The state of the forces inside the WTO :
What sort of power strategies will we see in the coming weeks?
These games are characterized by alliances, simulated or real, between states, which, as the negotiations move forward, can form, break up, and form again…
The difficulty in the game lies in the evaluation of these alliances because we are in the presence of dynamic strategies that are always difficult to interpret!
The art of the negotiator is to be not only well-informed but also well-aware of the interests involved in order to manage his alliances to the best interest of the country or the community he represents.
While the agricultural negotiations are bogged down, each state is trying to revive its alliances with other countries or groups of countries in order to block the projects of the exporting countries and in particular the Untied States.
This is why the position of different partners that could have preoccupations identical to those of the European Union in terms of access to the market are more ambiguous than it would seem.
This article seeks to analyze the forces and interests involved as far as we have been able to evaluate them in the informal meetings at the WTO these last few days and to explore the possible alliances that are often far from corresponding to what we could commonly imagine.
Despite the efforts of the Director General of the WTO, the secretaries of state of the six principal partners (the United States, the European Union, Brazil, India, Japan, and Australia) could not reach an agreement on any issue, agricultural or otherwise: access to markets for industrial products, services…
The simulation of offers in terms of access to the market was presented to the delegations. Some imagined that this exercise would help the discussions move forward, but the results are a mere reflection of proposals, the technical evaluation of which is difficult to interpret due to the difference in tariff structures of the member states.
The most important point to be emphasized is that whatever the rate of reduction of customs duties and the thresholds of the bands, the consequences are particularly harsh both for the industrialized countries as well as for the developing countries.
Each country is trying to reposition itself according to its interests in terms of access to the market of agricultural products in order to prepare for future consequences and commitments and to protect key products for its agriculture.
This is why cohesion inside the different groups of countries (G20, G33, G90…) is far from perfect and is even showing signs of fractures.. › Between the G20 and the G33, the Indian strategy is fluctuating but efficient. The G20 is not at all a homogenous group because it combines exporting LDCs (Latin American and Asian countries) such as Brazil and countries on the defensive like India and China. This situation was clearly revealed when the G20 put off for months the presentation of a common position on the access to agricultural markets and in the end presented a document touting special treatment and differences. Today, India is moving closer to the G33, a group of importing LDCs, and is making a bid for leadership. However the practically unique goal of this group is the limitation of commitments in terms of access to the market through the following four elements:
› reduction of duties that is as limited as possible,
› special and differential treatment,
› implementation of a special safeguard clause for the developing countries.
› and a definition that is as wide as possible of special products (concerning particularly foods)
A rapid analysis of the Indian tariff structure leads us to consider that a definition that is as wide as possible of special products, combined with the implementation of a safeguard clause, would give this country great flexibility in terms of commitment to access to the market, in spite of its tariff structure: its average consolidated customs duty is currently 113.98% compared to 88.02% for Egypt and 644.74% for Malaysia! Therefore, by using its alliance with the importing LDCs to obtain specific measures (safeguard clause and special products) the Indian strategy can only pay off at a time when the United States continues to push access to the market by trying, through their stubbornness on this aspect, to open up markets of emerging countries, in particular India. › The absence of any dynamic ACP approach, and more particularly from Africa, is both astonishing and unfortunate ! The last document presented by this group of countries, except for the case on cotton for which only four countries are in the front lines (Burkina Faso, Mali, Chad and Benin) goes back to the month of October! The coordination that existed up until last autumn between the ACP countries does not seem to function any more. The most active countries are members of the G20, like Kenya, or are more preoccupied with Less Advantaged Countries like Tanzania. Mauritius, hard hit by the current evolutions, can no longer go on the offensive. We have only to remember the joint press conference of the G20, G33, and G90 in Hong Kong in order to appreciate the cleavage between the European will to defend the partnership with the African countries and their current position in the negotiations. This situation is even more difficult today for the European Union in that it is still seeking an alliance with these same African countries who count on the support of the European Union to limit the erosion of the preferential profit margins that they benefit from thanks to the Cotonou agreement. › Japan, false spokesman for the G 10, is torn between two positions. Within the structure of the current negotiations, the G10 appears to be the best ally of the European Union in agricultural negotiations and notably for access to the market. Japan is therefore implicitly considered as the spokesman for the G10. However, although this country belongs to the G10, can we consider it as a reliable ally? Yes, if we look at its tariff structure, which is globally identical to that of the European Union, except for a few products that this country would like to see treated ad hoc (notably rice, but also starch, a rice by-product, as well as certain dairy products). No, if we look at its most immediate objective: to preserve a few products whereas the European Union has a multitude of products to defend. Therefore it is not certain that Japan, preoccupied by the ceiling on duties at the end of a period (capping) is ready to fight on the other aspects of the discussion on access to the market like the special safeguard clause if it wins ad hoc treatment for its few key products. As an indication it is important to note that the ceiling for duties at the end of a period is the principal preoccupation of the G10 countries. Thus 30% of Swiss agricultural duties are higher than 75%, with a large share of processed products which have duties higher than 250%. Japan’s own partners seem to share the same doubts since it is concentrating mostly on access to the market while the other G10 countries are encountering major difficulties on other aspects of the agricultural negotiations: internal support (the case of Norway, Switzerland…) export competition (the case of Switzerland…) On this last aspect, let us note an important point concerning food aid: Japan and Korea are particularly attentive to conditions for access to food aid in that these two countries would send back to North Korea the rice imported in the framework of the commitments of the Uruguay round for food aid.. › In this context what should be the strategy of the European Union ? What are the real possibilities for alliances with other countries concerned, like the European Union, with preserving access to their markets? This question is even more acute in that the feeling that emanates from the meetings on access to the market is that the “fractioning” of the discussions that started last spring during the debate on the ad valorem equivalents is continuing, at least implicitly. This is why it is to be feared that the different elements contained in the community’s offer of 28th October 2005 be “dropped” by the Commission without obtaining any real concession in return, notably on :
› the definition of the threshold of the bands which is crucial
› the principle of customs ceilings at the end of periods
› flexibility within the first band1
› tariff contingents and the risk of “sliding” to supplementary contingency volumes which are highly destabilizing on the domestic market, even for small volumes.
In this context it is essential that the European Union remain firm and maintain its proposal of 28th October:
› demand a real system of parallel concessions within the discussions on agriculture, with particular attention to “marketing loans” which greatly distort the world market
› reinforce the application of the safeguard clause to all products and not just those defined in the offer of 28th October (beef, butter, sugar, fowl, fruit and vegetables) with an adapted trigger price causing it to take effect automatically.
› define clearly the key products: number of lines, means of reducing tariffs on key products, means for calculating the contingents that must be opened, calculation references, percentage of growth, customs duties applicable inside the contingent.
Evaluating alliances is a very complex exercise because it is based on a game with several parameters (the three stages of the negotiations if we just consider the agricultural negotiations), with several dimensions (three sectors are really concerned: agriculture, industry and services) and several times (the negotiations take place during periods spread out over time where many other factors can come into play). All this information can be apprehended through game theory which is the basis of the new economic model being created by WOAgri. 1 Let us remember that flexibility leads to the definition of a reduction rate for each band. The country can then apply a different reduction rate for each product but must respect the average reduction of the band and not vary from the pivotal rate of a percentage to be defined. |