Multilateral Trade Negotiations: Update on The Doha Development Round A European Perspective Dr Rolf Moehler

The Basic Approach of the EU to the Agricultural Negotiations The EU is fully committed to the objective of establishing a fair and market-oriented trading system The EU wants to preserve a competitive European agriculture that protects the environment and keeps rural areas viable To this end the CAP has been reformed several times, last time in 2003 and This reform is the basis for the EU negotiating position. The Doha Round is not only about agriculture but also about non-agricultural market access and services among other subjects

The EU Approach to Developing Countries The EU pays particular attention to the needs of developing countries It has a special responsibility to the Cotonou Convention countries Least developed countries have free access to the EU market Developing countries have more to export than agricultural products South-South trade is important, too

Where are we in the Agricultural Negotiations? The July Framework Agreement in 2004 has been a milestone in the negotiations Recent negotiations have focused on the three pillars: market access, domestic support and export competition Progress has been made but negotiations seem to have run aground on market access Other problems remain e.g. cotton, erosion of preferences, geographical indications

EU on Market Access Four bands with the thresholds: 0 – 30%, 30% - 60%, 60% – 90%, >90% Reduction rates of 20%, 30%, 40% and 50% Tariff cap of 100% Sensitive products cover 8% of tariff lines; main candidates are beef, dairy, sugar For developing countries higher thresholds, lower reduction rates and cap of 150%

EU on Market Access The EU proposes a substantial reduction of tariff protection The EU is less ambitious than the US and the G-20 as  EU agriculture has still major structural problems, enhanced by enlargement and  The EU is a net importer of agricultural products  Exports will decrease with elimination of export subsidies

EU on Domestic Support On AMS reduction three bands The EU accepts to be in the highest band with a reduction rate of 70% on an AMS of 73 billion Euro Proportionally similar reduction rates for others e.g. 60% for the US and Japan De minims support to be reduced by 65% Further reduction of “blue box” beyond 5% value of production limit Definition of “blue box” must not allow inclusion of US “countercyclical payments” without further discipline Reduction of Overall Trade Distorting Support (OTDS) similar to AMS reduction For developing countries much lesser reduction rates and de minimis of 10% The “green box” is not up for re-negotiation

EU on Export Competition Setting a date on the elimination of export subsidies is dependent on agreement to eliminate all other forms of export subsidisation by the same date On export credits there is still no clarity on disciplines for export credits of 180 days or less There may be less strict rules on emergency food aid but discretion of donors where low income countries are concerned is a non-starter. Programme aid should be banned. The export monopoly of state trading companies in developed countries has to go.

What Else Needs to Be Done? Besides the three pillars there are a few matters that should not be forgotten, e.g.  Cotton  Tariff erosion  Geographical indications Geographical indications may not be so important economically but they are a political issue for the EU.

What Outlook for Hong Kong? Agreement on export competition and domestic support should be possible Setting a date on the phasing-out of export subsidies depends on tighter discipline for food aid and state trading enterprises On domestic support the key issue is the definition of the new “blue box” But on market access we are far apart and this may hamper progress in the other two pillars Does Hong Kong come one year too early?