The Hong Kong beauty parade

I had a meeting yesterday with a senior EC Commission official—a former member of Pascal Lamy’s staff when he was Trade Commissioner—who insisted that there’s no ‘wriggle-room’ in the EC’s offer on Agriculture of 28 October: Mandelson had laid out the whole package. I recently speculated that there was more to come at Hong Kong, but the issue is now probably moot. The new, informal but bankable, timetable for the negotiations means that there will be more posturing than squirming at the Hong Kong meeting.

The ‘new quad’ (USA, EC, Brazil, India—and sometimes one or two others, just to confuse the arithmetic; in this case, Japan) have apparently decided that the next WTO General Council meeting in March 2006 is a more likely timeframe for agreement on the ‘modalities‘—that is the ‘headline numbers‘—on agriculture, NAMA, services etc.

Lamy and others will be pressing Ministers at Hong Kong for more ‘conditional’ offers, as my friend from Brussels put it, like the EC offer to eliminate export subsidies, conditional on balancing offers from others. But the new timetable means no one will be under pressure at Hong Kong to make any conditional offers final.

“We want Hong Kong to be more than just a simple stock-taking exercise,” said Rob Portman, the US trade representative. Peter Mandelson, the EU trade commissioner, agreed: “We want Hong Kong to be more than treading water. It should lock in the progress made … and put in place, as far as possible, a springboard for advance in 2006.” (Financial Times)

So Hong Kong is likely to become a ‘beauty parade’, where each of the main contenders will try to portray its conditional offers as most encouraging to rapid progress early next year. In fact, all of the offers on agriculture summarized in the Agriculture Negotiating Group Chairman’s report earlier this week (available here) are conditional.

The EC, like everyone else, has the option to amend its position and to extend its offers at any time before the end, if they think there is an advantage in doing so. The negotiations are not over until the ink is dry on the signature. But my friend from the Commission insisted that Mandelson could not extend his agricultural market access offer which is already at the frontier of Europe’s agricultural reform policies.

But I’m still not entirely convinced that flexibility on market access is exhausted. The EC)’>CAP reform packages of 2003 contain no provisions on the levels of access to the European market. This is a matter of management of the internal “supply balances” that Commission officials (advised by a powerful committee of Member state representatives) watch closely, on a weekly or daily basis if necessary.

Supply is only one side of the market balance equation and supply itself has both domestic and import components. The connection between a EC)’>CAP reform target—expressed as a domestic supply balance at a particular price level—and import access volumes is an articulated link that the Commission controls. For the negotiators from other WTO members, t’s a matter of discovering Europe’s price on a management strategy that prioritizes imports.

It would help if European consumers were more keenly aware of the price—e.g. in terms of employment—of the current supply management bias towards domestic production.

I’m en-route to Pakistan where I’ll be for a few days later this week, talking to officials and business leaders about public-private consultations on trade policy. I’ll try to keep up with the preparations for Hong Kong, but it may be next week before I can post again.

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