*EPF211 10/26/2004
Little Chance Seen for Finishing WTO Farm Negotiations in 2005
(Toughest negotiations still ahead even after July framework achieved) (1310)

By Bruce Odessey
Washington File Staff Writer

Washington -- Finishing World Trade Organization (WTO) agriculture negotiations by the end of 2005 is possible but not likely, a U.S. Department of Agriculture (USDA) official says.

Jim Grueff, assistant deputy administrator for international trade, said in a recent interview that negotiators, mindful of years of missed WTO deadlines, are reluctant to set another deadline that might not be met.

The July declaration issued by trade ministers in Geneva provided the long-sought framework for conducting the agricultural negotiations and set the next WTO ministers' meeting for December 2005 in Hong Kong.

No goals are set for the Hong Kong meeting by the declaration, however.

As recently as October 12, WTO Director-General Supachai Panitchpakdi told negotiators in Geneva he would like to wait until next spring after the agriculture and other negotiating groups performed months of technical work before setting goals for 2005.

"To do that at this stage would be a somewhat speculative exercise," Supachai was reported as saying.

Some countries want to set a goal for the Hong Kong meeting of finishing the agriculture modalities, or setting specific details and deadlines required by the framework for eliminating export subsidies, reducing domestic support and reducing tariffs and quotas. [See related article, "WTO Agriculture Negotiators Moving to Hard Number Crunching Job."]

If agreement on these modalities were achieved in 2005, USDA's Grueff said, then presumably the rest of the work on an agriculture agreement could be completed in 2006.

"That would be a lot," Grueff said. "My perspective is that it can be done, but I don't think anyone would want to say that it's a sure thing or even that it's probable."

The technical aspects are not so complicated that negotiators could not finish the modalities in 2005, he said.

"But having the political will in high places to make these decisions -- that's where the difficulty is," Grueff said.

The 2001 declaration that launched the negotiations, formally called the Doha Development Agenda, had originally set the goal of finishing agriculture and all the other negotiations by December 2004 -- a goal long recognized as unattainable.

Advances in the agriculture negotiations have long been viewed as crucial for making progress in the other WTO negotiations, especially those on industrial tariffs and services.

Many of the WTO's developing-country members have little interest in the Doha negotiations except for the potential for opening foreign markets to their agricultural exports.

"A number of countries were going to make sure that no other area moved faster than agriculture did," Grueff said, "and that in fact is what happened."

The agricultural negotiations plodded along without meaningful progress from 2000 through mid-2003, with wide differences persisting between developed and developing countries and within those groups as well.

The WTO negotiations collapsed at the September 2003 WTO ministers' meeting in Cancún, Mexico, when the participants failed again to agree on agriculture and stalled for nearly another year as U.S. Trade Representative Robert Zoellick and other countries' ministers traveled the globe trying to revive them.

In July, ministers from Australia, Brazil, the European Union (EU), India and the United States attempted to forge a compromise draft framework agreement on agriculture that could win consent from the 100-plus other WTO members.

The attempt succeeded. With a few changes after weeks of intense negotiations, the WTO General Council in Geneva adopted the five-party draft July 31, giving the Doha negotiations a new chance to succeed.

Yet by all accounts the deal reached in Geneva was the easy part, an indication of the really hard bargaining ahead.

Bob Stallman, president of the American Farm Bureau Federation, the largest U.S. farmers' organization, said he expects obstacles to achieving a successful agreement to arise from developing and developed countries alike.

All but the least-developed WTO members are required to make substantial reductions in agricultural tariffs. Because U.S. tariffs are already very low, Stallman said, developing countries are demanding the United States also reduce domestic support.

But because developing countries rely on tariffs, especially on politically sensitive products, to maintain internal farm prices and protect their farmers, "they resist meaningful tariff cuts," Stallman said. "That is an enormous obstacle."

He described also how some countries use developing-country status as a tool to negotiate lesser WTO commitments to open their agricultural markets even though they are major agricultural exporters.

Still other countries, such as South Korea, use developing-country status to maintain high agricultural tariffs even though they have high per capita incomes, he said.

"Developing countries can't be allowed to use their status as a shield to protect them from tariff cuts and trade liberalization while demanding that U.S. agriculture disarms," Stallman said. "If the negotiations are to go forward and achieve true liberalization, developing countries must agree to substantive cuts."

As for obstacles from developed countries, he said, some maintain high tariffs to favor certain sectors. Some seek to use WTO negotiations to protect existing domestic farm policies, he said.

"This undercuts the ability of these nations to engage in good-faith negotiations to reach an agreement," Stallman said.

He said he expects difficult negotiations with other developed countries over reducing tariffs on what are called "sensitive" products. All countries, developed and developing, are allowed to designate some number -- that number to be negotiated -- of sensitive products subject to smaller tariff cuts in combination with larger tariff-rate quotas.

Stallman cited Japan, with rice, and the European Union, with dairy and beef, as examples of some developed countries that impose high tariffs in certain sectors. Stallman himself is a rice and cattle producer from Texas.

In the view of USDA's Grueff, the country groupings that emerged as contenders in the months leading up to the framework agreement are likely to stay together.

The United States and the EU remain the two biggest players in the negotiations ahead. Likely to retain strong influence are the G-20 group of developing countries led by Brazil, India and China; the G-33 group of poorer developing countries, which aim to protect their domestic markets against surging imports by using temporary quotas and high tariffs; the G-10 wealthy food-importing countries such as Switzerland and Japan, and the Cairns Group of food-exporting countries.

The 31 least-developed countries are viewed as having less influence in the agriculture negotiations ahead because they have already been exempted from any agreed cuts in tariffs and quotas.

WTO agriculture negotiators attended a technical session the first week of October. They have scheduled another technical session in November and might plan another for December.

"Then it's wide open," Grueff said, "and the chairman [and] the other leaders of the process right now are trying to communicate about what should be the work plan for next year."

Although setting an objective of finishing the modalities by the time of the Hong Kong meeting would create an incentive to get the job done, it could also set up the potential for another failure, he said.

If and when the modalities are agreed upon, he said, the negotiations are still not complete. At that time, the participants would have to produce country schedules demonstrating how they intend to implement the agreement.

During that period, subsets of participants might engage in what is called "request/offer" negotiations to go further than the general agreement, including sectoral initiatives. U.S. farmers have said they want agreements for low or no tariffs in fruit and vegetable trade, for example. Sub-Saharan African countries seek elimination of domestic support for cotton, another sectoral initiative.

Finally, a process called reconciliation would take place in which WTO members scrutinize the schedules of others' countries for adherence to the agreement.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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