House of Commons reviews the EU approach to the WTO negotiations
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CTA. 2004. House of Commons reviews the EU approach to the WTO negotiations. Agritrade, January 2004. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52871
A report based on the hearings of the International Development Committee of...
A report based on the hearings of the International Development Committee of the UK House of Commons on December 4 th 2003 is now available on the internet. The report which is entitled ‘Trade and development at the WTO: learning the lessons of Cancun to revive a genuine development round' reviews what happened in Cancun , the lessons to be drawn, and what can be done to revive a genuine ‘development round'. It makes a number of recommendations on the WTO process in the light of the new alliances which have emerged. On issues of substance it notes that ‘without agreement on agriculture, there will be no development round' and maintains that ‘the developed world failed to offer sufficiently radical or quick reforms of its agricultural policies' and that ‘the EU's failure on agriculture was an own goal resulting from a lack of coherence between its policies on trade, development and agriculture'. It argues that ‘the developed world must accept that if its agricultural policies harm developing countries – and trade-distorting domestic support and export subsidies clearly do - then they must be changed'. It notes that ‘if agricultural subsidies keep farmers in business, and their products are exported, then these subsidies are trade distorting'. It was also critical of ‘the condescending refusal of the USA to negotiate on cotton'. The committee maintains that the lesson of Cancun is simple: ‘developing countries' concerns should be listened to carefully and taken seriously'. On specific issues linked to agriculture the report argued that ‘the peace clause should not be extended'. It welcomed the ‘EU-inspired proposal to remove export subsidies for products of particular interest to developing countries'. It maintained, however, that ‘the farmers of developing countries who suffer the effects of the dumping of agricultural products, are poorly served by the EU's agreement on CAP reform'. It observed that ‘the reform may be substantial in terms of EU politics, but that does not mean that it will make a substantial difference in developing countries'. It argued that ‘partially decoupled agricultural support will still keep European farmers in business at the expense of farmers in developing countries. If agricultural subsidies keep farmers in business, and their products are exported, then those subsidies are trade distorting'. The report observes that ‘agricultural negotiations at the WTO revolve around definitions', noting that ‘unfettered use of green-box measures is crucial for the EU; moving agricultural support from the amber box and the blue box to the green box is central to maintaining progress with CAP reform and consequentially with multilateral negotiations.' It records Pascal Lamy's' view that capping the green box would be a disincentive to further CAP reform and as such, according to both the Commission and the UK government, it is not politically realistic. However, as the Committee report notes, for the G20 and others ‘if green-box subsidies keep farmers in the business of exporting their produce then they are trade distorting and should be subject to limits and reduction commitments'. Against this background the Committee report poses the question ‘is the green box a stepping stone or a stumbling block towards fundamental development-friendly agricultural reform, within the EU and internationally?' It notes that Trade Commissioner Pascal Lamy dismissed questions about whether green-box support is trade distorting as ‘a very interesting academic question'. However the Committee report argues that for ‘poor farmers in developing countries and to exporters in less poor but still developing countries, it is more than academic'. The report calls for an independent review of the trade-distorting nature of green-box measures based on objective criteria ‘rather than political bargaining' and suggests that the World Bank could conduct such a review. The report's section on agriculture concludes that development-friendly agricultural trade rules cannot be built simply on what is ‘politically feasible from an EU perspective', since multilateral rules are meant to be about creating a level playing field. In this context the Committee calls on the UK government to move beyond ‘an exercise which tries to hide trade-distorting subsidies in a different coloured box'. Comment: The report constitutes a radical critique of the process of CAP reform to date, questioning as it does the definitions of the trade-distorting nature of different forms of support. It postulates and supports the basic premise that if agricultural aid, in whatever form, affects farmers' production decisions and allows them to grow more than they would otherwise grow in the absence of such aid, and if this production is then traded, then these forms of aid are effectively trade-distorting. This strikes at the heart of the process of CAP reform, which is designed to enhance the price competitiveness of EU agricultural and value-added food-product exports through shifting patterns of EU aid between different types of ‘boxes' of support which are subject to different WTO disciplines. In this context it remains to be seen whether any of the report's recommendations will be taken up by the UK government, other member states, and subsequently the European Commission. Looking beyond the report itself, it also remains to be seen whether policy developments that the report welcomed, such as the Commission's offer to remove export subsidies on all products of export interest to developing countries, would include export subsidies on such EU products as sugar or whether they would not be allowed onto any list of products important to developing countries.