Special Session of the Committee on Agriculture

Informal Meeting, 24-28 February 2003

Statements by Norway

Final version

a) General comment

Mr. Chairman,
We have to admit that we are both surprised and disappointed by your draft modality paper. Surprised because this proposal goes further than we had ever expected in favouring the interests of competitive exporting countries at the expense of non-competitive importing countries. Disappointed because there is an abyss between the Chair’s and our own proposal, and we see few attempts to address our concerns. Put into effect, the Chair’s proposal, in particular its provisions on tariff reductions, would have dramatic consequences for Norwegian agriculture. This is not what we were prepared for when we entered into this reform process. In our view, the draft simply lacks the basic characteristics of a compromise with which all Members can live, and it does not take non-trade concerns into consideration as foreseen by the Doha mandate. Our objections do not only relate to your figures. It is as much a question of approach.

Norway is firmly committed to the deadline of agreeing to modalities by the end of March. We hope this draft paper has not stimulated unrealistic expectations and a hardening of unworkable positions. If so, we risk a setback or even a deadlock. We need now to look forward, and we would like to suggest a set of guiding principles for your second draft.

First, the proposal needs to allow all Members, irrespective of production conditions and competitiveness, to address their non-trade concerns through a certain degree of domestic agricultural production. A tariff harmonisation formula is simply not appropriate because it does not take into account the differences in production conditions. Nominal tariff levels cannot be compared across countries. A high tariff may in fact yield less effective protection for a country with unfavourable production condition than a low tariff in case of a country with favourable production conditions. An unmodified Uruguay Round formula is therefore the only way forward. Resulting from 8 years of difficult negotiations, this formula is by definition a compromise.

As to our own quantitative proposal tabled two weeks ago, we have proposed average tariff reduction of 36% and a minimum tariff reduction of 10% for each tariff line.

Second, as to domestic support, the paper should target the most trade distorting elements. This implies that the existing framework of the green and blue boxes should be continued and no caps introduced. As to AMS support, overall large reductions would only be possible if support to exported products is penalised substantially more than support to products for the home-market. We have suggested that AMS support to products for the home market should be subject to a reduction of 20%, while the export oriented AMS should be subject to a reduction of 60%.

Third, as to export subsidies, Norway has consistently acknowledged the need for stricter disciplines, and we are committed to the Doha mandate of phasing out such measures. Concretely, in this round, Norway agrees to an average reduction of the budgetary outlays of export subsidies of 60%, provided that flexibility is given in dealing with the different products. However, the Doha Declaration will only be honoured if all forms of export subsidies are treated equally. This is an essential principle to be respected. In other words, no loopholes for food aid and export credits.

Finally, Norway fully recognises the need for special and differential treatment of the developing countries, and we endorse several of the proposals made in this regard, including longer implementation periods and lower reduction rates in all three pillars. The weeks since we last met in January have been quite eventful. We are glad to see that a number of countries have tabled figures that are quite similar to ours.

Mr. Chairman, you have a difficult task. In our opinion, this is not about mathematical compromises. It is about making commitments in “an equitable way among all Member s”, to quote the Preamble to the Agreement on Agriculture. It is about a careful balancing of the political sensitivity that characterises the agricultural sector of individual Members, a sensitivity that is not evenly distributed among the Membership. It is about establishing an agricultural trading system that is fair to all, exporting as well as importing, developing as well as developed Members.

Mr, Chairman, to conclude, the next version needs to be fundamentally different for it to provide a useful basis for “bridging the gaps”, to use the motto from the last meeting. We wish you good luck and lots of wisdom in your work with your second draft.

Thank you.

b) Market access

Mr. Chairman,
As to market access, the question to Norwegian agriculture is “to be, or not to be”. We have the world’s northern-most agriculture. Together with a handful of other countries we probably have the world’s most difficult production conditions. Tariffs are nothing less than indispensable to secure a certain degree of domestic production, and thereby securing non-trade concerns.

As we stated this yesterday, a tariff harmonisation formula is simply not acceptable because it does not take into account the differences in production conditions. Nominal tariff levels cannot be compared across countries. A high tariff may in fact yield less effective protection for a country with unfavourable production condition than a low tariff in case of a country with favourable production conditions. An unmodified Uruguay Round formula is therefore the only way forward. Resulting from 8 years of difficult negotiations, this formula is by definition a compromise.

We are of course standing by the Doha mandate of substantially improving market access conditions, and we have therefore proposed a 36% average tariff cut. The minimum tariff cut required for each tariff line should not exceed 10%.

