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WTO proposal a start but needs to be more ambitious.

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AFFA03/028WT - 14 February 2003

WTO proposal a start but needs to be more ambitious

A proposal released overnight as part of the World Trade Organisation’s (WTO) Doha Round of negotiations on agriculture has some good elements, but needs to be much more ambitious, Federal Agricultural Minister Warren Truss said today.

“The First Draft of Modalities for the Further Commitments released by Stuart Harbinson, Chair of the Doha agriculture committee, is an important step in the negotiations, but the proposals do not go far enough in a number of critical areas, particularly domestic subsidies and market access,” Mr Truss said.

“The draft paper proposes tariff cuts that increase for higher levels of tariffs. While these cuts appear significant, in many cases they will not be large enough to encourage increased trade.

“The draft also proposes expanding tariff quotas to between 8 to 12 per cent of domestic consumption. This could provide significant gains in some markets for Australian exporters — depending on how the tariff quotas are allocated.

“Another positive is Harbinson’s proposal to eliminate export subsidies over six to 10 years — a key goal of the Cairns Group, although we would prefer a shorter timeframe.

“The proposal to limit the extent to which some countries use export credits and food aid as de facto export subsidies is also welcomed. The sting in the tail is that he has proposed single desk export arrangements be removed.

“The Government, however, firmly believes that Australia’s single desk arrangements do not distort world trade and are beneficial to Australian farmers.”

On domestic subsidies, reductions of between 50 per cent and 60 per cent over five years are proposed.

“The subsidy reduction proposals do not go as far as the Cairns Group would like. Our goal is the gradual elimination of all distorting domestic subsidies,” Mr Truss said.

“The outrageous levels of domestic support provided by the European Union, Japan, the US and some other countries, need to be cut substantially.

“Despite these shortcomings, the difficulty of reconciling the diverse range of proposals on the table, not to mention the serious lack of engagement by some of the major players involved, Mr Harbinson’s draft proposal is an important step to meeting the Doha Round’s end•of•March deadline for establishing reform mechanisms.”

Backgrounder is attached.

Harbinson Agriculture Modalities Paper Backgrounder

Market Access

Tariffs Tariff cuts to be implemented over five years in equal annual instalments according to the following formula:

● Tariffs > 90 per cent: to be cut by an average of 60 per cent,

minimum cut 45 per cent per product; ● Tariffs > 15 per cent ≤ 90 per cent to be cut by an average of 50 per

cent, minimum cut 35 per cent per product; and ● Tariffs ≤ 15 per cent to be cut by an average of 40 per cent,

minimum cut 25 per cent per product.

Tariff Quotas Tariff quotas are to be expanded to 10 per cent of domestic consumption in equal annual instalments over five years. Flexibility provided to increase only up to 8 per cent on condition that an equal number of tariff quotas will increase to 12 per cent.

Export Competition

Export Subsidies All export subsidies would be reduced to zero over 10 years with half the export subsidies to be phased out over six years.

State Trading Enterprises Single desk exporters would be prohibited.

Export Credits/Food Aid

Tighter disciplines would apply to ensure that export subsidy reduction commitments would not be circumvented.

Domestic support

Amber Box Total trade distorting domestic support would be reduced by 60 per cent in equal annual instalments over five years. Support on individual products would be capped at a recent representative period.

Blue Box Direct payments to farmers linked to production levels would be capped and reduced by 50 per cent over a period of five years — or, alternately, shall be folded into amber box.

Green Box

Tighter disciplines on those forms of open-ended domestic support to ensure that these are genuinely non-trade distorting.

Further media inquiries:

Minister Truss' office: Tim Langmead (02) 6277 7520 or 0418 221 433