December 2009 proposals should be seen as alternatives to the bracketed options in TN/AG/W/4/Rev.4. Language has yet to be provided by proponents concerning the clarification reported in paragraph 42 above.

 

B. OTHER ISSUES

44. The Negotiating Group has also been discussing specific proposals from Members tabled since December 2008, including some tabled in recent weeks, which range beyond the bracketed or otherwise annotated issues itemised above. As yet, no conclusions have been drawn from these discussions.

 

C. CLARIFICATIONS

45. I indicated in TN/AG/25 that I was available to hear from Members, individually or collectively, regarding any technical ambiguity they consider exists or technical clarification they consider is needed in the Draft Modalities text.

46. Given the Modalities text, when agreed, will provide instructions regarding the scheduling of commitments and amendments that will be required to the Agreement on Agriculture it is important those instructions are clear and their meaning is commonly understood by Members.

47. Members have accordingly been considering a number of questions concerning provisions in the Draft Modalities text which have been identified by certain Members or have arisen in the course of template development work.

48. As yet there has been no communication to the Negotiating Group of any views formed by Members involved in this ongoing discussion.

 

D. CORRECTIONS

49. In reading the Draft Modalities text (TN/AG/W/4/Rev.4) the following corrections should be made. These are itemised below in the order they appear in the text with the corrections highlighted in bold font.

Footnote 11 to paragraph 65 — corrected paragraph number references

The Members concerned are those that meet the criteria set out in paragraph 157 and are listed in Annex I. As is made clear in the Agreed Framework, small vulnerable economies (SVEs) are not meant to create any sub-category of Members. Bearing that principle in mind, the following Members could also be deemed to be eligible for this treatment, should they choose to avail themselves of it, despite not being members of the SVE Group per se given that this treatment could be deemed to be broadly comparably appropriate: Republic of Congo, Côte d'Ivoire and Nigeria (plus other Members that can provide data that show that they meet the criteria in paragraph 157). Additionally, Bolivia shall have access, exceptionally, to treatment equivalent to that provided for in paragraph 151. As an exception, Suriname shall rebind its agricultural tariffs on a line by line basis at the level of the average bound tariff of Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines and Trinidad and Tobago resulting from these modalities.

Footnote 24 to paragraph 135 — corrected paragraph number reference

A shipment shall not be considered for purposes of paragraphs 135 and 136 unless the volume of the product included in that shipment is within the range of normal commercial shipments of that product entering into the customs territory of the importing developing country Member.

Paragraph 174 — corrected typographical error in second sentence

A Member which intends to institute export prohibitions and restrictions shall consult, upon request, with any other Member having a substantial interest as an importer with respect to any matter related to the proposed measure. The Member instituting such export prohibitions and restrictions shall provide, upon request, the interested importing Member with necessary information, including relevant economic indicators.

Section A, Attachment Ai — corrected paragraph reference in first paragraph

The purpose of the product category list is to establish a common basis on which a member would undertake a partial designation calculation, in the event tariff lines in a product category might be declared Sensitive. The list is comprehensive for the purposes of transparency required in paragraph 6(a) of Annex C.

 

II. TEMPLATE DEVELOPMENT

50. The work the Negotiating Group has been undertaking on development of templates is understood by all Members to be of an exclusively technical nature. It has been a very deliberate and deliberative process undertaken in the open-ended format.

51. Work has proceeded across each of the three “pillars” (Domestic Support, Market Access and Export Competition) in two “steps” as follows:

Step 1 concerns the identification and development of templates (including possible supporting tables) for the presentation of base data;

Step 2 concerns the identification and development of templates (including possible supporting tables) for the presentation of DDA commitments.

52. It is recognised by all Members that this work is not a substitute for work towards the conclusion of Modalities. Indeed, given that work on draft formats of scheduling templates and supporting tables is based on the Draft Modalities provisions in TN/AG/W/4/Rev.4, it is not possible to complete all work on templates until Modalities have been agreed.

53. It should also be noted that the template development work is just that — the development of templates for the formatting of the presentation of necessary information, to be used when such presentation is required or otherwise agreed.

54. Issues involving the timing of the actual provision of information have been and will continue to be dealt with in a distinct process. Activity of this nature is covered in the “Data” section of this report.

55. It has also been recognised that work on templates may raise questions on substantive interpretation of draft modalities provisions. Where such situations have arisen, such as the case of some of the issues covered below in the “Data” section of this report, these questions too have been and will continue to be dealt with in a distinct process.

