16/03/2005
Doha Development Agenda
WTO: CIAA priorities in the multilateral trade negociations of the Doha Development Agenda

1. CIAA commitment to the multilateral process

CIAA welcomed the renewed support given by the WTO General Council on 31 July to the Doha Development Agenda and reaffirmed its commitment to the multilateral process. For CIAA, the WTO scene is the preferred place to agree on continued and comprehensive trade reforms and to strengthen disciplines applicable to agriculture. This commitment stems from the EU food and drink industries’ ambition to improve market access and its capacity to compete with third country products.

The food and drink industry is the largest industrial sector in Europe, with a production value of over € 800 billion. About 4 million employees are working in the sector, which is composed of a large number of SMEs. The EU food and drink industry is also an important contributor to world trade of foodstuffs. Exports (€ 44 billion a year) are essential to growth in this sector. The EU is also the largest importer of agricultural raw materials globally, notably from developing countries (greater than the USA, Japan, Canada, Australia and New Zealand combined).

For the EU food and drink industry, the key areas of interest that need to be part of a comprehensive agreement at multilateral level include agriculture, trade facilitation, enhanced protection of geographical indications within the TRIPS agreement, non-agricultural market access (NAMA) and certain WTO rules.

2. Objectives in Agriculture Negotiations

The framework for establishing modalities in agriculture is a milestone in a process that required substantial efforts. However, the framework agreement still needs considerably greater development before a final agreement can be reached.

CIAA shares the objective of the July 2004 draft modalities: “The reforms in all three pillars form an interconnected whole and must be approached in a balanced and equitable manner.” The maintenance of the competitiveness of its industries is a fundamental objective and it depends on a balanced approach being fully maintained between market access, domestic support and export competition.

It is also important to treat agricultural raw materials and their processed goods equivalently.

2.1 Domestic Support

CIAA supports a substantial reduction in all forms of trade-distorting domestic support – amber box, blue box and de minimis, in view of eliminating certain instruments that have serious impact on trade, such as marketing loans and counter-cyclical payments. While the EU has undertaken efforts to reform its agricultural support, CIAA is concerned that the review of the blue box criteria would allow certain WTO members through simple box-shifting, from amber to blue to escape substantial reductions in trade-distorting domestic support.

As green box measures are not trade distorting, the request for “clarification” of the green box, calls for a limited review and should not be misused to try redefining the criteria.

2.2 Export Competition

The timing and manner in which export refunds are phased-out will be critical to the maintained competitiveness of the EU’s food and drink manufacturing industry. EU food and drink industries cannot simply afford a unilateral phasing out of export refunds. As these export refunds are a compensation for higher EU agricultural prices, their elimination will result in exports being no longer viable in certain sectors of the food industry, if it does not go hand in hand with necessary internal market reforms and if there is no access to competitive agricultural raw materials.

CIAA stresses the need to follow the framework agreement’s approach for implementation according to which the “commitments will be implemented by annual instalments” and “their phasing will take into account the need for some coherence with internal reform steps of Members”. Further, in implementing the phasing out of refunds, agricultural raw materials and their processed goods will also have to be treated in a coherent way.

Phasing out of export refunds or export “subsidies” for food products must be conditional upon strictly parallel treatment of other export support measures, i.e. export credits, food aid, and the functioning of STEs.

Trade distorting practices such as export taxes should be addressed and differential export taxes, in particular, need to be eliminated.

2.3 Market Access

The chosen tariff reduction formula must create real improvements in market access opportunities for food and drink products. No tariff lines should be exempt from reduction commitments, but flexibility needs to be provided. CIAA will provide information on products and countries for which improvement of market access will be key to obtain positive responses to food and drink industry offensive interests.

CIAA understands that there may be need to consider “Special” and “Sensitive” product categories, but emphasises that they should not become so broad so as to negate the key objective of providing substantial improvements in market access, in particular as regards emerging economies. When tariff rate quotas are used in this case to provide market opening, systems of quota administration should be simplified and standardised. Bidding and auctioning systems for quota allocation should be avoided as they create commercial uncertainty.

When addressing tariff peaks and tariff escalation, CIAA is of the opinion that the reduction of tariff peaks and escalation should also be applied by the most advanced developing countries, not only by developed countries.

CIAA does not oppose a certain simplification of composite tariffs. However, conversion of specific duties into ad valorem duties should not be required to be permanent. Members should ultimately have the ability to apply specific tariffs because they offer certainty and predictability and do not discriminate against higher value added products. EU exporters of high quality products may also favour specific tariffs on their export markets.

2.4. Special and Differential Treatment

Negotiators should develop objective criteria for differentiating between advanced- and less-advanced developing countries in the WTO. Special and differential treatment (SDT) provisions should be targeted and made available to countries depending on their level of need. In order to facilitate North-South and, perhaps more importantly South-South trade, developing countries should be required to make reductions in import tariffs commensurate with their level of development in the agriculture and food sectors. This will be key to achieving a development friendly outcome of the negotiations.

3. Non-Agricultural Market Access

Whereas nearly all food and drink products are covered by the agriculture negotiations, fish, fish products and salt belong to the negotiation on Non-agricultural Market Access. CIAA members favour significant progress in the industrial market access negotiations.

4. Non-Tariff Barriers to Trade

According to CIAA, the existing Sanitary and Phyto-Sanitary Agreement does not need to be re-opened or re-interpreted. However, when negotiating tariffs, negotiators should be vigilant, because the traditional market access barriers are often not the most important trade inhibitors. Non-compliance with health, hygiene, food composition, traceability and rules of origin requirements often hinders or serves trading relationships. Officials should continue to monitor standards’ developments in third countries to ensure that new policies do not represent unjustified barriers to trade. Officials must ensure that trade bans imposed for SPS reasons are scientifically justified. Expeditious removal of illegitimate bans is a priority.

CIAA does also support initiatives providing assistance to developing countries to understand and comply with all relevant and justified EU standards.

5. Trade Facilitation

Increased harmonisation and simplification of customs procedures and documentation will benefit both developed and developing countries by reducing administrative costs. Improved transparency of information is necessary and third countries must receive adequate prior notification of any relevant regime changes. CIAA priorities in this part of the negotiation covers:

• the introduction of national single window communications environments;
• improved co-ordination and communication between national and supranational authorities involved in trade;
• consolidation of existing “trusted trader schemes”;
• standardisation of, or increased consistency in, inspection charges; and
• WTO scrutiny of national border protection initiatives to ensure they do not become technical barriers to trade.

6. Geographical Indications in the TRIPS negotiations

The absence of progress in the negotiations on geographical indications gives rise to concern. The majority of CIAA members consider that the TRIPs agreement should lead to an effective and continuous protection of the specific character of products using particular denominations (geographical indications and denomination of origin). This would respond to the need to fight misuse of product names, to ensure fair competition and to protect the interest of consumers. According to these members, a realistic strategy will be required to pursue further this objective. The establishment of a register for wines and spirits should be a priority with a view to result in real legal security for manufacturers. The extension of the additional protection provided by article 23 of the TRIPS agreement to other food products should be the second objective.

7. Trade Disputes

Whilst outside the remit of the Doha Development Round, WTO members should consider ways to resolve WTO trade disputes without resorting to the imposition of retaliation or sanctions which often create “innocent victims”. Irrespective of whether the EU wins or loses a WTO case, the EU food and drink industry frequently suffers as the target of these unresolved trade disputes. These sanctions either increase raw material prices or reduce export competitiveness.