MORE PAPERS AND TALK ON AGRICULTURE MASK IMPASSE

Apr 25, 1988

MORE PAPERS AND TALK ON AGRICULTURE MASK IMPASSE

GENEVA APRIL 20 (IFDA/CHAKRAVARTHI RAGHAVAN)— The Uruguay Round negotiating group on agriculture received more papers and views, but is basically at on impasse until a way could be found to reconcile sharply differing viewpoints on short-term vs. long-term measures, and haw to deal centrally with issues of agriculture and development in the third world, according to participants.

The meeting of the group this week takes place against the background of sharp clash between the U.S. and EEC last week at Vancouver, at the meeting of the four major trading blocs (U.S., EEC, Japan and Canada) on short-term and long-term solutions.

Within the negotiating group there are the sharply differing viewpoints and approaches of the U.S., supported by Cairns group, and the EEC and other Europeans and Japan. A slowly emerging fourth view is that of major third world economies with large populations dependent on agriculture.

At its meeting Wednesday, the group reportedly received a proposal from the U.S., to meet third world criticism that the U.S. and other proposals had paid no attention to the problems of agricultural development in the third world.

Argentina, on behalf of the Cairns group, presented the views of their Ministers outlined at their February meeting in Bariloche (Argentina), while the EEC presented its proposals on rules for sanitary and phytosanitary regulations in agricultural trade.

Nigeria in a communication which it has described as 'Food-for-thought’ on agricultural policies to promote growth and development, has expressed concern that most of the proposals before the group had fallen short of addressing the development element.

The Nigerian communication expresses support for presentations of Egypt and India, at earlier meetings of the group, that the development element could not and must not be taken for granted, but should be addressed as a central issue.

The new U.S. paper in essence justifies its call for comprehensive liberalisation of trade and end to market access barriers and subsidies affecting trade, by arguing that third world countries would be major beneficiaries of the U.S. approach.

But seemingly to meet third world criticisms, the U.S. has said it is willing to consider special. Treatment for third world countries, but hedging it with its 'graduation' approach, and calls for review of criteria related to level of agricultural and overall economic development, to justify 'exceptional treatment'.

In the U.S. view, third world countries with relatively advanced economies and/or well-developed agricultural sectors would be expected to fully accept GATT disciplines.

Where 'need is demonstrated', third world countries could be permitted to maintain non-commodity specific subsidies for long-term agricultural development - like research and extension, information services and infrastructure and improvement projects.

However such countries should agree to eliminate agricultural subsidies as their agricultural sectors develop.

In the area of market access, where the U.S. has called for elimination of all non-tariffs measures and binding at zero the tariff on all-agricultural products; the U.S. wants the third world countries to commit themselves to 'phased elimination of all non-tariff measures'.

Those of them needing 'continued limited tariffs' on agricultural imports could be permitted to do so, provided such tariffs were reduced to 'no more than moderate levels' and 'bound' in GATT.

Both the 'bound' tariff ceilings and the pace of reduction should be dependent an 'relative level of economic development'.

The U.S. concedes that third world countries, 'in some instances', might need more time to make the transition to liberalised trading environment, and the period for elimination of trade-distortive measures could be extended 'for a certain time for certain developing countries, if appropriate'.

In its paper, Nigeria suggests as a point of departure to judge work of the group, the extent to which the group addresses agricultural policies for growth and development in relation to:

--Provision of adequate food for increasing populations,

--Raw materials for industrialisation,

--Increased public revenue and foreign exchange for third world countries, and

--Increased employment opportunities.

Since the majority of third world countries are dependent on agriculture, negotiations should aim at promoting and raising agricultural productivity through diversification of export-base, modernisation of production through infusion of improved technology and adequate protection from disasters like droughts, desertification, sail erosion, Nigeria says.

Government pricing policies, in the Nigerian view, should have the objectives of --Providing remunerative prices to farmers for their products, --stabilising their prices and incomes,

--Ensuring prices of agricultural commodities are competitive in world market and, to that extent, promoting agricultural exports, and

--Ensure that agricultural import 'do not enjoy undue comparative price advantage compared to their locally produced substitutes'.

While supporting the view for a general prohibition on use of export subsidies, but subject to carefully circumscribed exceptions, Nigeria argues that third world countries, as a matter of priority, should be allowed to implement policies, including incentive programmes, to increase production, meet increased consumption and bridge food shortage gaps.

While supporting monitoring of the reforms, Nigeria rejects as for too technical for third world countries, concepts like producer subsidy equivalent (PSE) and decoupled payments, suggested in the OECD context and advocated in GATT by U.S. and Cairns group.

In presenting the Bariloche declaration of ministers of the Cairns group, Argentina has underscored the importance of achieving 'substantive interim results' at the December review meeting of the trade negotiations committee, scheduled for Montreal.

The outcome, Argentina has said, should secure a firm commitment on elements of a long-term framework for agricultural reform, underpinned by reformed and strengthened GATT rules, particularly on elimination of domestic and export subsidies and quantitative and other import restrictions.

There should be a programme of measures for immediate implementation, including a contractual freeze and phased reduction of agricultural support and protection focussing an most trade distorting policies.

This, in the cairns group view, would be 'a genuine down-payment on long-term reform, which must be directly linked to and consistent with this short-term action’.

Presumably in response to the criticisms that the Cairns proposals had not dealt with development as a central issue, the Argentina delegate also drew attention among other things to the Bariloche statement on the need for reaffirmation and further elaboration of elements of the Cairns proposals concerning differential and mare favourable treatment for third world countries, and for 'an early result' in the negotiations on tropical products.