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AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
8 April 2003
WTO AGRICULTURAL NEGOTIATIONS: BRIEFING
Chairperson: Mr N Masithela (ANC)
Documents handed out:
AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
WTO Agricultural Negotiations presentation
The Directorate for International Trade within the Department of Agriculture and Land Affairs briefed the Committee on agricultural negotiations at the World Trade Organisation. The Committee heard that the collective mandate of the WTO was to establish a fair and market-oriented international trading system through introducing fundamental reform, in order to correct and prevent restrictions and distortions in world agricultural markets. The Committee's attention was drawn to a document produced by Hong Kong Ambassador Stuart Harbinson, which proposes a programme for the implementation of these reforms worldwide. World reaction to the document has varied from an outright rejection of the excessive changes which it proposes, to the opinion that it is not ambitious enough.
Briefing by International Trade Directorate
Mr Günter Müller: Deputy Director, Directorate for International Trade reported that agriculture forms a critical part of the broader agenda of the World Trade Organisation, which was launched at the fourth WTO Ministerial Conference in Doha, Qatar, in November 2001. This Conference agreed on a detailed mandate, and a time schedule for agricultural negotiations to be finalised. The mandate agreed upon is as follows:
- Substantial improvement in market access by all players with an export interest.
- Reductions, with the view to phasing out, of all forms of export subsidies.
- Substantial reductions in trade-distorting domestic support.
- Special and differential treatment for developing countries.
Although these are major talking points within the WTO, member countries are far from reaching a compromise on the issues. Mr Müller reported that the split was mainly on the level of ambition. Some countries are in favour of drastic changes, while others want to implement fewer reforms, or none at all. Agreement should have been reached on modalities by 31 March 2003. That deadline, however, was missed, with agriculture being one of the issues that should have been addressed. It is questionable whether the new deadline at the fifth Ministerial Conference in September 2003 will be reached.
The First Modalities Draft Paper, produced by Hong Kong Ambassador Stuart Harbinson, on 12 February 2003, seeks to provide a framework to guide commitments by individual WTO members, such as a formula for tariff reductions, size of reduction in domestic support, and time frames for eliminations of export subsidies. This document, although welcomed by developing countries, is seen by many of them as not ambitious enough.
Mr Müller continued that South Africa wanted to provide sufficient space to ensure that development issues can be adequately addressed.
Referring to the table which outlined tariff cuts suggested by Harbinson, Mr Müller reported that the document provides for bigger cuts in developed countries, with shorter implementation periods. Smaller cuts were suggested for developing countries, with longer implementation periods. The documents seeks to provide more built-in flexibility for the developing countries than for the developed countries.
Mr Müller informed the Committee that Mr Harbinson's document fails in not addressing high tariff products or tariff escalation. This is problematic for developing countries who often export products, such as cocoa, only in the first stages of production, with the accompanying lower tariffs. Other countries export the finished product, with much higher tariffs.
According to the First Modalities Draft Paper, the provisions of Article 5 of the Agreement on Agriculture will be phased out after five years. The Draft Paper proposes that 50% of export subsidies be phased out within the next five years, and the remaining 50% within the next nine years.
Referring to the global response to the Harbinson's proposal on EU domestic subsidies, Mr Müller reported that European Union members felt the proposals were extremely ambitious, introducing too many excessive cuts in subsidies.
Subsidy cuts, as suggested in the Draft Paper, would reduce US domestic subsidies from $19 billion to $10 billion. However, the US proposal was to phase out the "amber box" provision completely while maintaining the de minimis provision (reducing the subsidy by half over five years), to assist farmers.
The application of the Harbinson proposal to Japan would have no impact there, as they have reduced domestic support for internal reasons.
Mr Müller concluded by stating that the major debate was to what extent reforms should be implemented. Additionally, they could not yet determine how much flexibility should be given to developing countries. Although they need to receive special treatment, they should not be exempt from tariffs.
Mr A Botha (DA) asked that the Harbinson "First Modalities Draft Paper" be distributed to the Committee members. Making particular reference to the American poultry dumping case, he wanted to know how well the Safeguard Clause really worked. Lastly, he asked how much benefit South African agriculture could derive from the African Growth and Opportunity Act (AGOA).
Ms J Ntuli (ANC) inquired, with regard to the proposed elimination of all export subsidies, if this also pertained to developing countries, and how it could be ensured that that action would not cripple South Africa's farmers.
Mr B Radebe asked if AGOA was solely an initiative by the USA, or if they had, in fact, consulted with the African countries.
Mr Müller informed the Committee that the Harbinson Draft Paper was available online, but he would ensure that the document was made available to Committee members.
