The so-called Framework Agreement was adopted in Geneva on July 31, 2004. Its text sets the parameters of the future package in five key areas: agriculture, industrial products, development issues, trade facilitation, and services. This decision effectively completes half of the trade negotiations launched in Doha in November 2001 and stalled in Cancun last year.
The Doha Development Agenda (DDA) is crucial for bolstering international economic growth and helping developing countries integrate into the global economy. What happened on July 31 gives a clear signal about the capacity of the system to maintain an ambitious round that is broad in scope.
The European Union (EU) feels that the Framework Agreement is, indeed, a balanced one. It can be the basis for boosting the world economy, including farm trade, and is a good deal for developing countries, in particular the poorest among them.
This agreement still needs to be fleshed out, notably with statistics, and a lot of work will have to be done in this respect. In the agricultural field, the deal embraces all aspects linked to agricultural reforms. De facto, it:
* Will involve elimination of all export support. All trade-distorting elements of export credits, food aid or state trading enterprises are to be eliminated, just like the EU export subsidies.
* Will mean less agricultural subsidies: developing countries will get a reform of both the EU and US agricultural policies. The overall levels of the most trade-distorting domestic support will have to be substantially reduced: already in the first year of implementation, a down payment of 20 per cent of this reduction will be made, therefore providing a bigger cut than the reductions made further to the Uruguay Round over six years.
* Will provide the tools to protect sensitive and special agricultural products vital for the food security of countries like India and Indonesia.
* Will address the issue of cotton ambitiously and within the negotiations on agriculture in assuring coherence between trade and development aspects. The relevant work will encompass all trade-distorting policies affecting the sector, from import tariffs, trade-distorting cotton subsidies to export subsidisation. The EU on its part has already abolished all export subsidies and tariffs for cotton and has undertaken a fundamental reform of its cotton subsidies by eliminating the most trade-distorting support.
* Represents a strong call for duty-free and quota-free treatment for the worlds poorest countries.
All developing countries will benefit from special and differential treatment by means of longer implementation periods for all commitments; lower tariff and subsidy cuts, the recognition of special treatment for so-called special products to address food security, livelihood and rural development concerns; fullest liberalisation of trade on tropical products; dealing with the erosion of preferences.
These elements will provide developing countries with the necessary flexibility to adapt their agricultural industry and to be able to benefit from greater trade liberalisation.
Besides, a particular treatment will be granted to least developed countries, which will not have to undertake any commitment to reduce either tariff or farm support. On the contrary, developed countries and the developing countries in a position to do so are encouraged to provide duty and quota-free access to products originating in these countries. The EU has been on the forefront by implementing unilaterally such a measure with its Everything but arms initiative.
All in all, the agreement means that other countries will follow the EU on its reform path in making their farm support systems more trade-friendly.
Developing countries will have clearer perspectives: better market access, less agricultural subsidy, while at the same time having the possibility to protect their own sensitivities.
From its side, the EU will continue to take the developing countries needs into account whilst preparing its position, and will continue to work towards addressing fully their particular needs and interests at the next stage of negotiations.
Exclusive to FE from EU