56. Significant effort has been devoted to work on Step 1 across each of the three pillars and work is well advanced. A considerable number of documents have been produced to contribute to this work with many having been amended or superseded through the course of discussion in the Negotiating Group. Those documents that remain under discussion will need to be finalised and consolidated as part of the conclusion of base data template work.

57. Since April 2010, work has continued on template development, with particular focus on “Step 2”.

58. This has included overall “roadmap” presentations covering each of the three “pillars” (Domestic Support, Market Access and Export Competition). There have also been more detailed presentations on scheduling templates on Total AMS and Overall Blue Box in the Domestic Support pillar; on Tiered Formula tariff reductions in the Market Access pillar; and on Export Subsidy commitments in the Export Competition pillar.

59. The template development work needs to be taken forward and finalised — to the extent it can in both “Step 1” and “Step 2” pending establishment of Modalities — in order that electronic files can be developed for use by Members in the post-Modalities scheduling phase.

 

III. DATA-RELATED ACTIVITIES

60. The way commitments resulting from Modalities can be readily understood and verified is a data-intensive exercise. The Negotiating Group has therefore continued to engage separately on a number of data-related activities.

61. These activities have been focussed, as a priority, around those areas where the Draft Modalities provisions in TN/AG/W/4/Rev.4 require data to be available and capable of having been verified by Members in advance of the establishment of Modalities — including that data which is required by those provisions to be annexed to the Modalities themselves.

62. The Negotiating Group agreed an extended date, until 4 December 2009, for additional Members who wished to submit Domestic Consumption data for the purposes of Sensitive Product declaration consistent with Annex C of TN/AG/W/4/Rev.4 and for Members to make technical amendments to data previously submitted. The data which was submitted by ten Members (counting the EU as one) ahead of this agreed date remains subject to an ongoing process of verification.

63. Data provision and verification activity has also continued in respect of Value of Production (VoP) data to be annexed to the Modalities (in terms of Members and base years) as required by paragraph 12 of TN/AG/W/4/Rev.4. As part of this process it has been clarified that the operating definition of Value of Production remains that which flows from the Agreement on Agriculture.

64. Such VoP data has now been submitted by all but one Member required so to do. Steps are underway to rectify that gap. The data submitted is also understood to have gone through a thorough process of verification.

65. VoP data which has been submitted by Members and for years beyond that required by paragraph 12 of the Draft Modalities continues to serve for transparency purposes only at this stage.

66. Data has also been sought for the product-specific AMS and product-specific Blue Box to be annexed to the Modalities as required by paragraphs 22 and 40 of TN/AG/W/4/Rev.4. It has been clarified that this data needs to be provided by developed country Members only.

67. With it being understood that commitments will be expressed in HS 2002 nomenclature, work is also underway to confirm AVE (ad-valorem equivalent) transposition for the purpose of the AVEs to be annexed to the Modalities as required by paragraph 60 of TN/AG/W/4/Rev.4.

68. Both these data sets need to be completed speedily.

69. A range of data required for post-Modalities scheduling remains outstanding. The Negotiating Group will need to consider when this data should be submitted in order to provide sufficient time for verification without unduly delaying eventual scheduling activity.

70. A number of other questions that have been raised relating to the provision of data remain to be addressed.

 

IV. FUTURE WORK

71. Members have been engaged in considerable activity over the past two year, including since TN/AG/25 was presented. It is regrettable that Members did not feel able, at this point in the process of negotiations, to present more of that activity in a way that could be captured in agreed or otherwise visible text.

72. It is my intention to consult with Members on the organisation of future work in the Negotiating Group following, and consistent with, guidance provided by the Trade Negotiations Committee.

 

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List of communications relating to the work of the Negotiating Group formally submitted by Members since the issuance of TN/AG/W/4/Rev.4

 

> December 2008 revised draft modalities

 

Notes:

1. These documents are attached to this report.  back to text

2. This report incorporates and, as relevant, builds on the report (TN/AG/25) I presented to the Trade Negotiations Committee on 22 March 2010 covering the activities of the Negotiating Group to that point.  Also attached is a list of communications relating to the work of the Negotiating Group formally submitted by Members since the issuance of TN/AG/W/4/Rev.4.  Work on “Clarifications” and "Template Development" has also benefitted from a range of informal contributions from Members.  back to text