WTO revises drafts on subsidies and tariffs to push trade talks

Mumbai: The World Trade Organisation has issued fresh drafts on the most contentious issues of lowering farm subsidies and cutting industrial tariffs, in a renewed effort to bring the global trade talks back on track.

The fresh drafts would "kicks off another intensive series of meetings for members to try to reach agreement, and probably to amend the draft", a WTO statement said.

Under the revised draft, the US would have to cut farm subsidies to between $13 billion and $16.4 billion a year. Its current limit is around $48 billion, while Washington has offered in the WTO negotiations a new cap of $17 billion.

The European Union has to cut its highest tariffs on farm imports by 73 per cent, more than the 60 per cent it has offered so far.

The draft says between 4 and 6 per cent of farm products in most developed countries can be classed "sensitive" and which can therefore be protected from the full impact of tariff cuts. The US and some poor countries had called for a 1 per cent limit and the EU originally supported 8 per cent.

The draft did not specify tariff lines on "special" products that the developing countries deem as protected from tariff cuts and instead suggested guidelines.

The US wants countries such as India not to protect large sectors of agriculture against farm imports.

Developing countries would also cut import tariffs on industrial goods, such as cars or chemicals, but not by as much as rich nations, the draft said.

A 19-23 range of coefficients for developing countries in a tariff-cutting formula is less demanding than a level of 15 sought by the EU and the US. But it is deeper than a level of 30 proposed by Brazil and other countries.

The proposal would leave developing countries with industrial goods import tariffs below 12 per cent on average and only a handful would have them above 15 per cent although the very poorest countries would have more protection.

Rich countries would cut tariffs to below 3 per cent on average with "peaks," or high tariffs for some individual products, under 10 per cent.

Major developing countries like Brazil, China and India will also have to offer greater market opportunities for industrial exports, according to the new draft prepared by agriculture and manufacturing mediators.
WTO said the drafts are based on member governments'' latest positions in negotiations and are an assessment of what might be agreed for the formula for cutting tariffs and trade-distorting farm subsidies, and related provisions.

A European Commission spokesman said the fresh trade proposals advocating sharp cuts in US government subsidies for farmers and in industrial import duties imposed by emerging nations can be a useful basis for further work although there points which pose concerns.

EU negotiator Peter Power said, "it is certainly something that we can work with." He, however, declined to specify the points of concern.

"We will come to a position over the coming days in consultation with our member states, and this position will be presented in Geneva on Monday," he said.

EU trade commissioner Peter Mandelson will discuss the proposals with EU trade ministers over dinner on Sunday.

Trade analysts, however, said the documents do not indicate any common ground between the extreme positions of the developing and developed countries with regard to the formula and the modalities for reduction of farm subsidies.

The WTO released these drafts within a few weeks of the collapse of talks among the four key players – India, Brazil, EU and the US in Potsdam, Germany. WTO chief Pascal Lamy wanted the talks to continue in Geneva despite failure of the four important players to bridge the gaps.

The Doha Round of world trade talks was to conclude in the beginning of 2005 and is running much behind the original time line.