Such concessions will be painful to Norwegian agriculture. Production is likely to drop in several important sectors, with substantial negative effects on our non-trade concerns.

As to minimum access tariff quotas we need to have in mind that the intention of this arrangement was to provide a minimum of access in products for which such access did not previously exist. This intention now being met, we do not see the rationale for expanding quotas beyond the existing arrangements.

Finally, the special safeguard must be continued, as foreseen in Article 5.9 of the Agreement. In the Uruguay Round we agreed to tariffication and the reduction of tariffs on the condition that a special safeguard mechanism was part of the overall reform package.

What then about the development dimension of your draft? We are supportive of several of the S&D elements embodied in your draft, including longer implementation periods and lower reduction rates, with a total exemption for LDCs. Improved market access is of vital importance to many developing countries. Developed countries should therefore provide duty- and quota-free access to their markets for all imports from LDCs. In this respect we feel that your draft should have a stronger commitment.

Having said this, we are concerned about the negative effects of the erosion of preferences that will flow from your tariff proposal. This is particularly worrying because many of the vulnerable developing countries that currently rely on preferential access are single-commodity exporters with few alternative options.

Mr. Chairman,

Our agriculture is characterised by its extremes. At present, we have only 50% self-sufficiency on a calorie basis. Arable land represents only 3% of the total. We have the lowest population density in Europe, next after Iceland, and agriculture makes up the backbone of our most remote rural communities. This is the reality that we are facing. We will be working constructively towards reaching an agreement by the established deadline. However, we are not willing to compromise our food security, our rural communities, our bio-diversity, identity and cultural heritage.

Thank you.

c) Export competition

Mr. Chairman,
As we underlined on Monday, Norway has consistently acknowledged the need for stricter disciplines, and we are committed to the Doha mandate of phasing out such measures. Concretely, in this round, Norway agrees to an average reduction of the budgetary outlays of export subsidies of 60%, provided that flexibility is given in dealing with the different products.

However, the Doha Declaration will only be honoured if all forms of export subsidies are treated equally. This is an essential principle to be respected. In other words, no loopholes for food aid, export credits and state-trading enterprises. As we see it, your proposal would still make it possible to use food aid as a means of surplus disposal. Therefore, food aid should only be granted in response to appeals from specialised UN food aid agencies. Food aid should not displace local production or commercial imports. This implies that food aid should not only be fully grant, nor should it be directly sold on the local market. We also need provisions to ensure a shift from aid in kind to financial aid for the purpose of triangular transactions and local purchases.

On export credits, we see no justification for an emergency clause that is different for export credits, as compared with for instance export subsidies. The same goes with market-differentiation. We are not convinced could export credits to developing countries be subject to more lenient provisions than export subsidies to the same destination? Any special and differential treatment in this area should be restricted to NFIDCs and treat credits and subsidies on an equal basis so as to ensure that such provisions do not actually take the form of S&D treatment for wealthy exporters.

Finally, Mr. Chairman, your second draft should on the export competition issue, as well as on any other issue, take a comprehensive approach in which all issues are dealt with in parallel.

Thank you.

d) Domestic support

Mr. Chairman,
As to domestic support, we believe that the first draft is far too ambitious with respect to the Amber and Blue boxes. We also have major problems with some of the proposals relating to the Green Box. A second draft would therefore need to be fundamentally different from the first version for it to provide a basis for further negotiations.

As an overall approach, the paper needs to target the most trade distorting elements. This implies that the existing framework of the green and blue boxes should be continued and no caps introduced.

Furthermore, as to AMS support, overall large reductions would only be possible if support to exported products is penalised substantially more than support to products for the home-market. We have suggested that AMS support to products for the home market should be subject to a reduction of 20%, while the export oriented AMS should be subject to a reduction of 60%.

Moreover, we must address the erosion of the bound domestic support ceilings resulting from inflation. The erosion of domestic support commitments due to inflation reduces the predictability of the multilateral trading system and increases the burden on countries that are already facing constraints in their nominal domestic support commitments. A more operationally effective commitment in this area would make it easier to make larger concessions in terms of AMS reductions.

As to Blue Box support, a second draft must reflect the very fact that such support is far less trading-distorting than Amber support. Combined with production-limiting programmes Blue support must be continued.

Finally, as to the Green Box we have major problems with several of the proposals, including the ones relating to historic base periods that cannot be updated and the new restrictions suggested with respect to environmental programmes. Overall, we believe there is an urgent need to discuss how domestic support can further non-trade concerns, within as well as outside the Green Box. Some of the concerns raised in Attachment 8 are common non-trade concerns of all Members, and we should therefore consider whether such measures should be generally available.

Thank you.