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					            INTERNATIONAL COOPERATIVE
            AGRICULTURAL ORGANIZATION


                      2000 ICAO SEMINAR



         THE STRATEGIC APPROACH OF
    AGRICULTURAL COOPERATIVES TO W.T.O.
         AGRICULTURE NEGOTIATIONS




               ISSUES AND PROSPECTS OF WTO
                AGRICULTURE NEGOTIATIONS


                By: NESTOR OSORIO LONDOÑO 


                          Rio de Janeiro, Brazil
                              December 4-2000





    Former Ambassador of Colombia to the WTO
    Former Chairman of the Committee on Agriculture of the WTO.
INTERNATIONAL COOPERATIVE AGRICULTURAL ORGANIZATION


                                     2000 ICAO SEMINAR


    THE STRATEGIC APPROACH OF AGRICULTURAL COOPERATIVES
             TO W T O AGRICULTURE NEGOTIATIONS



                    ISSUES AND PROSPECTS OF WTO AGRICULTURE
                                  NEGOTIATIONS


                                                          By: Nestor Osorio Londoño 


INTRODUCTION

It is a great pleasure and a privilege to have the opportunity to address this
important gathering of women and men devoted to the noble activity of the
work of the land which contributes in such a decisive way to the wealth and
progress of nations. At the occasion of this interesting seminar organised by
ICAO, I would like to share with you some views and perceptions concerning
“Issues and Prospects of World Trade Organization Agriculture Negotiations
that are currently taken place in Geneva.

PROCESS OF NEGOTIATION

As the first phase of the process of negotiation has concluded, it is important
to have a look at the developments occurred in the Special Sessions of the
Committee on Agriculture. Revising the different proposals introduced by
Members, one can say that in a way this formal process has been a repetition
of the informal one known as the AIE (Analysis and Information Exchange).



    Former Ambassador of Colombia to the WTO
    Former Chairman of the Committee on Agriculture of the WTO.
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Nothing wrong with that, simply that what Members announced in the
previous two years informally, has been now elevated to official positions.

Prior to the Ministerial Conference in Seattle, a good number of proposals
submitted, reflected profound differences of approach. These differences
concern not only the aspirations in concrete areas of trade of agricultural
products, but also in a more general and philosophical conception about the
scope and nature of the reform process. I would say that these differences refer
mainly to the depth and pace of the reform.

Proposals and statements of delegations preach and recognise the need to
move towards liberalisation, but in fact, the reality of policies, both in
developed and developing countries are showing a revival of protectionist
influences. This is due mainly to the changes occurred in the last three years
as some important economical and financial crisis resulted in recession and
negative effects in the economies of many developing countries. I think the
liberalisation fever of the early nineties has receded losing some degrees of its
previous high temperatures. Indeed, many governments responding to the
pressure of independent forces are now rethinking their policies and slowing
their process of liberalisation.

The failure to launch a round of negotiations in Seattle confirmed the political
unrediness to move forward in such direction. It is accurate to indicate that
this reluctance was observed in both, developed and developing countries. In
these circumstances the agricultural negotiations, together with services, as
mandated in the Agreement rest in the ground as an isolated sector. Without
the framework of a round that includes other critical areas like the industrial
sector and disciplines concerning competition and investment providing room
for trade off and political justifications, it is highly improbable that substantial
progress could be attain in the agricultural negotiation.

Recently the Cairns Group composed now by eighteen countries (developed
and developing countries exporters of agricultural products), stressed in its
communiqué of the Ministerial meeting held in Banff, Canada, that
“fundamental reform of world agricultural and agri-food markets is necessary
to ensure sustained improvements in the well-being of all the world’s people”.
Commissioner Fischler of the European Communities, invited to address this
gathering, said that Agenda 2000 constitutes a substantial reform of the
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Common Agriculture Policy (CAP) and that some OECD studies have already
shown that "the system of direct payments is far less trade distorting than
former market price support".

An issue of fundamental discrepancy is the one related to the objective of the
negotiation. The highest goal of the reform process in terms of the end result,
is given by the Cairns Group, with the affirmation that trade on agricultural
products should be submitted to the same multilateral rules and disciplines
applicable to other goods in order to eliminate restrictions and distortions in
world agricultural market. This vision is supported by United States but
strongly rejected by the European Community and other important members
like Japan, Switzerland Korea and Norway. Equally, by some developing
countries, specially net food importers that are not quite certain about the
consequences of a total integration of agriculture to the GATT/WTO system.
The concept of multifunctionnality of agriculture has been advanced to oppose
the moves towards liberalisation and total integration.

SCOPE OF PROPOSALS

An overview of proposals submitted during the four Special Sessions of the
Committee on Agriculture shows that no aspect covered by the Agreement
has been left out. There have been around 20 proposals involving nearly 80
countries. It is important to underlined the fact that good number of them
come from developing countries. They have now a clearer vision about their
interests and objectives in the agricultural negotiations.

As we look at the different areas of the Agreement to which proposals refer,
we can establish substantial divergences among members, but it is fair to say
that some common interests have also emerged.

