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G-20 group welcomes draft modalities for agriculture

ISLAMABAD —The draft modalities for agriculture have been welcomed by the G-20 group of developing countries including Pakistan saying the text is a good starting point for further work on farm negotiations in September next.

The task of trying to reach a balance in a complex negotiation such as agriculture should not be taken lightly. In order to move to a text-based negotiation, it is important to stress that only full modalities, covering all areas of the mandate, with clarity on contents, can provide a sound basis. According to the G20 reaction on the draft modalities released yesterday, which claimed that some issues are not addressed at this stage under the draft modalities text. There are many gaps to fill. Different levels of precision render difficult the assessment of the overall balance in the text and in relation to the non-agriculture market access (NAMA) text.

What is needed now is to improve the text by correcting the imbalances and by filling-in the gaps in areas that are not covered or not fully developed. Substantial improvements in market access, substantial reductions in trade-distorting domestic support, and special and differential (S&D) provisions are integral elements.

In the draft modalities, the text captures some progress in the negotiations, but the central linkage in agriculture is yet to be assessed. On domestic support, the effective cuts in over all trade distorting support (OTDS) are essential to make viable a higher level of ambition in agricultural market access.

The draft text has narrowed the OTDS range; the G-20 reiterates the need for very low teens to be bound in members schedules. Ranges should be determined by the mandate. Narrowing ranges is not an arithmetic exercise of dividing ranges by half, but of fairness in international trade. The domestic support must also incorporate effective disciplines at the product-specific level. On product-specific disciplines for the aggregate measure of support (AMS) and the Blue Box, the drafted parameters and end-result numbers must be closely examined. There is more clarity on the domestic support pillar at this stage of the negotiations and important special and different concerns have been incorporated in the draft text. However, additional amendments will be required in the Green Box. The G-20 recognises some improvements for programmes of interest of developing countries in relation to the previous draft. But this is not enough. Other important provisions for developing countries are missing. On the other hand, for developed countries, the draft does not deliver on a green box that must be non- or minimally trade-distorting. On Cotton, we welcome the inclusion of the demands of the Cotton-4, which the G-20 fully supports.

On market access, the central linkage is between formula and flexibilities for developed and developing countries. The G-20 welcomed the adoption of its formula tiers for developed and developing countries. Whereas the picture on the structure of the formula is clearer in the draft text, the impact both on developed and developing countries remains to be assessed. Moreover, the lack of clarity on flexibilities could hinder outcomes derived from the formula.

In terms of flexibilities, there is no clarity in terms of results for sensitive products. The draft text seems to take the direction of correlating deviation and trade related quota (TRQ) expansion based on domestic consumption. This is a positive step. However, results are to be clarified. The number of sensitive products is too high; the 2/3 deviation is excessive and the incentives not to apply it, are not sufficient; and the levels of ambition too elusive at this stage. Furthermore, no new TRQ should be created in the process and TRQ expansion must be MFN. This principle must also be implemented in TRQ administration.

The draft text also contemplates a number of exceptions to TRQ expansion that could further hinder market access, unduly penalising more competitive suppliers. The G-20 reiterates its position on the elimination of the special safeguard (SSG) from the beginning of the implementation period and the binding in ad-valorem terms of all tariffs.

On export competition, G20 recognised the inclusion of some positive elements in the disciplines and the elimination of export subsidies by 2013 is correctly preserved, but ambition on volume commitments remains to be addressed.