2nd WTO draft keeps 45% tariff cut in high-tariff farm imports

Asian Economic News, March 25, 2003

GENEVA, March 19 Kyodo

The World Trade Organization (WTO) on Tuesday unveiled a revised proposal for liberalizing global farm trade, keeping intact an initial demand for a minimum 45% tariff cut for high-tariff products, including rice imports in Japan.

The proposal, drawn up by Stuart Harbinson, head of the WTO agriculture negotiations group, was presented to WTO members ahead of the March 31 deadline the WTO has set for concluding a basic accord on tariff cuts and other modalities for liberalizing farm trade.

Japan and the European Union, which both want the minimum tariff cut target set at 15%, are likely to object to Harbinson's revised proposal when the WTO agriculture negotiation group meets next Tuesday.

The United States and other farm product exporting countries have shown little sign that they would accept a rollback of Harbinson's proposal.

Agricultural trade negotiations are part of a multilateral trade round the WTO members launched in November 2001 in Doha, with an overall deadline on Jan. 1, 2005. The three main targets are market access through tariff cuts, cuts in export subsidies and a reduction in trade-distorting domestic support.

The WTO has set March 31 as the deadline for farm negotiators to agree on the modalities of trade liberalization, with plans to decide on specific tariff cut rates at a WTO ministerial meeting in September in Cancun, Mexico.

As in the first draft, the revised proposal sets average and minimum tariff cut targets in terms of current import tariff rates.

For farm products with import tariffs currently set at under 15%, the proposal calls for an average tariff cut of 40% and a minimum tariff cut of 25%.

The average and minimum tariff cut targets would go up to 50% and 35%, respectively, for farm products currently taxed at between 15% and 90%, and would climb to 60% and 45% for products currently taxed at more than 90%.

As Japan currently imposes import tariffs of 400%-500% for rice, it will need to lower the tariff rates to around 250% under the Harbinson formula.

As for the tariff allocation system, which allows farm importing countries to charge high tariffs for imports exceeding certain volumes, the Harbinson draft proposes raising the low-tariff quota to 10% of domestic consumption.

The proposal also contains a tariff-scale compensation formula, under which importing countries would be allowed to limit the low-tariff scale to 8% of domestic consumption for 25% of imports so long as they expand the low-tariff scale to 12% of domestic consumption for another 25% of other high-tariff imports.

Japan currently sets 7.2% of domestic consumption as the ''minimum access'' mandatory rice import quota. If Japan applies the tariff-scale compensation formula, the amount of rice imported under the low-tariff quota is likely to be marginal as the domestic rice consumption is falling in Japan.

In addition to the tariff cut targets, the Harbinson proposal calls on developed countries to give special consideration to the needs of developing nations in implementing market access pledges.

It also proposes abolishing export subsidies in nine years.