Ad valorem equivalents plague WTO agriculture talks

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New Delhi, May 2: An agreement on the methodology for estimating ad valorem equivalents (AVEs) for non-ad valorem tariffs still eludes the World Trade Organisation’s (WTO) committee on agriculture (CoA). G-20, the group of developing countries, continues to lock horns with EU, the US and Switzerland on the issue.

With special sessions of the CoA in March-April failing to arrive at a solution, its chairman Tim Groser hopes that the matter will be resolved in the next session scheduled to begin on May 30.

While ad valorem duties are based on the value of the commodity, non-ad valorem or specific tariffs are per-unit based (like $/kg).

In a report submitted to the trade negotiations committee (TNC) of the WTO, Mr Groser noted that to make progress on market access, a methodology for estimating ad valorem equivalents of non-ad valorem tariffs for the purpose of applying a tiered tariff reduction formula is needed.

He said that another formal special session will take place during the week beginning May 30. The week will include informal consultations on a variety of issues in the agreed framework.

According to the commerce ministry, G-20 has been insisting on a tight methodology for converting all non-ad valorem tariffs into ad-valorem equivalents to ensure that there are no manipulations in the calculations. “A loose method of conversion could give countries with non-ad valorem tariffs room for bringing about lower tariff cuts than countries with ad valorem tariffs,” an official said.