WTO reaches framework deal
by The Ledger
13 August 2004 – Members of the World Trade Organization (WTO) reached a deal on the framework for future negotiations in the Doha round August 1, 2004; and agreed to a December 2005 meeting in Hong Kong for the sixth WTO ministerial. Many groups – including the three national wheat organizations – have praised the negotiators for their ability to conclude the negotiations. There had been much speculation that a failure on the framework would be seen as a huge failure for the WTO.
“United States wheat producers applaud the successful negotiation of a framework document that has put the World Trade Organization Doha Development Round negotiations back on track,” the Wheat Export Trade Education
Committee, U.S. Wheat Associates, and National Association of Wheat Growers wrote in a press release. “The Framework clearly provides for the beginning of harmonization in use of domestic support with the largest users being required to take the biggest cuts. It does the same for reductions on tariffs to open markets. … Wheat producers, looking at our specific issues, see the agreement as a very important step, but there is still a way to go in future negotiations.”
For domestic supports, the new framework will cut trade-distorting support by twenty percent. This will impose product specific caps on amber box payments, cap five percent of blue box production value and reduce de minimis subsidies.
In export competition, all export subsidies will be eliminated as well as the subsidy element of export credits and export state trade enterprises. Disciplines will be placed on food aid to prevent commercial displacement, and strong disciplines will be imposed on export bans, embargoes and trade restrictions.
This will be the first time state-trading enterprises will be disciplined within the WTO. According to U.S. Trade Representative Robert Zoellick, this could lead to eventual elimination. “We are delighted … state trading enterprises have been a major challenge for us, we have an understanding in our bilateral agreement with Australia to move on to elimination at a later point, and now we’ve got the Canadian Wheat Board. That is going to be a very sensitive issue for Canada. But that is going to be something we are going to need to try to pursue in the negotiations.”
Under market access, a tiered approach will be used. Higher tariffs will be reduced more than lower tariffs and all tariffs will be reduced from bound rates. The use of tariff rate quotas will be expanded and in-quota tariffs will be reduced and possibly eliminated.
Developing countries will continue to have access to special domestic subsidies and special export subsidies. They will also have access to a special safeguard mechanism. While there is some language that protects special products, the terms and conditions have not been negotiated.
The framework is only a starting point that puts in place the outline for future negotiations. Few observers believe that the end result will be accomplished in Hong Kong and do not feel that the current U.S. Farm Bill will be impacted. Rather, critics speculate that 2007 will be the year of change.
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