Commissioner Fischler's Speech on Agriculture Negotiations - DOHA Round

Dear Colleagues,

As you are all aware, with Pascal Lamy we sent a letter on Sunday to all trade ministers of WTO members setting out what we see as the key areas where more movement is needed, in order for us to agree on framework modalities by July.

From many discussions at various levels over these past few months, it is clear that a stronger sense of resolve has emerged to make progress on the Doha Development Agenda in order for 2004 not to be a lost year. But equally clear is the fact that this resolve has a time limit the end of July.

As you are also only too aware, agriculture is central if progress is to be made soon. So let me try to briefly explain where we are in the agricultural negotiations, and where we expect to go from here.

A series of meetings in Geneva has taken place in the last two months, focusing mainly on the clarification of the positions of the various members. Crucial, but obviously not exclusive, in these discussions have been the meetings of a "core group" of members representing players with different approaches and interests in this process the EU, the US, Brazil, Australia and India. This group represents nothing more at this stage than a small and flexible forum for brainstorming to explore whether progress is feasible. Yet within it the main areas where further progress is needed have already emerged.

A closer look at these areas indicates that there exists on agriculture a historical opportunity for a breakthrough. To render this opportunity reality with benefits for all, the responsibility for showing the lead clearly lies with the major subsidising countries in the developed world.

We are prepared to play our role in that respect, as two major reforms of the Common Agriculture Policy in the span of less than a year demonstrate. But there must be movement on all three pillars market access, domestic support, and export support - in a balanced fashion. And there must be movement from all.

Clearly the area where more progress is needed is market access. This is natural, as is also natural that approaches differ widely. Tariff structures are so different among members, and so many WTO members have often opposing interests in this pillar that the search of a "one fits all" solution is anything but evident.

As a result of this complexity, criticism has increased in recent weeks of the so-called "blended formula". Last Friday, Brazil presented the latest example of such criticism, reflecting concerns of the G-20 group about certain aspects of the blended formula. But the absence, once more, of a viable alternative indicates the fundamental problem of such criticisms. By focusing only on some aspects of the blended formula, and viewed only from one angle, they choose to ignore its most essential element: it was meant to compromise opposing interests.

The sensitivities, interests and concerns of exporting members lie in a generalised drop of tariffs, with emphasis in tariff peaks and in a higher reduction of the highest tariffs; thus their preference for the Swiss formula. The sensitivities, interests and concerns of importing members lie in a lower ambition of tariff reductions and an adequate protection for sensitive products; thus their preference for a linear approach (such as the Uruguay Round formula).

If we are really interested in a solution, we have to address concerns of both exporters and importers. And the only way to do so is by "blending" their different approaches. It does not get any simpler than that!

Clearly the extent of ambition that this blending will achieve will differ based on numbers; how many products in the sensitive list, how many tariffs will face linear and how many non-linear reductions, and by how much?

But all these are questions that the negotiations will have to resolve after a framework for modalities is agreed, not before. And only when the overall balance of an agreement, among all three pillars and by considering all sectors, is known.

This is why we continue to believe that a blended formula could, with the necessary modifications, meet the concerns of all participants as well as our own sensitivities. And instead of looking for our own magic solutions, we should consider how best to address these concerns by focusing on the necessary flexibility particularly in response to developing country sensitivities.

On domestic support, we continue to aim for a very substantial reduction of all forms of trade-distorting subsidisation. Here the real issue is how this can be achieved in a manner that recognises the efforts of reform that the EU has taken while at the same time opens the way for a real reform of US domestic support.

Since Cancun, a number of developing countries, including the G-20, have made their objectives very clear and we are ready to go a long way to meet them. CAP reform allows us to commit ourselves to a large reduction in trade distorting (amber) support as well as reduction in existing blue box payments and their capping. But non-trade distorting support (green box) should remain free of restrictions.

Finally, it is clear that eliminating all forms of export support is one which is an objective shared by the great majority of participants. The challenge we face here is clear. And we have already moved in this area by offering to eliminate export subsidies on a list of products of interest to developing countries, and we subsequently made clear that there would be no a priori exclusions; no products were excluded.

This Commission position received the wide support and endorsement of member-states during the preparations for the Ministerial Meeting in Cancun, and this was reconfirmed post-Cancun in the preparation of the WTO General Council last December.

However, the list approach has not worked, and we need to take this into account.

But in doing so, we should also need to avoid a repetition of the Uruguay Round outcome. Our own export subsidies have been disciplined, and have decreased very substantially over the past several years. On the contrary, other forms of export subsidisation by other members of the WTO have been maintained or increased, and remain undisciplined.

This issue has to be addressed first, by clearly defining the requirements of full parallelism among different forms of export competition. This is not just a requirement of the Doha mandate. It makes common sense if we want to be serious.

Can you imagine the elimination of EU export subsidies in wheat while the US still determines its food aid shipments in inverse relation to the world market price and thus to humanitarian needs, and in direct relation to its needs for surplus disposal; or if US export credit allocation is based on multiple government guarantees; or while Canada and Australia continue to grant export monopoly status to their wheat boards?

As long as a legal basis and a budget for a policy instrument supporting exports exist, a clear trade distorting effect of such instrument would also exist. Our export support instruments are disciplined, and we have made clear our determination to move further. But not before all instruments distorting exports do so in a strictly and fully parallel manner and the overall balance of an agreement emerges.

Clearly, the agriculture package must be taken as a whole, and this whole includes that our non-trade concerns as agreed in Doha are adequately addressed.

From what I have just explained, you can clearly see I believe that the ideas that Pascal and I have developed in all three pillars are fully in line with the Community's position as it has evolved during the negotiations.

Thanks you for your attention.

| Top |