1- On Market Access there is a general call to simplify trade conditions and
 restrictions by cutting tariffs. This means to address the remaining problem of
tariff peaks, tariff escalation and the complexities of TRQ´s and its
administration. Discussions about how to approach the cut of tariffs are yet to
be held. Different formulas like “across the board”, “zero for zero”, or the
“Swiss formula”, have to be examine measuring the impact on both, tariff
structure and trade flows.
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The Special Safeguard has deserved some consideration. Given the fact that
only few countries like United States, European Union and Japan have
reserved the right to use this mechanism, some members have ask to extend
the use of the safeguard. It is clear that there is an imbalance that goes against
developing countries and in one way or another it will be necessary to level
the situation by eliminating discrimination.

2-     On Export Subsidies the call for elimination or substantial reduction is
almost general. Such call is complemented by proposals aiming to avoid
circumvention of commitments by including disciplines concerning export
credits, food aid and operations of single exporters. As the negotiation flows,
all forms of export competition will required analysis in order to establish
which forms are the most trade distorting, and to introduce the appropriate
corrections. Some developing countries, food importers, have expressed their
worries about the potential impact on food prices as a result of elimination of
subsidies. Some have responded arguing that such action could be in their
benefit thanks to the competition that will push prices down.

3- On Domestic Support most proposals are oriented to reduce and simplify
the trade distorting measures specially in developed countries. An study of
OECD shows that total transfers to agriculture in its member countries had
risen in the last five years, although most of them had utilised less than half of
their permitted AMS commitments which means that they have the potential
to increase support level further. At the same time developing countries are
asking more flexibility to allocate resources and to enhance green box
provisions.

Other two dominant topics covered by proposals refer to Special and
Differential Treatment and Non Trade Issues, both directly linked to domestic
support and market access regimes. The purpose of SDT is to help and
encourage developing countries to be better integrated and to participate more
fully in the WTO system, ensuring that they share the benefits of trade.

It is been repeatedly said that the current negotiation should aim to levelling
the playing field in terms of reducing the disparity between developed and
developing countries in the use of support and protection and improving
market access conditions for developing countries. Developing countries are
focusing on how to introduce or enhance internal protection instead of how to
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get a better access to markets. In my opinion this is what really matters,
specially if one takes into account the fact that developing countries resources
are very limited. In many cases the possibilities of providing support is just
theoretical, because in practice the money allocation is not even made at the
level of national budgets. This means that concessions at the multilateral level
become meaningless and indeed a cheap bargain for developed countries.
Market access is the key issue and here is where the SDT will have some real
sense.

The Non Trade Concerns have become a mayor concern in the negotiations.
Paradoxically, non-trade issues are taken the central stage of a trade
negotiation. This illustrates my early point and remarks related to the return of
protectionism. Important members talk about multifunctionality of agriculture
as the concept to serve as basis of support measures. So far this has been done
in pure abstract terms. It’s well known that the green box provides the
framework to implement policies in pursuit of the various functions of
agriculture. So, what is needed now is that those who talk about
multifunctionality translate in concrete proposals the measures that will
developed the concept. Then the discussion and the negotiation will be more
tangible and it will be possible to see to what degree such measures are or are
not trade distortive. The European Community has already introduced a
proposal on animal welfare that will serve the purpose of this test. You would
guess that initial reactions have not been sympathetic at all.

POLITICAL ISSUES

Finally, let me touch on two pending issues of a political nature that require
close attention.

One is the entrance of China to the World Trade Organization. Although there
is not a precise date that could be announced for this country to become a
member, the fact is that mayor obstacles have been already surmounted and its
membership could be protocolized in the first half of next year. China has
already gone to a complex process of bilateral negotiations with WTO
members that include trade on agriculture. Once she becomes a member she
will undoubtedly be a significant player in the negotiation and will influence
the way many countries will approach this process.
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The other important political factor is related to the United States new
administration and its eventual commitment to a new round of negotiations. It
will take some time before a productive and specific dialogue could be
established between the new American government and the main players of
international trade. This will be relevant, specially to influence the way to
conduct the forthcoming second phase of the negotiations. The elections result
indicates that the new President will not control Congress, which is neatly
divided, therefore it will take some time before the political conditions are ripe,
if ever, to request from Congress fast track authority. To do so, he has to be
pretty sure about a positive outcome because a failure will result in a set back
with negative consequences in terms of leadership and ability to conduct trade
liberalisation at multilateral and regional level.

One has also bear in mind that a new round can only be launch by a
Ministerial Conference. Before calling such meeting, it will be necessary to
laid solid foundations for a consensus. Nevertheless there is a mandate to
convene a Ministerial Conference every two years, which means that this
meeting will have to take place by the end of 2001. If there are not political
conditions to launch a round at this occasion then the agenda will be
dominated by implementation issues, area in which developing countries have
good number of complains and grievances. Members and also the Director
General have to be pragmatic and realistic about what could be achievable and
prepare that meeting accordingly. Another Seattle debacle will hurt seriously
the multilateral trade system.

Given the facts and the substantive differences concerning the integration of
agriculture to GATT/WTO disciplines, it is difficult to forecast mayor
developments during the year 2001. Only as the expiration of the so call
“Peace Clause” approaches (end of 2003), one could think about some sense
of urgency.

There are important differences among WTO members and many questions to
be solved, but one positive aspect of the process so far is the substantive
contributions and proposals submitted to the Committee on Agriculture. This
shows the will to address and discuss the mayor issues related to the reform
process. What rest to be seen is if there is a real political will to negotiate.

Thank you very much.

				
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