The Global Dairy Alliance (GDA) – represented by the dairy industries of Argentina, Brazil, Chile, Uruguay, New Zealand and Australia – demands that the WTO Doha Development round negotiations deliver real improvements in trade opportunities for world dairy producers.

The GDA's policy position is based on the Framework Agreement of July 2004, except that in several instances where it considers the Framework Agreement does not deal sufficiently with specific issues. Examples are tariff simplification and controls on product specific domestic support.

The Global Dairy Alliance requires a major outcome from the Doha Development Round. Such an outcome must provide substantial benefits to dairy trade across all three pillars – market access, export subsidies and domestic support.

It is not sufficient merely to make reductions in both export and domestic subsidies or tariffs. These cuts must not just reflect a lessening of entitlements even at a substantial level. This must mean effective real cuts that require major developed countries to remove elements of their existing expenditure and programmes.

For the international dairy trade the results in market access are crucial. Removing export subsidies and major reductions in domestic support are insufficient to produce the desired changes. Market access is the key element in this negotiation. It is vital through the Doha Development Round that international trade expand through much lower tariffs and increased tariff quota commitments.

It is well known that the dairy sector is one of the most distorted in international trade. For example, tariffs often exceed 100% in major developed countries. Because of this the GDA supports an approach across all three pillars that does not differentiate in any way between agriculture sectors. Differentiation in, for example, the treatment of export subsidies only leads to further distortions within agriculture.

Market Access

The Framework Agreement frequently refers to ‘substantial' cuts or results in its comments on market access. For the GDA it is important that this ambition of substantial improvements is met.

Present tariffs are often at significant peaks (in one case over 500%). Reducing these peak tariffs is a major ambition for the GDA. But with peak and other tariffs the key point is that such reductions allow additional trade to develop.

For that reason the GDA supports

• A tariff cap that is progressively reduced
• The calculation of ad valorem equivalents that recognise their true protective nature
• Bands for tariff reduction that allow the higher tariffs to receive much larger cuts
• A strict limit on the number of products classified as sensitive including a limit per tariff chapter.

Tariff quotas offer another way to increase international trade. Increases in tariff quota commitments should

• Be based on consumption over a recent period
• Include the elimination of inside quota tariffs
• Ensure that quotas are filled through new rules on tariff quota administration.

The GDA view for tariff simplification is that the conversion of specific to ad valorem tariffs should occur on a permanent basis. This applies also to the complex tariffs including both ad valorem and specific elements.

In the dairy sector there is considerable trade to and from developing countries. Under the Framework Agreement developing countries are not required to meet the same level of commitment as their counterparts in developed countries. Nevertheless there should be clear criteria adopted in choosing a limited number of special products accompanied by improvements in market access that create additional trade.

Export Competition

The commitment in the Framework Agreement to eliminate export subsidies is a major step forward for the GDA, but it is crucial that the implementation process move quickly to the point of elimination.

The time period is a major part of elimination. The GDA supports a 3-year period with a substantial down payment in year one. Within this formula and in other elements of implementation there should be no differentiation between dairy and other agriculture sectors.

At present export subsidy limits are established on both a volume and value basis. The timetable for removal of export subsidies must apply equally to both volume and value entitlements.

Strong transition measures must prevent circumvention of reduction commitments. These should include

• Placing a limit on the ‘per unit' subsidy and phasing the limit down over time
• Prohibiting the rollover of export subsidy provisions between individual years
• Eliminating the use of component subsidies
• Maintaining the disaggregation commitments of export subsidies.

Disciplines are also required on food aid as supplies under food aid can and have disrupted commercial markets. The GDA's view is that

• Food aid should not be a means of surplus disposal but should be for emergency assistance only on a bilateral basis or through multilateral agencies
• A notification process to be established through the WTO committee on agriculture including usual marketing requirements
• Food aid not to be ‘monetised'.

Domestic Support

The Framework Agreement as it now stands contains a number of flaws particularly on product specific trade distorting support.

The present levels of domestic support include significant quantities of support in major developed countries for their dairy sectors. For that reason the GDA wants to see effective control and reduction of trade distorting domestic support on a sectoral basis.

Both on a sectoral basis and overall there will need to be very significant cuts in domestic support. Current entitlement levels are well above actual usage. The Doha Development Round reductions should lead to real and effective cuts in actual expenditure and not just the removal of part of the surplus element in current entitlements.

Specifically the GDA calls for progressive elimination of all trade distorting domestic subsidies in developed countries is one of the GDA's key demands for the Doha Development Agenda.

• Initial reductions in trade distorting domestic support (including AMS, Blue Box and de-minimis) should be from current usage levels
• The reduction formula should be truly harmonising so that allowable levels of support are the same for all developed countries. This should be based on a percentage of the value of production i.e. the largest users make the biggest cuts
• A cap and a progressive reduction of all trade distorting domestic support on a product specific basis, not just for AMS, to prevent ‘box shifting' and misuse of de minimis provisions.

It is also necessary to control the use of the green box by ensuring that criteria are clear and that there is an ongoing review process to ensure green box programmes meet these criteria.

MARCH 2005