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Dairy Facts 2016

Top Negotiator Attempts to Kick-Start WTO Ag Negotiations

May 21, 2007

Top Negotiator Attempts to Kick-Start WTO Ag Negotiations

In a last-ditch effort to revive flagging negotiations before time runs out, the World Trade Organization's (WTO) chairman of agriculture negotiations recently issued a paper challenging WTO members to find common ground in their entrenched agricultural positions. The paper kicked off a storm of comments that re-engaged many members, but it remains to be seen whether it will lead the 150-nation organization into renewed negotiations.

As part of his challenge, the chairman, Ambassador Crawford Falconer of New Zealand, asked the United States to accept "a figure certainly below $19 billion and somewhere above the very low teens" for overall domestic subsidies that distort production and trade, known as amber box items. In the past, the United States has said it would not be willing to cut this support below $22 billion.

"IDFA is pleased that WTO members are continuing their discussions," said Helen Medina, IDFA manager of international affairs. "However, it's hard to imagine that there will be an agreement anytime soon unless more market access is given to U.S. agriculture in exchange for lowering amber box allowances."

In the paper, Falconer urged the European Union and a group of 20 developing nations to consider more tariff cuts as well as lowering the number of products they consider to be "sensitive," or subject to fewer tariff cuts than other agricultural products. The United States has asked for these "sensitive products" to be kept to 1% of each country's tariff lines.

India and 33 other developing countries, Falconer said, could be more flexible in opening their markets, possibly limiting the number of "special products," which also receive tariff breaks, to somewhere between 5% and 8% of total exports. To date, these nations have refused to accept a figure lower than 20%.

But Falconer warned, "If we do not get serious momentum over the next few weeks — I hesitate to say months — we will either fail or we will put this whole exercise in the freezer for some considerable time until a better generation than us can thaw it out."

Initial reactions to the paper from WTO members, including the United States, EU, Brazil, India, Japan, Australia and Argentina, have been critical of the ambassador's suggestions and tactics. The United States, for example, argued for increased market access, while the EU said the paper was not the proper vehicle for negotiations. India charged that the paper "lacks balance between the sacrifices required from various interests," and Australia said the recommended cuts to U.S. trade-distorting subsidies were still too high.

For his part, Falconer is pleased that the members have become re-engaged. He said he welcomes all comments, which he hopes to incorporate into in a revised version of the June 2006 modalities paper, or template agreements.

Although the WTO Doha Round negotiations will continue, the U.S. administration's trade promotion authority (TPA), which allows the White House to negotiate trade agreements that Congress must approve or reject without making changes, is scheduled to expire at the end of June. This fast-track authority is considered vital to U.S. participation in trade talks, because other countries could not be expected to negotiate seriously if they knew Congress could change the final deal.

Earlier this year, the president urged Congress to renew the authority, but challenges remain. Max Baucus (D-MT), who is chairman of the Senate Finance Committee, has said he sees no urgent need to renew TPA. As an alternative, House Ways and Means Committee Chairman Charles Rangel (D-NY) has suggested the possibility of a temporary, limited renewal that could be used solely for the Doha Round negotiations.

IDFA is deeply committed to improving international trade opportunities for dairy foods through bilateral and multilateral free trade agreements, including the WTO Doha Round negotiations. To read IDFA's position on the WTO Doha Development Agenda, click here.

To read the challenge paper, click here.

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Posted May 21, 2007

Dairy Delivers