He said that the Safeguarding Clause was an additional provision that measures import surges on a price basis. South Africa is able to use the Safeguard for many products, but has thus far not done so. He added that the process was quite a complicated one. He lacked the detailed knowledge to give a strong indication on whether the clause could be beneficial, but concluded the matter by saying that proceedings had successfully been instigated against the US, in the case specified by Mr Botha.
He further stated that approximately 50% of South African exports are to the US, under the AGOA agreements. He offered to furnish the Committee with more substantial information regarding the AGOA agreements, at another occasion.
To Mr Radebe's question, Mr Müller responded that AGOA was a unilateral US initiative, subject to WTO rules. He reported that the US Administration had consulted with African countries that had qualified for benefits with regard to the establishment of AGOA. Hearings in which South Africa had participated preceded the final implementation of the Act.
On the elimination of export subsidies, Mr Müller explained that South Africa does not make use of export subsidies. Subsidy eliminations will therefore not have an impact on South Africa farmers. Developing countries had not really made use of export subsidies either. For them, there would be no negative implications. Developing countries had not made use of price-distorting measures, either. He informed the Committee that the Agricultural Measure of Support (AMS) was such a price-distorting measure, which the US proposed to eliminate.
Mr van Niekerk (FA) asked, with regard to interaction between the Departments of Agriculture and Land Affairs and Trade and Industry, whether his Department played a direct or a supportive role. He further asked what the Department's input was when certain irregularities in trade were uncovered.
Dr A. Schoeman (ANC) commented that the bilateral agreements which South Africa has entered into (for instance, with the EU, the AGOA agreements, the SADC agreements), seem to be more beneficial than the country's membership with the WTO. He asked whether the way forward was through unilateral or bilateral negotiations, or with the WTO.
Mr Müller replied that close negotiations exist between the Departments of Agriculture and Land Affairs and Trade and Industry (DTI). Although Land Affairs has agreed to play a role in the WTO, there is a broader framework for international policy for DTI within the organisation. He felt that there was sufficient cooperation between the two Departments, conceding that friction naturally occurred between the two sometimes. Land Affairs consults with the Agricultural Trade Forum, which automatically goes to the DTI as well.
To Mr Schoeman, he said that some countries are totally against bilateral agreements, arguing that multi-lateral agreements are preferred. However, at the moment there is an explosion of bilateral agreements occurring. There are advantages related to each option, and one needs to find a healthy balance.
Mr Botha, once again engaging Mr Müller on the issue of dumping, said the particular complaint was of the time it takes to respond when an irregularity is perceived. By the time that anti-dumping measures are imposed, the damage has been done, jobs have already been lost, and the industry has been damaged.
On anti-dumping measures, Mr Müller responded that his Department was aware that responses to the phenomenon were too slow. South Africa was not alone in its failure to react fast enough to prevent damage to the market. It is a widespread phenomenon, which is problematic.
Study tour and GMO Conference discussion
The Committee discussed matters relating to their planned trip to Botswana and Zimbabwe and the Genetically Modified Food (GMO) Conference on 14 and 15 April 2003.
The Chairperson reported that as yet, there was no programme available for the trip to either countries. He informed the Committee that Members would be departing from South Africa on 22 April 2003 to Gaberone, and from there, to Zimbabwe. They would return on 1 May 2003.
With regard to the GMO Conference, Government had been requested to suggest organisations with which they have dealings on GMO issues, for participation in the Conference. Representatives from the private sector and production companies would attend. A full list of all participants would be available by Thursday, 10 April 2003. Group sessions would focus on food security, agriculture, health, and two other issues. Officials from the relevant Departments would be asked to present on those matters.
The Chairperson reported that the Department of Agriculture in the Province had volunteered to sponsor the Conference, having already booked accommodations. The Department would also finance food for 250 people, with a budget ranging from R35 000 to R50 000. The Conference itself would be held in Stellenbosch.
Mr Radebe raised the point that no consumer groups had been mentioned for participation. He felt they were an important constituency that could not be overlooked, as whatever foodstuffs are produced are eaten by the consumer.
The Chairperson stated that two representatives per organisation would be invited to attend. However, that did not exclude those people who wanted to come on their own.
Mr Schoeman asked to have a deadline for names to be forwarded for the Botswana trip. He suggested that should that deadline not be met, the matter would be left in the hands of the Chairperson to decide.
Mr Botha agreed that the same deadline should be imposed for the dissemination of all information regarding the trip. The Chairperson suggested the end of Thursday, 10 April, as the deadline. All Members agreed.
The meeting was adjourned.